TRANSLATION OF THE FRENCH DOCUMENT DE ......SID Editions Connaissance des Arts Investir Le Journal...

TRANSLATION OF THE FRENCHDOCUMENT DE RÉFÉRENCE

FISCAL YEAR ENDED DECEMBER 31, 2012

CONTENTS

HISTORY 1FINANCIAL HIGHLIGHTS 2EXECUTIVE AND SUPERVISORY BODIES; STATUTORY AUDITORS 5SIMPLIFIED ORGANIZATIONAL CHART OF THE GROUP AS OF JANUARY 31, 2013 6

BUSINESS DESCRIPTION 9

WINES AND SPIRITS 10FASHION AND LEATHER GOODS 15PERFUMES AND COSMETICS 17WATCHES AND JEWELRY 19SELECTIVE RETAILING 21OTHER ACTIVITIES 22

MANAGEMENT REPORT OF THE BOARD OF DIRECTORS 23

LVMH GROUP 23PARENT COMPANY: LVMH MOËT HENNESSY–LOUIS VUITTON 47HUMAN RESOURCES 67LVMH AND THE ENVIRONMENT 85

REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 99

FINANCIAL STATEMENTS 113

CONSOLIDATED FINANCIAL STATEMENTS 113PARENT COMPANY FINANCIAL STATEMENTS: LVMH MOËT HENNESSY–LOUIS VUITTON 181

OTHER INFORMATION 209

GOVERNANCE 209GENERAL INFORMATION REGARDING THE PARENT COMPANY; STOCK MARKET INFORMATION 237

RESOLUTIONS FOR THE APPROVAL OF THE COMBINED SHAREHOLDERS’ MEETING OF APRIL 18, 2013 245

RESPONSIBLE COMPANY OFFICER; FINANCIAL INFORMATION 259

TABLES OF CONCORDANCE 263

This document is a free translation into English of the original French “Document de référence”, hereafter referred to as the“Reference Document”. It is not a binding document. In the event of a conflict in interpretation, reference should be made to the French version, which is the authentic text.

16th century 1593 Château d’Yquem

18th century 1729 Ruinart1743 Moët & Chandon1765 Hennessy1772 Veuve Clicquot1780 Chaumet

19th century 1815 Ardbeg1828 Guerlain1832 Château Cheval Blanc1843 Krug

Glenmorangie1846 Loewe1849 Royal Van Lent1852 Le Bon Marché1854 Louis Vuitton1858 Mercier1860 TAG Heuer1865 Zenith1870 La Samaritaine1884 Bulgari1895 Berluti1897 Franck et Fils

20th century 1908 Les Echos1916 Acqua di Parma1925 Fendi1936 Dom Pérignon

Fred1942 Rossimoda1945 Céline1947 Parfums Christian Dior

Emilio Pucci1951 Wen Jun1952 Givenchy

Connaissance des Arts1957 Parfums Givenchy1960 DFS

Bodegas Chandon1963 Miami Cruiseline1969 Sephora1970 Kenzo1972 Parfums Loewe1974 Investir-Le Journal des Finances1975 Montres Dior

Ole Henriksen1976 Benefit Cosmetics1977 Newton

Cape Mentelle1980 Hublot1982 Radio Classique1984 Thomas Pink

Marc JacobsDonna KaranMake Up For Ever

1985 Cloudy Bay1988 Kenzo Parfums1991 Fresh1993 Belvedere1998 Numanthia Termes1999 Terrazas de los Andes

Cheval des Andes

21st century 2001 De Beers Diamond Jewellers2005 10 Cane2010 Parfums Fendi

HISTORY

Although the history of the LVMH group began in 1987 with the merger of Moët Hennessy and Louis Vuitton, the roots of theGroup actually stretch back much further, to eighteenth-century Champagne, when a man named Claude Moët decided to build onthe work of Dom Pérignon, a contemporary of Louis XIV; and to nineteenth-century Paris, famous for its imperial celebrations,where Louis Vuitton, a craftsman trunk-maker, invented modern luggage. Today, the LVMH group is the world’s leading luxurygoods company, the result of successive alliances among companies that, from generation to generation, have successfully combinedtraditions of excellence and creative passion with a cosmopolitan flair and a spirit of conquest. These companies now form apowerful, global group in which the historic companies share their expertise with the newer brands, and continue to cultivate theart of growing while transcending time, without losing their soul or their image of distinction.

From the 16th century to the present

12012 Reference Document

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FINANCIAL HIGHLIGHTS

Key consolidated data

(EUR millions and percentage) 2012 2011 2010

Revenue 28,103 23,659 20,320Profit from recurring operations 5,921 5,263 4,321Net profit 3,909 3,465 3,319Net profit, Group share 3,424 3,065 3,032Cash from operations before changes in working capital(a) 7,113 6,137 4,848Operating investments 1,702 1,730 976Free cash flow(b) 2,474 2,177 3,073Total equity(c) 25,666 23,512 18,204Net financial debt(d) 4,261 4,660 2,678Net financial debt/Total equity ratio 17 % 20 % 15 %

(a) Before interest and tax paid.(b) Net cash from/(used in) operating activities and operating investments.(c) Including minority interests.(d) Excluding purchase commitments for minority interests included in Other non-current liabilities. See Note 18.1 of the notes to the consolidated financial statements.

Data per share

(EUR) 2012 2011 2010

Earnings per share Basic Group share of earnings per share 6.86 6.27 6.36Diluted Group share of earnings per share 6.82 6.23 6.32

Dividend per share Interim 1.10 0.80 0.70Final 1.80 1.80 1.40

Gross amount paid for fiscal year(e) (f) 2.90 2.60 2.10

(e) Excludes the impact of tax regulations applicable to the beneficiary.(f) For fiscal year 2012, amount proposed at the Shareholders’ Meeting of April 18, 2013.

2 2012 Reference Document

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Information by business group

(EUR millions) 2012 2011 2010

Revenue by business group Wines and Spirits 4,137 3,524 3,261Fashion and Leather Goods 9,926 8,712 7,581Perfumes and Cosmetics 3,613 3,195 3,076Watches and Jewelry 2,836 1,949 985Selective Retailing 7,879 6,436 5,378Other activities and eliminations (288) (157) 39

Total 28,103 23,659 20,320

Profit from recurring operations by business group Wines and Spirits 1,260 1,101 930Fashion and Leather Goods 3,264 3,075 2,555Perfumes and Cosmetics 408 348 332Watches and Jewelry 334 265 128Selective Retailing 854 716 536Other activities and eliminations (199) (242) (160)

Total 5,921 5,263 4,321

Information by geographic region

2012 2011 2010

Revenue by geographic region of delivery (as %) France 11 12 13Europe (excluding France) 20 21 21United States 23 22 23Japan 8 8 9Asia (excluding Japan) 28 27 25Other markets 10 10 9

Total 100 100 100

Revenue by invoicing currency (as %) Euro 24 26 28US dollar 28 27 27Japanese yen 8 8 9Hong Kong dollar 6 6 6Other currencies 34 33 30

Total 100 100 100

Number of stores France 412 390 364Europe (excluding France) 910 883 646United States 644 621 570Japan 370 360 303Asia (excluding Japan) 670 621 518Other markets 198 165 144

Total 3,204 3,040 2,545


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Board of Directors

Bernard ArnaultChairman and Chief Executive Officer

Pierre Godé Vice-Chairman

Antonio Belloni Group Managing Director

Antoine Arnault

Delphine Arnault

Nicolas Bazire

Bernadette Chirac (a)

Nicholas Clive Worms(a)

Charles de Croisset (a)

Diego Della Valle (a)

Albert Frère (a)

Gilles Hennessy

Marie-Josée Kravis (a)

Lord Powell of Bayswater

Yves-Thibault de Silguy (a)

Francesco Trapani

Hubert Védrine (a)

Advisory Board members

Paolo Bulgari

Patrick Houël

Felix G. Rohatyn

Executive Committee

Bernard ArnaultChairman and Chief Executive Officer

Antonio BelloniGroup Managing Director

Pierre GodéVice-Chairman

Nicolas BazireDevelopment and acquisitions

Yves CarcelleFondation Louis Vuitton

Chantal GaemperleHuman resources

Jean-Jacques GuionyFinance

Christopher de LapuenteSephora

Christophe NavarreWines and Spirits

Daniel PietteInvestment funds

Pierre-Yves RousselFashion

Philippe SchausTravel retail

Francesco TrapaniWatches and Jewelry

Jean-Baptiste VoisinStrategy

Mark WeberDonna Karan, LVMH Inc.

General secretary

Marc-Antoine Jamet

Performance Audit Committee


Nicholas Clive Worms(a)

Gilles Hennessy

Nominations and Compensation Committee

Albert Frère (a)

Charles de Croisset (a)


Statutory Auditors

DELOITTE & ASSOCIÉSrepresented by Thierry Benoit

ERNST & YOUNG et Autresrepresented by Olivier Breillot and Gilles Cohen


(a) Independent Director.

EXECUTIVE AND SUPERVISORY BODIES; STATUTORY AUDITORS

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66%

100%

100%

100%

100%

100%

100%

90%

100%

100%

100%

100%

100%

99%

100%

100%

34%

MOËT HENNESSY

Diageo

100%

100% 100%

100%

100%

100% 100%

99.9%

99%

100%

100%

100%

100%

LVMH SA

LV GROUP SA

Bulgari

ParfumsChristian Dior

Franck& Fils

Le BonMarché

LaSamaritaine

Sephora

Chaumet

FredKenzoParfums

Guerlain

ParfumsGivenchy

Make UpFor EverKenzo

Givenchy

Céline

Berluti

LouisVuitton

CapeMentelle

NewtonVineyards

CloudyBay

Moët & Chandon

Dom PérignonMercier

VeuveClicquot

Krug

Ruinart

DomaineChandonTerrazas

de los Andes

10 Cane

NumanthiaTermes

Hennessy

Wen JunSpirits

GlenmorangieArdbeg

Belvedere

SIMPLIFIED ORGANIZATIONAL CHART OF THE GROUP AS OF JANUARY 31, 2013


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91%

100%

96%

100%

100%

80%

100%

100%

96%

100%

61%

50%

65%

100%100%

100%

61%

100%

100% 100%

SOFIDIV SAS

100%

100%

100%

100%

100%

100%

100%

100%

Châteaud'Yquem

ThomasPink

100%

ChâteauCheval Blanc

Chevaldes Andes

SIDEditions

Connaissancedes Arts

InvestirLe Journal

des Finances

Les Echos

RadioClassique

SephoraUSA

DFSUSA

MiamiCruiseline

OleHenriksen

DonnaKaran

Fresh

BenefitCosmetics

MarcJacobs

LVMH Inc.LVMH BV

RoyalVan Lent

Loewe

50%De BeersDiamondJewellers

Hublot

Pucci

TAG Heuer

Zenith

Acquadi Parma

Fendi

DFS Asia

OTHER HOLDING COMPANIES


The Group also holds a 22.6% investment in Hermès International SCA(Paris, France).

The objective of this chart is to present the direct and/or indirectcontrol structure of brands and trade names by the Group’s mainholding companies. It does not provide a complete presentation of allGroup shareholdings.

■ Holding companies ■ Brands and trade names

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BUSINESS DESCRIPTION

1. WINES AND SPIRITS 101.1. Champagne and Wines 101.2. Cognac and Spirits 121.3. Wines and Spirits distribution 14

2. FASHION AND LEATHER GOODS 152.1. The brands of the Fashion and Leather Goods business group 152.2. Design 162.3. Distribution 162.4. Supply sources and subcontracting 16

3. PERFUMES AND COSMETICS 173.1. The brands of the Perfumes and Cosmetics business group 173.2. Research in Perfumes and Cosmetics in 2012 183.3. Supply sources and subcontracting 19

4. WATCHES AND JEWELRY 194.1. The brands of the Watches and Jewelry business group 194.2. Distribution 204.3. Supply sources and subcontracting 20

5. SELECTIVE RETAILING 215.1. Travel retail 215.2. Selective retail 21

6. OTHER ACTIVITIES 22


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Champagne shipments, for the whole Champagne region, break down as follows:

(in millions of bottles and percentage) 2012 2011 2010

Volumes Market Volumes Market Volumes Market share share share Region LVMH (as %) Region LVMH (as %) Region LVMH (as %)

France 171.4 9.9 5.8 181.6 10.6 5.8 185.0 12.6 6.8Export 137.4 47.9 34.9 141.4 48.4 34.2 134.5 43.2 32.1

Total 308.8 57.8 18.7 323.0 59.0 18.3 319.5 55.8 17.5

(Source: Comité Interprofessionnel des Vins de Champagne – CIVC).

1.1.1. The Champagne and Wine brands

LVMH produces and sells a very broad range of high qualitychampagne wines. In addition to the Champagne region, theGroup develops and distributes a range of high-end still andsparkling wines from well-known wine regions: France, Spain,California, Argentina, Brazil, Australia and New Zealand.

LVMH represents the leading portfolio of champagne brands,which hold complementary market positions. Dom Pérignonis a prestigious vintage produced by Moët & Chandon since1936. Moët & Chandon (founded in 1743), the leading winegrower and exporter of Champagne, and Veuve ClicquotPonsardin (founded in 1772), which ranks second in theindustry, are two quality internationally-known brands.Mercier (founded in 1858) is a brand designed for the Frenchmarket. Ruinart (the oldest of the Champagne Houses, foundedin 1729) has a development strategy that is carefully targetedon a number of priority markets, which are currently mainly in Europe. Krug (founded in 1843 and acquired by LVMH inJanuary 1999) is a world famous brand, specializing exclusivelyin high-end vintages. The Montaudon brand, purchased at theend of 2008, was sold in December 2010.

The Chandon brand (created in 1960 in Argentina) includesthe Moët Hennessy wines developed in California, Argentina,Brazil and Australia by Chandon Estates.

The Group also owns a number of prestigious wines from theNew World: Cape Mentelle and Green Point in Australia,Cloudy Bay in New Zealand, Newton in California andTerrazas de los Andes in Argentina.

Château d’Yquem, which joined LVMH in 1999, is the mostprestigious of the Sauternes. It owes its excellent internationalreputation to its 110 hectare vineyard located on a mosaic ofexceptional soils and to the extreme care taken in its preparationthroughout the year.

In 2008, LVMH acquired the Spanish wine companyNumanthia Termes, founded in 1998 and located at the heartof the Toro region.

In 2009, LVMH proceeded with the acquisition of a 50% stakein the prestigious winery Château Cheval Blanc, PremierGrand Cru classé A Saint-Émilion. Château Cheval Blanc ownsa 37 hectare domain within the Saint-Émilion appellation. The strictest respect for the purest traditions of winemakingcharacterizing the Bordeaux grand crus, a terroir of superiorquality, and an atypical blend of grape varietals give its winesan exceptional balance and unique personality. Château ChevalBlanc has been consolidated on a proportional basis sinceAugust 2009.

1.1.2. Competitive position

In 2012, shipments of LVMH champagne brands declined in volume by 2% while shipments from the Champagne regionas a whole were down 4%. Thus, the market share of the LVMHbrands was 18.7% of the total shipments from the region,compared to 18.3% in 2011 (source: CIVC).

1.1. Champagne and Wines

In 2012, revenue for Champagne and Wines was 1,980 million euro, representing 48% of the total revenue of the Wines and Spiritsbusiness group.

The activities of LVMH in the Wines and Spirits sector aredivided between two branches: the Champagne and Winesbranch and the Cognac and Spirits branch. The Group’s strategyis focused on the high-end segments of the global wine andspirits market.

In 2012, revenue for the Wines and Spirits business groupamounted to 4,137 million euros, or 15% of the LVMH group’stotal revenue.

1. WINES AND SPIRITS



Wines and Spirits

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The geographic breakdown of LVMH champagne sales in 2012is as follows (as a percentage of total sales expressed in numberof bottles):

(in percentage) 2012 2011 2010

Germany 5 5 5United Kingdom 9 10 10United States 18 19 18Italy 5 5 5Switzerland 2 2 2Japan 7 6 6Other export 36 35 32

Total export 83 82 78France 17 18 22

Total 100 100 100

1.1.3. The champagne production method

The name Champagne covers a defined area classified A.O.C.(Appellation d’Origine Contrôlée), which covers the 34,000 hectaresthat can be legally used for production. Only three types ofgrape varietals are authorized for the production of champagne:chardonnay, pinot noir and pinot meunier. The preparationmethod used for wines produced outside the Champagne region,but using the winemaking techniques used for champagne, iscalled the “champenoise method”.

In addition to its effervescence, the primary characteristic ofchampagne is that it is the result of blending wines from differentyears and/or different varieties and land plots. The best brandsare distinguished by their masterful blend and constant qualitywhich is achieved thanks to the talent of their wine experts.

Weather conditions significantly influence the grape harvestfrom one year to the next. The production of champagne alsorequires aging in cellars for two years or more for the “premium”vintages, which are the vintages sold at more than 110% of theaverage sale price. To protect themselves against crop variationsand manage fluctuations in demand, but also to ensureconstant quality over the years, the LVMH Champagne Housesconstantly adjust the quantities available for sale and keep reservewines in stock. Since a lower harvest can impact sales for two orthree years, or more, LVMH constantly maintains significantchampagne inventories in its cellars. As of December 31, 2012these inventories represented approximately 264 million bottles,the equivalent of 4 years of sales; in addition, there are also13 million equivalent bottles of quality reserve held from sale,in accordance with professional rules applicable.

1.1.4. Grape supply sources and subcontracting

The Group owns 1,717 hectares of champagne under production,which provide a little more than one-fourth of its annual needs.In addition, Group companies purchase grapes and wines fromwine growers and cooperatives on the basis of multi-yearagreements; the largest supplier of grapes and wines representsless than 10% of total supplies for the Group’s brands. Until1996, a theoretical price was published by the industry; to thiswere added specific premiums negotiated individually betweenwine growers and merchants. Since 1996, industry agreementshave been signed and renewed, with a view to limiting upwardor downward fluctuations in grape prices. The most recentrenewal of this agreement dates back to 2009, setting theframework for negotiations relating to harvests from 2009 to2013. Each individual agreement must now include anindexation clause for grape prices. The recommended benchmarkis the average sales price of a bottle of champagne, whichensures better value distribution for the market participantsand more control over grape price speculation.

For about ten years, wine growers and merchants have establisheda qualitative reserve that will allow them to cope with variableharvests. The surplus inventories stockpiled this way can besold in years with a poor harvest. These wines stockpiled in thequalitative reserve provide a certain security for future years withsmaller harvests.

For the 2012 harvest, the Institut National des Appellations d’Origine(INAO, the French organization responsible for regulatingcontrolled place names) set the maximum yield for the Champagneappellation at 11,000 kg/ha. This maximum yield representsthe maximum harvest level that can be made into wine andsold under the Champagne appellation. In 2006, the INAOredefined the legal framework for the abovementioned stockpiledreserves. It is now possible to harvest grapes beyond themarketable yield within the limits of a ceiling referred to as thePlafond limite de classement (PLC), the highest permitted yieldper hectare. This ceiling is determined each year depending onthe maximum total yield. It was set at 1,000 kg/ha for the 2012harvest. Grapes harvested over and above the marketable yieldare stockpiled in reserve, kept in vats and used to complementpoorer harvests. The maximum level of this stockpiled reserveis set at 10,000 kg/ha.

The price paid for each kilogram of grapes in the 2012 harvestranged between 5.20 euros and 6.05 euros depending on thevineyard, a 3.4% increase compared to 2011.

Dry materials (bottles, corks, etc.) and all other elementsrepresenting containers or packaging are purchased from non-Group suppliers.

The Champagne Houses used subcontractors primarily forbottle handling and storing operations; these operationsrepresented approximately 18 million euros in 2012.


Wines and Spirits


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The leading geographic markets for cognac, both for the industry and for LVMH, on the basis of shipments in number of bottles,excluding bulk, are as follows:

(in millions of bottles and percentage) 2012 2011 2010(a)

Volumes Market Volumes Market Volumes Market share share share Region LVMH (as %) Region LVMH (as %) Region LVMH (as %)

France 3.6 0.3 8.3 4.0 0.3 6.7 4.2 0.3 6.4Europe (excluding France) 38.8 9.1 23.5 39.1 8.6 22.1 38.4 9.0 23.4United States 49.5 29.1 58.8 48.2 27.9 57.9 46.4 27.3 59.0Japan 1.2 0.7 58.3 1.2 0.7 59.0 1.4 0.7 52.8Asia (excluding Japan) 62.3 25.6 41.1 57.5 23.1 40.2 50.0 21.8 43.5Other markets 8.3 4.9 59.0 7.6 4.2 55.7 7.3 3.6 50.8

Total 163.7 69.7 42.6 157.6 64.8 41.1 147.5 62.7 42.5

(a) Figures provided for shipments in 2010 have been corrected to reflect definitive statistics and for this reason no longer correspond to the volumes indicated in the 2010 Reference Document.(Source: Bureau National Interprofessionnel du Cognac – BNIC).

1.2.1. Cognac and Spirits brands

LVMH holds the most powerful brand in the cognac sector withHennessy. The company was founded by Richard Hennessy in 1765. Historically, the leading markets for the brand wereIreland and Great Britain, but Hennessy rapidly expanded itspresence in Asia, which represented nearly 30% of its shipmentsas early as 1925. The brand became the world cognac leader in 1890. Hennessy created X.O (Extra Old) in 1870 and, sincethen, has developed a line of high-end cognac that has made its reputation.

Since 2007, LVMH has held a 100% ownership interest inMillennium, a producer and distributor of high-end vodkaunder the Belvedere (1) brand name (and also Chopin until2010, when the distribution rights for this brand were sold).Millennium was founded in 1993 in order to bring to theAmerican market a luxury vodka for connoisseurs. In 1996,Belvedere and Chopin were introduced in this market. ThePolmos Zyrardow distillery in Poland, which develops theluxury vodka Belvedere, was founded in 1910 and purchasedby Millennium in 2001, when it was privatized. In 1999, thecompany decided to develop flavored vodkas.

LVMH acquired Glenmorangie in 2005. The Glenmorangiegroup holds the single malt whisky brands Glenmorangie andArdbeg.

In the spring of 2005, LVMH launched a handcrafted luxuryrum in the American market, under the 10 Cane brand, whichreflects the expertise of the Group at every stage of production.

In May 2007, the Group acquired 55% of the share capital ofWen Jun Spirits and Wen Jun Spirits Sales, which produceand distribute baijiu (white liquor) in China.

1.2.2. Competitive position

In 2012, the volumes shipped from the Cognac region were up4% from 2011, while the volumes of Hennessy shipped increasedby 8%. The market share of Hennessy was 42.6%, comparedto 41.1% in 2011 (source: Bureau National Interprofessionnel duCognac – BNIC). The company is the world leader in cognac,with particularly strong positions in the United States and Asia.

1.2. Cognac and Spirits

In 2012, revenue for the Cognac and Spirits segment totaled 2,157 million euros, or 52% of the total revenue for the Wines and Spiritsbusiness group.



Wines and Spirits

(1) There is no relationship between the Belvedere brand owned by LVMH and Belvédère, the French wines and spirits group.

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The geographic breakdown of LVMH cognac sales, as a percentageof total sales expressed in number of bottles, is as follows:

(in percentage) 2012 2011 2010

United States 42 43 44Japan 1 1 1Asia (excluding Japan) 37 36 35Europe (excluding France) 13 13 14Other export 7 7 6

Total export 100 100 100France - - -

Total 100 100 100

1.2.3. The cognac production method

The Cognac region is located around the Charente basin. Thevineyard, which currently extends over about 75,000 hectares,consists almost exclusively of the white ugni varietal whichyields a wine that produces the best eaux-de-vie.

This region is divided into six vineyards, each of which has itsown qualities: Grande Champagne, Petite Champagne, Borderies,Fins Bois, Bons Bois and Bois Ordinaires. Hennessy selects its eaux-de-vie from the first four vineyards, where the quality ofthe wines is more suitable for the preparation of its cognacs.

Charentaise distillation is unique because it takes place in twostages, a first distillation (première chauffe) and a second distillation(seconde chauffe). The eaux-de-vie obtained are aged in oak barrels.An eau-de-vie at full maturity is not necessarily a good cognac.Cognac results from the gradual blending of eaux-de-vie selectedon the basis of vintage, origin and age.

1.2.4. Supply sources for wines and cognac eaux-de-vie and subcontracting

Hennessy owns 173 hectares. The Group’s vineyard has remainedvirtually stable since 2000, after 60 hectares of vines were clearedin 1999 as part of the industry plan implemented in 1998.The objective of the plan was to reduce the production areathrough premiums offered for clearing and assistance given towine growers to encourage them to produce wines other thanthose used in the preparation of cognac.

Most of the wines and eaux-de-vie that Hennessy needs for itsproduction are purchased from a network of approximately2,500 independent producers, a collaboration which enablesthe company to ensure that exceptional quality is preserved.Purchase prices for wine and eaux-de-vie are established betweenthe company and each producer based on supply and demand.In 2012, the price of eaux-de-vie from the harvest increased by11% compared to the 2011 harvest.

With an optimal inventory of eaux-de-vie, the Group can managethe impact of price changes by adjusting its purchases fromyear to year.

Hennessy continued to control its purchase commitments for

the year’s harvest, and diversify its partnerships to prepare itsfuture growth in various qualities.

Like the Champagne and Wine businesses, Hennessy obtainsits dry materials (bottles, corks and other packaging) from non-Group suppliers. The barrels and casks used to age thecognac are also obtained from non-Group suppliers.

Hennessy makes only very limited use of subcontractors for itscore business.

1.2.5. The vodka production method, supply sourcesand subcontracting

Vodka can be obtained from the distillation of various grains orpotatoes. Belvedere vodka is the result of the quadrupledistillation of Polish rye. The distillery that prepares Belvedere,owned by Millennium, performs three of these distillationsitself in Zyrardow, Poland. It uses water purified using a specialprocess that yields a vodka with a unique taste.

Belvedere flavored vodkas are obtained by macerating fruits in a pure vodka prepared using the same process as the oneused for non-flavored vodka, and distillation takes place in aCharente-type still.

Overall, Millennium’s top raw eaux-de-vie supplier representsless than 35% of the company’s supplies.

1.2.6. The whisky production method

The legal definition of Scotch Whisky states that the spirit mustbe produced at a distillery in Scotland from water and maltedbarley to which other cereals may be added, fermented byyeast, distilled and matured in Scotland in oak casks with avolume of less than 700 liters for a minimum of three years.Single Malt Scotch Whisky is the product of one singledistillery. Blended Scotch Whisky is made by mixing malt andgrain whiskies together.

According to the rules for producing malt whisky, the malt isfirst ground, which produces a mixture of flour and huskscalled grist. This product is then mixed with hot water in largewooden tubes called wash tuns in order to extract the sugarsfrom the malted barley. The resulting sugary liquid, known as worsts, is transferred to a fermentation vessel or wash back andyeast is added to allow fermentation to occur and alcohol to becreated. This alcoholic liquid, known as wash, then undergoesa double distillation in copper pot stills, known as wash andspirit stills. Every distillery’s stills are unique in shape and sizeand have a huge impact on flavor. Glenmorangie’s stills are thehighest in Scotland at 5.14 meters and allow only the lightestvapors to ascend and condense. The spirit still at Ardbeg has aunique spirit purifier.

This newly made spirit is filled into oak ex-bourbon barrelsand matured in a distillery warehouse for at least three years.Maturation is a very critical part of the production processproviding the whiskies’ color and additional flavors. Glenmorangieand Ardbeg are normally matured for a minimum of 10 yearsin very high quality casks.


Wines and Spirits


1_VA_V5 26/03/13 20:27 Page13

LVMH’s Wines and Spirits are distributed to the world’s majormarkets primarily through a network of internationalsubsidiaries, some of which are joint ventures with the spiritsgroup Diageo plc. In 2012, 29% of champagne and cognacsales were made through this channel.

Diageo also has a 34% stake in Moët Hennessy which is theholding company of the LVMH group’s Wines and Spiritsbusinesses.

Since 1987, LVMH and Guinness (prior to the creation ofDiageo) have signed agreements leading to the creation of jointventures for the distribution of their top brands, includingMHD in France and Schieffelin & Somerset in the United States.This joint network strengthens the positions of the two groups,improves distribution control, enhances customer service, andincreases profitability by sharing distribution costs.

At the end of 2004, LVMH and Diageo announced they wereseparating their distribution business in the United States, runwithin the joint venture Schieffelin & Somerset; this agreement

does not change the distribution of the products of the two groupsto joint distributors, implemented on this market since 2002.Following this agreement, LVMH announced early in 2005 the creation of Moët Hennessy USA, which now markets all theLVMH brands of Wines and Spirits in the United States.

In 2010, LVMH and Diageo reorganized their productdistribution channels in Japan. Moët Hennessy refocused onthe distribution of its own brands of champagnes and spiritstogether with some of Diageo’s ultra-premium spirits brands,while the distribution of Diageo’s premium brands was transferredto a joint venture between Kirin and Diageo.

Until 2011, a joint venture between LVMH and Whitehall wasresponsible for the distribution of the Group’s Wines andSpirits brands in Russia. Since 2011, as a result of the buyoutby LVMH of Whitehall’s stake in the joint venture, a subsidiarywholly owned by Moët Hennessy has been responsible for thisdistribution.

1.3. Wines and Spirits distribution

1.2.7. The 10 Cane rum production method

The rum category is not highly regulated. With the exceptionof “Agricultural Rums”, there is no Appellation Contrôlée. It is,however, possible to distinguish two groups based on themethod of processing sugar cane: rums made from molasses, aby-product of the sugar refinement process, and rums preparedfrom a wine with a very diluted cane juice base as is the case inthe French Antilles, for example.

The 10 Cane distillery on the island of Trinidad only uses thejuice from the first pressing, and everything else is rejected.After the gradual fermentation of the pure undiluted canejuice, the distillery uses an ancestral and expressive distillationmethod. Double distillation in Charente stills highlights the qualities of the cane wine and, ultimately, the rum. Afterdistillation, maturation can begin in aged oak barrels from theFrench Limousin region that are lightly toasted.

For the installation of its production facility, the 10 Canedistillery partnered with Angostura Trinidad Distillers, whichhas been present on the island for several generations. However,10 Cane retains control in the most sensitive areas.

1.2.8. Production method for Wen Jun spirits

Wen Jun is one of the oldest and most celebrated luxury spiritproducers in China. The spirits produced by Wen Jun are whiteliquors of the “Nong” (aromatic) style, the most popular in thecountry. They are produced from spring water and various grains,primarily wheat, rice, sorghum, maize and glutinous rice.

The fermentation process is carried out in a pit dug into theground, measuring three meters on each side and in depth,whose walls are covered with a special putty mixture containingparticular enzymes and bacteria beneficial to flavor development.The grains are sealed into the pit with a fermenting agent forabout 70 days prior to distilling. The product obtained at theend of the distillation process is then aged for a year in ceramicjars large enough to hold 1,100 liters of the liquid. At the end of this aging process, the product is finally blended andbottled. The fermentation quality of Chinese white spirits isclosely linked to the temperature, moisture and alkalinityconditions of the local environment. Sichuan, where the WenJun distillery has been located since the 16th century (Mingdynasty) is considered as an ideal environment for the productionof “Nong” white liquors.



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In the luxury Fashion and Leather Goods sector, LVMH holds a group of brands that are primarily French, but also includeSpanish, Italian, British and American companies.

Louis Vuitton (founded in 1854), the star brand of this businessgroup, first focused its development around the art of traveling,creating trunks, rigid or flexible luggage items, innovative,practical and elegant bags and accessories, before expanding its territory and its expertise in other areas of expression. Forover 150 years, its product line has continuously expanded withnew travel or city models and with new materials, shapes andcolors. Famous for its originality and the high quality of itscreations, today Louis Vuitton is the world leader in luxurygoods and, since 1998, has offered its international customers a full range of products: leather goods, ready-to-wear for menand women, shoes and accessories. Since 2002, the brand hasalso been present in the watch segment; Louis Vuitton launchedits first line of jewelry in 2004, its first eyewear collection in2005, and a line of High-End Leather Goods in 2011.

The principal leather goods lines of Louis Vuitton are:

- the Monogram line, a historical canvas created in 1896, alsoavailable in Monogram Vernis, Idylle and Multicolore;

- the Damier line for men, which is available in three colors -“ébène”, “azure” and “graphite”, and offers two variants,Damier géant and Damier infini;

- the Cuir Epi line, offered in several colors;

- Nomade and Taïga lines for men, Taïga being available in fourcolors;

- three soft leather lines: the embossed Monogram Empreinte;Mahina, with a subtle perforated Monogram design; andAntheia, in hand-embroidered suede.

Fendi, founded in Rome in 1925, one of the flagship brands ofItalian fashion, is part of the LVMH group since 2000. Particularlywell-known for its skill and creativity in furs, the brand is alsopresent in leather goods, accessories and ready-to-wear.

Donna Karan was founded in New York in 1984 and joinedthe LVMH group in 2001. Its ready-to-wear lines, the exclusiveCollection line, and DKNY, a more casual clothing line, meetthe needs of a very modern and international lifestyle.

Loewe, the Spanish company created in 1846 and acquired by LVMH in 1996, originally specialized in very high qualityleather work. Today it is present in leather goods and ready-to-wear. The Loewe perfumes are included in the Perfumesand Cosmetics business group.

Marc Jacobs, created in New York in 1984, is the brand nameof Louis Vuitton’s eponymous creative Director, and is expandingrapidly in fashion for men and women; LVMH has been incharge of the distribution of its products since 1997.

Céline, founded in 1945 and owned by LVMH since 1996, is developing a ready-to-wear line, leather goods, shoes andaccessories.

Kenzo, formed in 1970, joined the LVMH group in 1993.Today, the company operates in the areas of ready-to-wear for men and women, fashion accessories, leather goods andhome furnishings. Its perfume business is part of the Perfumesand Cosmetics business group.

Givenchy, founded in 1952 by Hubert de Givenchy and partof the LVMH group since 1988, a company rooted in a traditionof excellence in Haute Couture, is also known for its collectionsof men and women’s ready-to-wear and its fashion accessories.The Givenchy perfumes are included in the LVMH Perfumesand Cosmetics business group.

Thomas Pink, a brand formed in 1984, is a recognized specialistin high-end shirts in the United Kingdom. Since joining the LVMH group in 1999, the brand has been accelerating itsinternational growth.

Emilio Pucci, an Italian brand founded in 1947, is a symbol ofcasual fashion in luxury ready-to-wear, a synonym of escapeand refined leisure. Emilio Pucci joined LVMH in 2000.

Berluti, an artisan bootmaker established in 1895 and held by LVMH since 1993, designs and markets very high qualitymen’s shoes, a line of leather goods, now enriched with a line of ready-to-wear for men.

Rossimoda, an Italian company founded in 1942, which joinedthe Group in 2003, specializes in the manufacturing anddistribution of luxury women’s footwear.

2.1. The brands of the Fashion and Leather Goods business group

The Fashion and Leather Goods business group includes LouisVuitton, the world’s leading luxury brand, Donna Karan,Fendi, Loewe, Céline, Kenzo, Marc Jacobs, Givenchy, ThomasPink, Pucci, Berluti and Rossimoda. This exceptional group ofbrands, born in Europe and the United States, has 1,280 storesaround the world. While respecting the identity and creative

positioning of each of its brands, LVMH supports theirdevelopment by providing shared resources.

In 2012, the Fashion and Leather Goods business group postedrevenue of 9,926 million euros, representing 35% of the totalrevenue of LVMH.

2. FASHION AND LEATHER GOODS


Fashion and Leather Goods


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In Fashion and Leather Goods, manufacturing capacities and the use of subcontracting vary significantly, depending onthe brand.

The seventeen leather goods manufacturing shops of LouisVuitton Malletier, twelve in France, three in Spain and two in the United States, provide most of the brand’s production.All development and production processes for Louis Vuitton’sentire footwear line are handled at its site in Fiesso d’Artico,Italy. Louis Vuitton Malletier uses third parties only tosupplement its manufacturing and achieve productionflexibility in terms of volumes.

Louis Vuitton Malletier purchases its materials from supplierslocated around the world, with whom Louis Vuitton Malletierhas established partnership relationships. The supplier strategyimplemented over the last few years has enabled requirementsto be fulfilled in terms of volumes, quality and innovation,thanks to progressive diversification and by limiting dependencyon suppliers. In 2009, Louis Vuitton Malletier initiated anintegration strategy, notably via a joint venture agreement withTannerie Masure, a longstanding supplier of premium-qualityvegetable-tanned leathers. This partnership resulted in thecreation of Tanneries de la Comète, where hides are tanned

exclusively for Louis Vuitton, using vegetable tannins. In 2011,the acquisition of a stake in Heng Long, an exotic leather tannery,also contributed to mastering this savoir-faire, and helped secureaccess to strategic supplies. This strategy continued in 2012,with the acquisition of Tanneries Roux, a French supplierof premium-quality calfskin. For Louis Vuitton, the leadingsupplier of hides and leathers represents about 16% of its totalsupplies of these products.

Fendi and Loewe have leather workshops in their country oforigin, and in Italy for Céline, which cover only a portion of theirproduction needs. Generally, the subcontracting used by the business group is diversified in terms of the number ofsubcontractors and is located primarily in the country of originof the brand: France, Italy and Spain.

Overall, the use of subcontractors for Fashion and Leather Goodsoperations represented about 41% of the cost of sales in 2012.

Finally, for the various Houses, the fabric suppliers are oftenItalian, but on a non-exclusive basis.

The designers and style departments of each House ensure thatmanufacturing does not generally depend on patents or exclusiveexpertise owned by third parties.

2.4. Supply sources and subcontracting

Controlling the distribution of its products is a core strategicvector for LVMH, particularly in luxury Fashion and LeatherGoods. This control allows the Group to benefit from distributionmargins, and guarantees strict control of the brand image, sales reception and environment that the brands require. It alsogives the Group closer contacts with its customers so that it canbetter anticipate their expectations.

In order to meet these objectives, LVMH created the firstinternational network of exclusive boutiques under the bannerof its Fashion and Leather Goods brands. This networkincluded 1,280 stores as of December 31, 2012.

2.3. Distribution

Whether they belong to the world of Haute Couture or luxuryfashion, the LVMH brands have founded their success first andforemost on the quality, authenticity and originality of theirdesigns that must be renewed with each season and eachcollection. Thus, a strategic priority is to strengthen the designteams, ensure the collaboration of the best designers, and adapttheir talent to the spirit of each brand.

LVMH believes that one of its essential assets is its ability toattract a large number of internationally recognized designersto its companies. Marc Jacobs has designed the Louis Vuittonready-to-wear collections since 1998, supervises the creation of shoes and is successfully recreating the great classics of thebrand in leather goods. Karl Lagerfeld is in charge of the creationof Fendi’s ready-to-wear line for women, Silvia Fendi being in charge of accessories and men’s ready-to-wear collections.

Phoebe Philo was appointed as Céline’s new creative Directorin 2008. The fashion designer Riccardo Tisci, who has been the creative Director of Givenchy’s Haute Couture, ready-to-wearand accessories lines for women since 2005, was givenresponsibility for the brand’s ready-to-wear line for men in 2008as well. Stuart Vevers is Loewe’s creative Director since 2008.In 2011, Humberto Leon and Carol Lim were appointed ascreative directors for all of the Kenzo collections. Donna Karancontinues to create the lines of the company that bears her name.In 2008, Peter Dundas was named as Emilio Pucci’s creativeDirector. Olga Berluti, the heiress of the expertise built up byher predecessors, is perpetuating the unique style and qualityof Berluti shoes. In 2011, Alessandro Sartori was appointed as the brand’s new creative Director to launch its first men’sready-to-wear collection.

2.2. Design




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Parfums Christian Dior was born in 1947, the same year asthe Fashion House Christian Dior, with the introduction of theMiss Dior perfume. While developing its lines of fragrances formen and women over the years, Parfums Christian Dior expandedits activity to the make-up sector in 1955, and to skincareproducts in 1973. François Demachy, perfumer and creativeDirector, and Tyen, creative Director for make-up, both buildon Christian Dior’s rich heritage and legacy. Today, ParfumsChristian Dior allocates 1.6% of its revenue to research and ison the cutting edge in innovation.

The brand’s iconic women’s fragrances are J’adore, Miss Dior,Poison and Dior Addict, a range broadened with the addition ofthe Escales collection. Eau Sauvage, Fahrenheit, Dune pour Hommeand Dior Homme are the brand’s leading fragrances for men. La Collection Privée Christian Dior, unveiled in 2010, a line of refined, hand-crafted fragrances bearing the signature ofFrançois Demachy, has consolidated Dior’s position as a makerof luxury perfumes.

Dior’s top cosmetics lines are: Capture, Diorsnow, Hydralife, L’Orde Vie, and Prestige, launched in 2011, for skincare products,and Dior Addict, Diorskin, Backstage, Rouge Dior and Diorshowfor make-up.

Guerlain, founded in 1828 by Pierre François Pascal Guerlain,has created more than 700 perfumes since its inception. Thebrand has an exceptional image in the perfume universe and many of its creations have enjoyed remarkable longevity.Today it is also known for its make-up and skincare lines.

Jicky, L’Heure Bleue, Mitsouko, Shalimar, Samsara, Aqua Allegoria,L’Instant de Guerlain, Insolence, Idylle and La Petite Robe Noirelaunched in 2012, for women, Habit Rouge, Vetiver, L’Instant de Guerlain pour Homme, and Guerlain Homme, for men, are thetop brand ambassadors.

Guerlain’s leading cosmetics lines are Orchidée Impériale, AbeilleRoyale and Super Aqua for skincare products, and Terracotta, Les Météorites, Lingerie de peau and KissKiss for make-up.

Parfums Givenchy, founded in 1957, complements Givenchy’sfashion lines with a range of fragrances for women and men,including Amarige, Organza, Very Irrésistible Givenchy, Ange ouDémon, Play for Her (launched in 2010) and Dahlia Noir(launched in 2011), in addition to Givenchy pour Homme, VeryIrrésistible pour Homme, and Play. Givenchy is also active incosmetics, offering skincare products as well as the make-upline Givenchy Le Makeup.

Parfums Kenzo appeared in 1988, and developed themselveswith the success of FlowerbyKenzo, launched in 2000. The brand diversified its activities in the “well-being” segment by launching the KenzoKi line in 2001. The following years sawthe launches of the women’s fragrance KenzoAmour and themen’s fragrance KenzoPower, the creation of KenzoHomme eau detoilette boisée, followed by the introduction of Eau de ParfumMadly Kenzo in 2011 and KenzoHomme Sport in 2012.

Benefit Cosmetics (created in 1976 in San Francisco andacquired by LVMH at the end of 1999) owes its rapid successto the high quality of its beauty and make-up products, whichconvey a true sense of pleasure and are enhanced by the playfulaspect of the product names and packaging. Aside from the sales through its 39 exclusive boutiques across the world(California, Chicago, New York, United Kingdom, HongKong, China and Sydney), the brand is currently distributed inover 3,000 points of sale in 39 countries across the world.

Fresh (created in 1991 and acquired by LVMH in September2000) initially built its reputation on creating body careproducts inspired by ancestral beauty recipes and entirely naturaland high quality fragrances, before expanding its concept tomake-up and hair care products.

3.1. The brands of the Perfumes and Cosmetics business group

LVMH group is present in the perfume and cosmetics sectorthrough its major French Houses Parfums Christian Dior, Guerlain, Givenchy and Kenzo. In addition to theseworld-renowned brands, this business group also includesBenefit Cosmetics and Fresh, two young, high-growthAmerican cosmetics companies, the prestigious Italian brandAcqua di Parma, Parfums Loewe, the Spanish brand with strongpositions in its domestic market, and Make Up For Ever, aFrench company initially specializing in professional make-upproducts. Fendi perfumes, launched recently, are also part ofthis business group.

The presence of a broad spectrum of brands within the businessgroup generates synergies and represents a market force. The volume effect means that advertising space can be purchasedat better prices and better locations can be negotiated indepartment stores. In research and development, the groupbrands have pooled their resources since 1997 with a joint

center in Saint-Jean de Braye (France), at the industrial site ofParfums Christian Dior. The use of shared services by subsidiariesincreases the effectiveness of support functions for worldwidedistribution and facilitates the expansion of the newest brands.These economies of scale permit larger investments in designand advertising, two key factors for success in Perfumes andCosmetics.

The Group’s Perfumes and Cosmetics brands are sold mainlythrough “selective retailing” channels (thus as opposed tomass-market retailers and drugstores), although certain brandsalso sell their products in their own stores. There were a total of 94 points of sale of this type for the business group as ofDecember 31, 2012.

In 2012, the Perfumes and Cosmetics business group postedrevenue of 3,613 million euros, representing 13% of LVMH’stotal revenue.

3. PERFUMES AND COSMETICS


Perfumes and Cosmetics


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Innovation plays a major role in the growth strategy of thePerfumes and Cosmetics business group, especially given thecurrent focus on speeding up the development of new products.The various research entities established by the Group’s brandsare brought together under an umbrella organization, the GIE (Groupement d’Intérêt Économique) LVMH Recherche, aconsortium which helps build numerous synergies in the areaof research and in the development of new formulations for cosmetics products. LVMH Recherche also monitorsdevelopments in regulations with a view to making theproducts available for sale around the world. In a periodcharacterized by profound changes in regulatory constraintsrelating to raw materials and in procedures for the registrationof products in various countries, the consortium coordinatesregulatory compliance for all of the LVMH group’s brandsinvolved in the perfumes and cosmetics business.

In Saint-Jean de Braye at the heart of the competitiveness clusterknown as Cosmetic Valley, more than 260 scientists, researchers,chemists, biologists, pharmacists and physicians work onbehalf of the development of all skincare, make-up and perfumeproducts for the brands Parfums Christian Dior, Guerlain,Parfums Givenchy and Fresh, as well as the development of certain products for a number of other Group companies:Benefit, Make Up For Ever, Parfums Kenzo, Acqua di Parma,Fendi, Pucci and Loewe. By bringing together resources andexpertise at a single site, LVMH Recherche is able to conductapplied research projects, in association with partners andleading universities, supporting product development for all of the business group’s brands.

In 2012, the consortium’s research and development teamsconsolidated their work in their key areas of upstream researchand development. For upstream research, an automated systemhas been installed to screen active ingredients which can greatlyexpand testing capabilities and facilitate discoveries relating to skincare products. In the area of histology, visualizationmethods associated with new models for skin cell cultures haveresulted in the discovery of new biological targets involved inskin aging and repair. LVMH Recherche also continued its workon skin stem cells for high-performance skincare products(Capture Totale by Dior).

With respect to development, new encapsulation technologiesfor natural products have come to light, as well as a newformulation for cloth facial masks in luxury lace impregnatedwith a super-hydrating gel made of plant-based glycerol and

jojoba esters (Givenchy). Furthermore, LVMH Recherche staffconducted research on new ingredients providing optimalbenefits far exceeding those of components traditionally usedin certain formulations. Collaborations between skincareexperts and make-up specialists have given rise to a range of skin beautifiers known as “perfect skin” products, thanks tothe combined use of fine emulsions and a mixture of naturalpowders and pigments.

Innovations focusing on make-up involve the quest for evermore advanced textures, whether through the development of complex wax mixtures for high-gloss lipstick or the creationof new high-intensity black pigments for mascaras offeringgreater volume and enhancing eye definition.

Teams continued their research into natural products.Orchidarium, Guerlain’s international platform for orchidresearch, expanded its collections of wild species for conservationand pursued the development of its reforestation program. In addition, continuing phytochemical research has led to thediscovery of the cellular bio-energetic properties of a new orchid,used in Guerlain’s Orchidée Impériale skin care line. Roses werean important area of study, with the use of a black rose extractderived using the process known as enfleurage to improve skin’sdefenses and the development of the “Jardin de Granville” rose to provide key components for Parfums Christian Dior’sPrestige line. New methods for in vivo analysis have resulted in the creation of a skin vitality index and a technique for theassessment of changes in skin due to aging. Research facilitiesin Japan and China have forged new partnerships for strategicprojects relating to new make-up and skincare formulations.

In response to ongoing major developments in European lawand cosmetics regulations around the world, LVMH Recherche’steams have made the necessary changes to their product safetyassessment methods. Backed by studies conducted for severalyears now and working closely with industry representatives,the laboratories have successfully integrated new in silicomethods (involving computer simulations) which can helpidentify the toxicological profiles of new molecules on the basisof their chemical structure. LVMH is one of a very smallhandful of players in the perfume and cosmetics industry whonot only take part in the international validation of alternativemethods but who has also developed its own in vitro toxicologyunit, whose commitment to “Bonnes Pratiques de Laboratoire”(BPL, good laboratory practices) has been recognized by thesupervisory authorities in France.

3.2. Research in Perfumes and Cosmetics in 2012

Loewe introduced its first perfume in 1972. A major player inSpain, the brand is also developing its international business,primarily in Russia, the Middle East and Latin America.

Make Up For Ever (created in 1984) joined LVMH in 1999.The brand specializes in professional make-up and its applicationsfor consumers. Its products are distributed in exclusive boutiquesin Paris, New York, Los Angeles and Dallas, and in a numberof selective retailing circuits, particularly in France, Europe,the United States (markets developed in partnership withSephora), and also in China, South Korea and the Middle East.

Acqua di Parma, founded in 1916 in Parma and acquired by LVMH in 2001, is a luxury perfume brand and a symbol ofItalian high fashion. The brand specializes in perfumes andskincare and has diversified its product line to include homescents and linens. Now based in Milan, Acqua di Parma relieson an exclusive retailing network, including a brand store inMilan and Paris.

Parfums Fendi successfully transposed the aesthetic appeal,elegance and values of the House of Fendi into the world ofperfume with the launch of the fragrance Fan di Fendi in 2010.




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TAG Heuer, founded in 1860 in the Swiss Jura town of Saint-Imier and acquired by LVMH in November 1999, hasforged strong ties over the years with the world of competitivesports, reflected in the brand’s core performance values. TAGHeuer is recognized for the quality and precision of its timepieces,combined with cutting-edge design aesthetics. Its mostcoveted professional sport watches are the Aquaracer, Link andFormula 1 lines. For traditional watches and chronographs, the Carrera and Monaco models enjoy strong followings. In2010, the brand launched the Calibre 1887, its first automatic

movement developed and built in-house. Via licenses, TAGHeuer is also active in the eyewear segment and in cellularhandsets, with Meridiist, designed in partnership with ModeLabs.

Hublot, founded in 1980 and part of the LVMH group since2008, has always been an innovative brand, creating the firstwatch in the industry’s history fitted with a natural black rubberstrap. Relying on a team of top-flight watchmakers, the brandis widely renowned for its original concept combining noblematerials with state-of-the-art technology and for its iconic

4.1. The brands of the Watches and Jewelry business group

The most recent LVMH business group holds a portfolio ofquality watch and jewelry brands with highly complementarymarket positions: TAG Heuer, the world’s leading maker of luxurysports watches and chronographs; Hublot, a recent high-endwatchmaker; the luxury watchmaker Zenith, which has its ownmanufacture; Montres Dior, which offers collections inspired by the designs of the Fashion House; Bulgari, the pace-setter for Italian fine jewelry since 1884; Chaumet, the prestigioushistoric jeweler on Place Vendôme in Paris; Fred, a designer ofcontemporary jewelry pieces; and De Beers Diamond Jewellers,a joint venture formed in July 2001, which has continued to solidify its position as diamond jeweler.

The business group has already deployed internationally,strengthened the coordination and pooling of administrative

resources, expanded its sales and marketing teams, andprogressively began to establish a network of after-sale multi-brand services worldwide to improve customer satisfaction.LVMH Watches and Jewelry has a territorial organization thatcovers all European markets, the American continent, northernAsia, Japan, and the Asia-Pacific region.

This business group has implemented industrial coordinationthrough the use of shared resources, such as prototype designcapacities, and by sharing the best methods for preparinginvestment plans, improving productivity and negotiatingpurchasing terms with suppliers.

In 2012, the Watches and Jewelry business group postedrevenue of 2,836 million euros, which represented 10% of totalLVMH revenue.

4. WATCHES AND JEWELRY

The five French production centers of Guerlain, ParfumsChristian Dior and LVMH Fragrance Brands provide almost allthe production for the four major French brands, includingKenzo, both in fragrances, and in make-up and beauty products.Make Up For Ever also has manufacturing capacities in France.The manufacturing of Benefit, Parfums Loewe, Fresh andParfums Fendi’s products is partly provided by the Group’s otherbrands, the remainder being subcontracted externally.

In 2012, manufacturing subcontracting represented overall about8% of the cost of sales for this activity, plus approximately9 million euros for logistical subcontracting.

Dry materials, such as bottles, stoppers and any other items thatform the containers or packaging, are acquired from suppliersoutside the Group, as are the raw materials used to elaborate thefinished products. In certain cases, these materials are availableonly from a limited number of French or foreign suppliers.

The product formulas are developed primarily in the Saint-Jeande Braye (France) laboratories, but the Group can also acquireor develop formulas from specialized companies, particularlyfor perfume essences.


Research projects have also been pursued by LVMH Recherchein cooperation with Cosmetic Valley. In addition, LVMHRecherche continues to demonstrate its commitment toconsistently protecting its inventions via patents.

The full breadth of research activities conducted by LVMHRecherche resulted in a number of scientific papers presentedat various specialized international scientific conferences.LVMH Recherche held its 12th International ScientificSymposium in Paris, on the depletion of natural resources

and cosmetic raw materials, and the strategies developed.LVMH Recherche also continued its active involvement in theestablishment of a scientific photography exhibition inassociation with La Recherche, the French scientific journal, so asto underscore the important role played by scientificphotography in raising the profile of research work.

Progress made on the construction of the new “HELIOS”research center means that it remains on schedule for its grandopening in the second half of 2013.


Watches and Jewelry


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With its Swiss workshops and manufactures, located in Le Locle,La Chaux-de-Fonds, Neuchâtel, Cornol, Le Sentier and inNyon, the Group provides almost the entire assembly of thewatches and chronographs sold under the TAG Heuer, Hublot, Zenith, Bulgari, Christian Dior, Chaumet and Fredbrands, as well as the design and manufacturing of themechanical movements El Primero and Elite from Zenith, the Calibre 1887 from TAG Heuer, UNICO from Hublot andthe Hautes Complications from Bulgari. In 2011, TAG Heueracquired the entire share capital of ArteCad, a leading Swissmanufacturer of watch dials, and Hublot acquired the entire

share capital of Profusion, a supplier of carbon fiber parts andcomponents, which complements TAG Heuer and Bulgari’scurrent capacity for critical components such as dials, cases andstraps. Zenith’s manufacture in Le Locle underwent a majorrenovation in 2012.

In this business, subcontracting represented 12% of the cost of sales in 2012.

Even though the Group can, in certain cases, use third partiesto design its models, they are most often designed in its ownstudios.


The Watches and Jewelry brands’ store network comprised347 stores as of December 31, 2012. The jewelry brands’products are thus showcased in prestigious positions, located insome of the largest cities in the world. Moreover, TAG Heuer

and Hublot are developing their store networks, includingthose that are directly operated and those operating underfranchise, by obtaining strategically located locations whichcontribute to the visibility of their products.

4.2. Distribution

Big Bang model launched in 2005. Along with the many versionsof this model, Hublot has relaunched its long-establishedClassic Fusion line.

Zenith (founded in 1865 and established in Le Locle near theSwiss Jura region) joined LVMH in November 1999. Zenithbelongs to the very select group of watch movement manufactures.In the watchmaking sector, the term manufacture designates a company that provides the entire design and manufacturingof mechanical movements. The two master movements ofZenith, the chronograph El Primero and the extra-flat movementElite, absolute benchmarks for Swiss watchmaking, are providedon the watches sold under this brand.

Bulgari, founded in 1884, stands for creativity and excellenceworldwide and is universally recognized as one of the majorplayers in its sector. The long-celebrated Italian brand occupiesa strong leadership position in jewelry, where it is particularlywell known for its iconic Serpenti line, and in watches, whileplaying an important role in the fragrance and accessoriessegments as well.

Chaumet, a jeweler established in 1780, has maintained itsprestigious expertise for over two centuries, imposing a stylethat is deliberately modern and is reflected in all its designs,

whether high-end jewelry pieces, jewelry or watch collections.The LVMH group acquired Chaumet in 1999.

Montres Dior has been managed since 2008 in the form of ajoint venture between the Watches and Jewelry business groupand the company Christian Dior Couture. The collections of Montres Dior, particularly Christal, Chiffre Rouge, D de Diorand, since 2011, Dior VIII, are designed in complete harmonywith the creative impetus of the Fashion House.

De Beers is a high jewelry brand, created in July 2001 andjointly managed by the LVMH and De Beers groups, throughDe Beers Diamond Jewellers Ltd. The company, headquarteredin London (United Kingdom), is progressively rolling out aglobal network of boutiques offering jewelry under the DeBeers brand name. It approaches the diamond market from anoriginal angle, both in its creative jewelry design and its conceptof points of sale.

Fred, founded in 1936 and part of the LVMH group since 1995,is present in high-end jewelry, jewelry and watchmaking. Sincejoining the Group, Fred has completely revamped its design,image and distribution. This revival can be seen in the boldcontemporary style of its creations, exemplified by the brand’siconic Force 10 line.



Watches and Jewelry

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Sephora

Sephora, founded in 1969, has developed over time a perfumeand beauty format that combines direct access and customerassistance. This concept led to a new generation of stores with a sober and luxurious architecture, designed in three spacesdedicated to perfumes, make-up and skincare respectively.Based on the quality of this concept, Sephora has gained theconfidence of selective perfume and cosmetics brands. In addition,Sephora has offered products sold under its own brand namesince 1995 and has developed a line of exclusive productsthanks to its close ties with brands selected for their bold ideasand creativity.

Since it was acquired by LVMH in July 1997, Sephora has recordedrapid growth in Europe by opening new stores and acquiringcompanies that operated perfume retail chains. Sephora has

898 stores today in Europe, located in 16 countries. The Sephoraconcept also crossed the Atlantic in 1998 and the brand nowhas 286 stores in the United States, plus an Internet sitesephora.com, and 38 stores in Canada. As of December 31, 2012,Sephora has 133 stores in China, a market which it entered in 2005. Having entered the Middle East in 2007, the brandhad 24 stores in five countries at the end of 2012. After enteringthe South American market in 2010 with its acquisition ofSack’s, the leading online retailer of selective perfumes andcosmetics in Brazil, Sephora has reinforced its presence in thiscountry and in Mexico, now operating a total of nine stores in the region. Sephora has also strengthened its presence inRussia, raising its stake in Ile de Beauté, a perfume andcosmetics retail chain, to 65% in 2011. As of December 31, 2012,Ile de Beauté’s network comprised 139 stores.

5.2. Selective retail

DFS

Duty Free Shoppers (“DFS”) joined LVMH in 1997.

DFS is the pioneer and the world leader in the sale of luxuryproducts to international travelers. Its activity is closely linkedto tourism cycles.

Since it was formed in 1960 as a duty-free concession in the KaiTak airport in Hong Kong, DFS has acquired an in-depthknowledge of the needs of traveling customers, built solidpartnerships with Japanese and international tour operators,and has significantly expanded its business, particularly in thetourist destinations in the Asia-Pacific region.

The strategy of the DFS group is focused on the developmentand promotion of its city-center Galleria stores, which accountfor more than half of its revenue today.

With an area of around 6,000 to 12,000 square meters, the 13 Gallerias are located in the urban centers of major airlinedestinations in Asia-Pacific, the United States and Japan. Eachspace combines in one site, close to the hotels where travelersare lodged, two different, but complementary commercialspaces: a general luxury product offer (including perfumes andcosmetics, fashion and accessories) and a gallery of prestigiousboutiques belonging or not to the LVMH group (such as LouisVuitton, Hermès, Bulgari, Tiffany, Christian Dior, Chanel,Prada, Fendi, Céline…).

While focusing on the development of its Gallerias which areits main source of growth, DFS maintains its strategic interestin the airport concessions if those can be obtained or renewedunder good financial terms. DFS is currently present in sometwenty international airport sites in the Asia-Pacific, the UnitedStates and Japan. As an example of this strong presence, DFSwas granted three major concessions at Hong Kong InternationalAirport in 2012.

Miami Cruiseline

Miami Cruiseline, acquired by LVMH in 2000, is an Americancompany founded in 1963, the world leader in the sale of duty-free luxury items on board cruise ships. It providesservices to over 80 ships representing several cruise lines. It alsopublishes tourist reviews, catalogs and advertising sheetsavailable on board.

The acquisition of Miami Cruiseline boosted the travel retailactivity’s organization of its geographic presence and enhancedthe diversity of its customer base, which was previouslyprimarily Asian, and is now supplemented by cruise customers,primarily Americans and Europeans. There are also excellentsynergies between the activities of DFS and those of MiamiCruiseline in the areas of management and merchandising.

Miami Cruiseline focused its recent efforts on improving thequality of its product offer and adapting its product line to eachcruise to boost the average spending per traveler.

5.1. Travel retail

The Selective Retailing businesses are organized to promote an environment that is appropriate to the image and status ofthe luxury brands. These companies are expanding in Europe,North America, Asia and the Middle East, and operate in twosegments: travel retail (the sale of luxury products to internationaltravelers), the business of DFS and Miami Cruiseline, and the

selective retail concepts represented by Sephora and the Parisdepartment store Le Bon Marché.

In 2012, the Selective Retailing business group posted revenueof 7,879 million euros, or 28% of the total revenue of LVMH.

5. SELECTIVE RETAILING


Selective Retailing


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The Other activities segment includes the media divisionmanaged by the Les Echos group, La Samaritaine and, since thefourth quarter of 2008, the Dutch luxury yacht maker RoyalVan Lent.

Les Echos group

LVMH acquired the Les Echos group in 2007. The Les Echosgroup includes Les Echos, France’s leading financial newspaper,LesEchos.fr, the top business and financial website in France, thebusiness magazine Enjeux-Les Echos, as well as other specializedbusiness services. Les Echos group also holds several otherfinancial and cultural media titles that were previously ownedby LVMH: Investir - Le Journal des Finances, resulting from the2011 merger of two financial weeklies; Connaissance des Arts;and the French radio station Radio Classique. Les Echos groupalso publishes trade journals, with titles produced by SIDPresse, and is active in the business-to-business segment, withthe organizations Les Echos Formation and Les Echos Conférences, thetrade show Le Salon des Entrepreneurs, and Eurostaf market studies.

La Samaritaine

La Samaritaine is a real estate complex located in the heart ofParis, aside the Seine river. It comprised a department store inaddition to leased office and retail space until 2005 when thedepartment store was closed for safety reasons. An ambitiousarchitectural plan was drawn up to transform the formerdepartment store into a hotel, office, shopping mall and socialhousing complex. The building permit was obtained at the end of 2012, the launch of the construction work beingscheduled for 2013. In November 2010, LVMH acquired fromFondation Cognacq-Jay the 40.1% stake held by the latter inLa Samaritaine.

Royal Van Lent

Founded in 1849, Royal Van Lent designs and builds, accordingto customers’ specifications, luxury yachts marketed under the Feadship brand, one of the most prestigious in the worldfor yachts measuring 50 meters or longer.

6. OTHER ACTIVITIES

Le Bon Marché

Established in 1852, Le Bon Marché Rive Gauche was a pioneerof modern marketing in the 19th century. The sole departmentstore located on the left bank in Paris, it was acquired byLVMH in 1998.

Le Bon Marché Rive Gauche has a food store, La Grande Épiceriede Paris. Since 1995, it has also owned Franck et Fils, located

on rue de Passy in the sixteenth district of Paris. In recent years,a fundamental overhaul that included the renovation andremodeling of its sales spaces, together with moving to a moreupscale product offer, strengthened the identity of Le BonMarché. Famous for its very demanding inventory and servicepolicy, Le Bon Marché Rive Gauche is now the most exclusiveand creative department store in Paris.



Other activities

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MANAGEMENT REPORT OF THE BOARD OF DIRECTORSLVMH group

1. BUSINESS AND FINANCIAL REVIEW 241.1. Comments on the consolidated income statement 241.2. Wines and Spirits 281.3. Fashion and Leather Goods 291.4. Perfumes and Cosmetics 311.5. Watches and Jewelry 321.6. Selective Retailing 331.7. Comments on the consolidated balance sheet 341.8. Comments on the consolidated cash flow statement 36

2. BUSINESS RISK FACTORS AND INSURANCE POLICY 372.1. Strategic and operational risks 372.2. Insurance policy 402.3. Financial risks 40

3. FINANCIAL POLICY 42

4. OPERATING INVESTMENTS 434.1. Communication and promotion expenses 434.2. Research and development costs 434.3. Investments in production facilities and retail networks 43

5. MAIN LOCATIONS AND PROPERTIES 445.1. Production 445.2. Distribution 455.3. Administrative sites and investment property 45

6. STOCK OPTION PLANS IN FORCE AT SUBSIDIARIES 457. EXCEPTIONAL EVENTS AND LITIGATION 458. SUBSEQUENT EVENTS 469. RECENT DEVELOPMENTS AND PROSPECTS 46

2|1_VA_V5 26/03/13 20:27 Page23


1.1.1. Analysis of revenue

Change in revenue per half-year period(EUR millions and percentage)

(a) The principles used to determine the net impact of exchange rate fluctuations onrevenue of entities reporting in foreign currencies and the net impact of changes in thescope of consolidation are described on page 27.

Consolidated revenue for the fiscal year 2012 was 28,103 millioneuros, up 19% over the preceding year. It was favorablyimpacted by the appreciation of the Group’s main invoicingcurrencies against the euro, in particular the US dollar, whichappreciated by 8%.

The following changes have been made in the Group’s scope ofconsolidation since January 1, 2011: in Watches and Jewelry,Bulgari was consolidated with effect from June 30, 2011 and in Selective Retailing, Ile de Beauté, one of the leadingperfume and cosmetics retail chains in Russia, was consolidatedwith effect from June 1, 2011. These changes in the scope of consolidation made a positive contribution of 3 points torevenue growth for the year.

On a constant consolidation scope and currency basis, revenueincreased by 9%.

Revenue by invoicing currency

(as %) 2012 2011 2010

Euro 24 26 28US dollar 28 27 27Japanese yen 8 8 9Hong Kong dollar 6 6 6Other currencies 34 33 30

Total 100 100 100

The breakdown of revenue by invoicing currency changed asfollows: the contribution of the euro fell by 2 points to 24%,yen-denominated revenue remained stable at 8%, whereas thecontribution of the US dollar and of all other currencies rose by1 point to 28% and 40%, respectively.

Revenue by geographic region of delivery

(as %) 2012 2011 2010

France 11 12 13Europe (excluding France) 20 21 21United States 23 22 23Japan 8 8 9Asia (excluding Japan) 28 27 25Other markets 10 10 9

Total 100 100 100

By geographic region of delivery, the relative contribution ofFrance and Europe (excluding France) to Group revenuedeclined by 1 point, coming to 11% and 20%, respectively.Japan and Other markets remained stable at 8% and 10%,while the United States and Asia (excluding Japan) increasedby 1 point to 23% and 28%, respectively.

Revenue by business group

(EUR millions) 2012 2011 2010

Wines and Spirits 4,137 3,524 3,261Fashion and Leather Goods 9,926 8,712 7,581Perfumes and Cosmetics 3,613 3,195 3,076Watches and Jewelry 2,836 1,949 985Selective Retailing 7,879 6,436 5,378Other activities and eliminations (288) (157) 39

Total 28,103 23,659 20,320

The breakdown of revenue by business group changed appreciablyas a result of the consolidation of Bulgari in Watches andJewelry with effect from June 30, 2011, with the contributionof this business group to consolidated revenue increasing by 2 points to 10%. The contribution of Selective Retailing roseby 1 point to 28% and that of Wines and Spirits remainedstable at 15%, while the contributions of Fashion and LeatherGoods and Perfumes and Cosmetics declined by 2 points and 1 point to 35% and 13%, respectively.

Wines and Spirits saw an increase in revenue of 17% based onpublished figures. Revenue for this business group increased by 11% on a constant consolidation scope and currency basis,with the net impact of exchange rate fluctuations raisingWines and Spirits revenue by 6 points. This performance wasmade possible by higher sales volumes and a sustained policy of price increases in line with the ongoing value-creationstrategy. Surging demand in Asia made a particularly significant

1. BUSINESS AND FINANCIAL REVIEW

1.1. Comments on the consolidated income statement

24

MANAGEMENT REPORT OF THE BOARD OF DIRECTORS

LVMH group

12,96626%

15,13713%

28,10319%

Fiscal year 2012Second half-year

Organic growth

Changes in the scope of consolidation (a)

Exchange rate fluctuations (a)

First half-year

7%

6%

12%

8%

6%

9%

3%

7 %

2|1_VA_V5 26/03/13 20:27 Page24

contribution to this strong upturn in revenue. China is still thesecond largest market for the Wines and Spirits business group.

Fashion and Leather Goods posted organic revenue growth of7%, and 14% based on published figures. This business group’sperformance benefited from the solid results achieved by LouisVuitton, which recorded double-digit revenue growth. Céline,Loewe, Givenchy, Berluti, Donna Karan, and Marc Jacobsconfirmed their potential, also delivering double-digit revenuegrowth in 2012.

Revenue for Perfumes and Cosmetics increased by 8% on aconstant consolidation scope and currency basis, and by 13%based on published figures. All of this business group’s brandsperformed well. This rebound confirmed the effectiveness ofthe value-enhancing strategy resolutely pursued by the Group’sbrands in the face of competitive pressures spawned by theeconomic crisis. The Perfumes and Cosmetics business groupsaw considerable revenue growth in the United States.

Revenue for Watches and Jewelry increased by 6% on a constantconsolidation scope and currency basis, and by 46% based onpublished figures. The consolidation of Bulgari with effect fromJune 30, 2011 boosted this business group’s revenue by 34%.The rebuilding of inventories by retailers and the recovery in consumer demand helped to drive stronger revenue. For all ofthe business group’s brands, Europe and Japan were the mostdynamic regions.

Based on published figures, revenue for Selective Retailingincreased by 22%, and by 14% on a constant consolidationscope and currency basis. The 2% positive effect of changes in the scope of consolidation relates to the consolidation of Ilede Beauté, the Russian perfume and cosmetics retail chain,with effect from June 2011. The main drivers of this performancewere Sephora, which saw considerable growth in revenue acrossall world regions, and DFS, which made excellent progress,spurred in particular by the continuing development ofChinese tourism boosting business at its stores in Hong Kong,Macao and Hawaii.

1.1.2. Profit from recurring operations

(EUR millions) 2012 2011 2010

Revenue 28,103 23,659 20,320Cost of sales (9,917) (8,092) (7,184)

Gross margin 18,186 15,567 13,136Marketing and selling expenses (10,101) (8,360) (7,098)General and administrative expenses (2,164) (1,944) (1,717)

Profit from recurring operations 5,921 5,263 4,321Operating margin (as %) 21 22 21

The Group posted a gross margin of 18,186 million euros, up17% compared to the previous year. As a percentage of revenue,

the gross margin was 65%, a decrease of 1 point: this decreasereflects a change in the structure of revenue by brand and thelower margins of the companies acquired in 2011, Bulgari andIle de Beauté.

Marketing and selling expenses totaled 10,101 million euros,up 21% based on published figures, amounting to an 11%increase on a constant consolidation scope and currency basis.This increase was mainly due to higher communicationsexpenditures by the Group’s main brands, but also to theongoing development of the Group’s retail networks. The levelof these marketing and selling expenses nonetheless rose byonly 1 point as a percentage of revenue, amounting to 36%.Among these marketing and selling expenses, advertising andpromotion represented 12% of revenue, an increase of 13% on a constant consolidation scope and currency basis.

The geographic breakdown of stores is as follows:

(number) 2012 2011 2010


Total 3,204 3,040 2,545

It should be noted that the number of stores increased significantlyin 2011, partly as a result of the integration of Bulgari and Ile de Beauté. Nearly 160 new stores were added in 2012,essentially as part of the Group’s Selective Retailing activity.

General and administrative expenses totaled 2,164 millioneuros, up 11% based on published figures, and up 4% on a constant consolidation scope and currency basis. Theyrepresented 8% of revenue, the same proportion as in 2011.

Profit from recurring operations by business group

(EUR millions) 2012 2011 2010

Wines and Spirits 1,260 1,101 930Fashion and Leather Goods 3,264 3,075 2,555Perfumes and Cosmetics 408 348 332Watches and Jewelry 334 265 128Selective Retailing 854 716 536Other activities and eliminations (199) (242) (160)

Total 5,921 5,263 4,321

The Group’s profit from recurring operations was 5,921 millioneuros, representing an increase of 13%. The operating marginas a percentage of revenue decreased by 1 point compared to2011, to 21%.



LVMH group

2|1_VA_V5 26/03/13 20:27 Page25

Change in profit from recurring operations(EUR millions)

(a) The principles used to determine the net impact of exchange rate fluctuations on profitfrom recurring operations of entities reporting in foreign currencies and the net impactof changes in the scope of consolidation are described on page 27.

Exchange rate fluctuations had a positive net impact on theGroup’s profit from recurring operations of 398 million euroscompared to the previous year. This total comprises thefollowing three items: the impact of changes in exchange rateparities on export and import sales and purchases by Groupcompanies, the change in the net impact of the Group’s policyof hedging its commercial exposure to various currencies, andthe impact of exchange rate fluctuations on the consolidation of profit from recurring operations of subsidiaries outside the Eurozone.

Wines and Spirits

2012 2011 2010

Revenue (EUR millions) 4,137 3,524 3,261Profit from recurring operations (EUR millions) 1,260 1,101 930Operating margin (as %) 30 31 29

Profit from recurring operations for Wines and Spirits was1,260 million euros, up 14% compared to 2011. Thisperformance was the result of both sales volume growth and asustained policy of price increases. Control of costs, togetherwith the positive impact of exchange rate fluctuations, partiallyoffset the rise in advertising and promotional expendituresfocused on strategic markets. The operating margin as a percentageof revenue fell 1 point for this business group to 30%.


2012 2011 2010

Revenue (EUR millions) 9,926 8,712 7,581Profit from recurring operations (EUR millions) 3,264 3,075 2,555Operating margin (as %) 33 35 34

Fashion and Leather Goods posted profit from recurring

operations of 3,264 million euros, up 6% compared to 2011.Profit from recurring operations for Louis Vuitton increased,and Céline, Loewe, Givenchy, and Marc Jacobs confirmed their profitable growth momentum. The operating margin as apercentage of revenue fell 2 points to 33%.


2012 2011 2010

Revenue (EUR millions) 3,613 3,195 3,076Profit from recurring operations (EUR millions) 408 348 332Operating margin (as %) 11 11 11

Profit from recurring operations for Perfumes and Cosmeticswas 408 million euros, up 17% compared to 2011. This growthwas driven by Parfums Christian Dior, Benefit, Guerlain, andParfums Givenchy, all of which posted improved results thanksto the success of their market-leading product lines and stronginnovative momentum. The operating margin as a percentageof revenue remained stable at 11%.

Watches and Jewelry

2012 2011 2010

Revenue (EUR millions) 2,836 1,949 985Profit from recurring operations (EUR millions) 334 265 128Operating margin (as %) 12 14 13

Profit from recurring operations for Watches and Jewelry was334 million euros, up 26% with respect to 2011. This sharprise was due mainly to the consolidation of the results of Bulgari’soperations. Since the operating margin achieved by Bulgariwas lower than the average margin for the business group as awhole, Watches and Jewelry nevertheless saw a 2 point declinein its operating margin as a percentage of revenue, to 12%.

Selective Retailing

2012 2011 2010

Revenue (EUR millions) 7,879 6,436 5,378Profit from recurring operations (EUR millions) 854 716 536Operating margin (as %) 11 11 10

Profit from recurring operations for Selective Retailing was854 million euros, up 19% compared to 2011. The operatingmargin as a percentage of revenue for Selective Retailing takenas a whole remained stable at 11%.

Other activities

The net result from recurring operations of Other activities andeliminations was a loss of 199 million euros, representing animprovement compared to 2011. In addition to headquartersexpenses, this heading includes the results of the Mediadivision and those of the yacht builder Royal Van Lent.



LVMH group

+398

5,263

2011

+194

Organicgrowth

+66

Changes inthe scope of

consolidation

5,921

2012

Exchangerate

fluctuations

(a)

(a)

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Comments on the determination of the impact of exchange rate fluctuations and changes in the scope of consolidation

The impact of exchange rate fluctuations is determined by translating the accounts for the fiscal year of entities having a functional currency other than the euro at the prior fiscal year’sexchange rates, without any other adjustments.

The impact of changes in the scope of consolidation is determined:- for the fiscal year’s acquisitions, by deducting from revenue for the fiscal year the amount of revenue generated during that fiscal year by the acquired entities, as of their initial consolidation;- for the prior fiscal year’s acquisitions, by deducting from revenue for the fiscal year the amount of revenue generated over the months during which the acquired entities were not

consolidated in the prior fiscal year;- for the fiscal year’s disposals, by adding to revenue for the fiscal year the amount of revenue generated by the divested entities in the prior fiscal year over the months during which those

entities were no longer consolidated in the current fiscal year;- for the prior fiscal year’s disposals, by adding to revenue for the fiscal year the amount of revenue generated in the prior fiscal year by the divested entities.

Profit from recurring operations is restated in accordance with the same principles.

1.1.3. Other income statement items

(EUR millions) 2012 2011 2010

Profit from recurring operations 5,921 5,263 4,321Other operating income and expenses (182) (109) (152)

Operating profit 5,739 5,154 4,169

Net financial income (expense) (14) (242) 612Income taxes (1,820) (1,453) (1,469)Income (loss) from investments in associates 4 6 7

Net profit before minority interests 3,909 3,465 3,319

Minority interests (485) (400) (287)Net profit, Group share 3,424 3,065 3,032

Other operating income and expenses amounted to a net expenseof 182 million euros, compared to a net expense of 109 millioneuros in 2011. In 2012, this item included an impairment loss of 74 million euros recognized for property assets, with theremainder mainly comprised of amortization and impairmentcharges for brands and goodwill.

The Group’s operating profit was 5,739 million euros, representinga 11% increase over 2011.

The net financial expense for the fiscal year was 14 million euros,compared with a net financial expense of 242 million euros in2011. This item comprises:

- the aggregate cost of net financial debt, which amounted to 140 million euros, showing a slight decrease compared to 2011. The increase in the average net financial debtoutstanding during the fiscal year was offset by a loweraverage borrowing cost; and

- other financial income and expenses, amounting to a netincome of 126 million euros, compared to a net expense of 91 million euros in 2011. This positive result consistsessentially of dividends received in connection with the Group’sshareholding in Hermès, which increased significantly as a result of the payment of an exceptional dividend.

The Group’s effective tax rate was 32%, compared to 30% in 2011.

Income from investments in associates was 4 million euros in 2012, down from 6 million euros in 2011.

Profit attributable to minority interests was 485 million euros,compared to 400 million euros in 2011. This total mainlyincludes profit attributable to minority interests in MoëtHennessy and DFS, and reflects higher earnings by these entities.

The Group’s share of net profit was 3,424 million euros, up12% compared to 2011. This represented 12% of revenue in2012, down 1 point compared to 2011.



LVMH group

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2012 2011 2010

Revenue (EUR millions) 4,137 3,524 3,261

Sales volume (millions of bottles) Champagne 56.8 55.5 55.2Cognac 67.1 63.5 59.8Other spirits 15.7 14.1 12.4Still and sparkling wines 43.3 41.8 39.9


Total 100 100 100

Profit from recurring operations (EUR millions) 1,260 1,101 930Operating margin (as %) 30 31 29

Operating investments (EUR millions) 182 159 83

In keeping with the positive trend observed in the wines andspirits market in 2011, demand remained robust in 2012.Sales by volume grew by 2% for all LVMH champagne brands,with prestige cuvées, rosé and vintages in high demand; salesvolume rose 6% for Hennessy cognac, which had a very goodyear for all its qualities, and in all of its markets. Wines andSpirits saw organic revenue growth of 11%, attributable not onlyto higher volumes and an enhanced product mix, but also to a firm pricing policy. Profit from recurring operations rose 14%.

Champagne and Wines

Moët & Chandon consolidated its position as the world leaderin champagne thanks to its expansion in emerging marketscoupled with a good performance in Japan and Australia aswell as a reaffirmed value-creation strategy in the United States.The Champagne House successfully launched its Grand Vintage2004. The new Mont Aigu winery is the first step in a majorproject and expands on the production capacity of the historicsites while maintaining its strong focus on quality control. Asof 2013, Roger Federer becomes Moët & Chandon’s newambassador, with a new advertising campaign being launchedoutside France.

Dom Pérignon’s strong revenue growth, especially in Japan,was boosted by the successful launches of two new vintages:Dom Pérignon 2003 and Dom Pérignon Rosé 2000. The brandcontinued to deploy its Power of Creation concept, organizingexceptional events with world-famous creators. It also showedanother side to its creativity through its collaboration withDavid Lynch on a special year-end holiday gift box.

Mercier, a leading brand in France, continued to develop itspresence at traditional dining venues.

Veuve Clicquot pursued its value-creation strategy successfully,with many new innovative products, such as Ponsardine andSuit Me. Veuve Clicquot Season events, such as polo tournamentsin New York and Los Angeles, continued to underpin theVeuve Clicquot’s communication. Veuve Clicquot Rosé confirmedits excellent results. Like the other champagne brands, thebrand significantly improved its performance in Japan andAustralia, and growth also continued in emerging marketssuch as Russia, Brazil, and South America.

Ruinart continued to progress in France and to developinternationally, most notably in Asia, Africa and LatinAmerica. The Miroir collection, designed by Hervé Van derStraeten, has made Ruinart’s emblematic Blanc de Blancs aneven bigger success. Increasingly engaged in the world ofcontemporary art, Ruinart is now the official champagne ofmany international art fairs.

Krug achieved good growth in Europe and demonstratedexcellent momentum in Japan as well as elsewhere in the Asia-Pacific region. In the United States, the ChampagneHouse continued to redeploy its operations. Through suchevents as its “Lieux éphémères” in New York, Paris and London,and its “Voyages Ambassades”, Krug affirmed its exceptionaland unique character.

Estates & Wines still and sparkling wines once again postedsignificant revenue growth. Chandon continued its vigorousgains and launched its innovative Chandon Délice cuvée withsuccess. Still wines benefited from upmarket repositioning andposted very strong performances.

Demand for the broad range of Château d’Yquem vintages isgrowing in emerging markets. Auction prices for mythical rarebottles have confirmed its legendary status. Château ChevalBlanc consolidated its rank as a 1er Grand Cru Classé A.

Cognac and Spirits

As was the case in 2011, sales of all qualities of Hennessycognac grew strongly in all regions. The world’s number onecognac, in terms of both volume and value, Hennessy achievedhistorical heights of performance in 2012. The main driver ofits rapid growth continued to be Asia, where in an environmentof managed development of prestige quality volumes, theyounger qualities have performed quite robustly, as seen by the very promising launch of Classivm in China. Hennessycontinues to progress throughout the Asian market, and tomaintain strong positions in Taiwan, Vietnam, Malaysia andChina, where well over a million cases have been sold. Thebrand has confirmed its number-one position in the Americaswhile growing rapidly in many promising new markets, such asMexico, Eastern Europe, Nigeria, South Africa and the Caribbean.

Glenmorangie and Ardbeg single malt whiskies once againprogressed rapidly in their key markets. Glenmorangie isincreasing its visibility in the United Kingdom by becomingthe new sponsor of The Open, the world’s most prestigious golf tournament. To celebrate its experiment in “molecularaging” on board the International Space Station, Ardbeg

1.2. Wines and Spirits



LVMH group

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2012 2011 2010



Total 100 100 100

Type of revenue as a percentage of total revenue (excluding Louis Vuitton) Retail 51 51 52Wholesale 43 42 41Licenses 6 7 7

Total 100 100 100

Profit from recurring operations (EUR millions) 3,264 3,075 2,555Operating margin (as %) 33 35 34


Number of stores 1,280 1,246 1,188

Fashion and Leather Goods posted organic revenue growth of7% in 2012. Profit from recurring operations for this businessgroup was up 6%.

Louis Vuitton achieved another year of double-digit revenuegrowth, a performance all the more remarkable as it was drivenby the contributions of every one of its businesses. Revenuegrowth continues to be coupled with exceptional profitability.

Backed by consistent strategy and the continued excellence ofits savoir-faire, Louis Vuitton pursued carefully managedexpansion plans in 2012, once again demonstrating itsinexhaustible creativity.

In a mixed global business environment, Louis Vuitton’s variouscustomer segments reaffirmed their attachment to the brandand their endorsement of its focus on quality. Asian customers,who are venturing beyond their borders in ever larger numbers,continue to embody a strong dynamic. Purchases by UScustomers have also shown particularly remarkable progress. InEurope, Louis Vuitton made steady gains, still fully reapingthe rewards of the brand’s extraordinary appeal among bothlocal and international customers.

In leather goods, the Maison placed special emphasis duringthe year on its fine leather lines. The Maison also continued toexpand its “Haute Maroquinerie” collection, a fine testamentto the excellence of its artisanal savoir-faire and the high degreeof sophistication offered to Vuitton’s customers. At the end of2012, Louis Vuitton opened its first “Cabinet d’Écriture” on thePlace Saint-Germain-des-Prés in Paris. This space is dedicatedentirely to the art of writing, a universe long treasured by theMaison and often associated with travel.

Louis Vuitton continued the selective, quality-driven developmentof its network of stores. Following the grand opening of theRoma Étoile Maison and a boutique in Amman marking the brand’s arrival in Jordan, the reopening in July 2012 of the Maison in Shanghai at Plaza 66, which coincided with thecelebration of Louis Vuitton’s 20th anniversary in China, wasone of the high points of the year. Louis Vuitton also expandedinto Kazakhstan and unveiled its first shoe salon at Saks Fifth Avenue department store in New York. Finally, thesecond half of the year saw the launch of Louis Vuitton’s firstboutique exclusively dedicated to fine jewelry and timepieces,complete with its own workshop, on the Place Vendôme in Paris.

1.3. Fashion and Leather Goods

released Galileo, a limited edition whisky that was highlysuccessful in most markets.

Belvedere vodka showed good momentum, particularly outsideof American markets. In the United States, its first televisedadvertising campaign was launched late in the year.

10 Cane rum raised its profile with new packaging and achanged formula.

Wenjun pursued its expansion, aiming to become China’snumber one luxury brand of Baiju, the world’s best-selling whiteliquor, and gained significantly in renown across the territory.

Outlook

In 2013, Wines and Spirits Houses will maintain a strategy of value-creation and targeted innovation, with the goal ofcontinuously enhancing the desirability and reputation of theirproducts throughout the world. Active efforts will be made toincrease prices and move the product mix further upmarket, inconjunction with substantial investments in communication,particularly via online media. With the outlook for Europe’seconomy uncertain, Moët Hennessy maintains its firm ambitionsfor its mature markets and will accelerate expansion in emergingmarkets, especially those of Asia. A powerful global distributionnetwork and experienced, performance-driven staff shouldenable the business group to continue to grow consistently andprofitably, and to strengthen its leadership in the world of luxurywines and spirits.



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A collaboration with the Japanese artist Yayoi Kusama providedan opportunity to underscore the brand’s enduring ties withthe art world. An exhibition titled “Louis Vuitton – MarcJacobs” was held at the Musée des Arts Décoratifs in Paris fromMarch to September 2012.

Fendi continued the quality-driven expansion of its retailnetwork with the aim of raising the brand’s profile through morespacious stores, better able to showcase its high-end offerings.In addition, Fendi put in place a more selective policy to governits presence in multi-brand stores. In leather goods, 2012 was ayear of record sales for the brand’s iconic Baguette bag, markingits 15th anniversary. Fendi’s other star lines, Peekaboo andSelleria, also continued to see strong growth, while its newlylaunched 2Jours model performed remarkably well. Fur, thebrand’s most iconic symbol, enjoyed increased visibility. Fendi carried out selective store openings in certain high-enddepartment stores in Europe and Japan. The brand furtherexpanded its retail network in Mexico, the Middle East, and in Asia, with the opening of a new Fendi flagship store onCanton Road in Hong Kong.

Céline performed remarkably well in 2012, setting new recordsfor revenue and profit. The brand saw impressive growth across all geographic regions and product categories. Céline’sready-to-wear collections continue to vigorously reaffirm thebrand’s identity, associated with iconic modernity, timelesselegance and quality. Its leather goods performed exceptionallywell again, buoyed by the success of the iconic lines Luggage,Cabas and Classic, combined with the strong results of the year’sinnovative additions, including Trapèze. Céline has launched arefurbishment and expansion plan targeting its retail network,which will move into higher gear in 2013.

Marc Jacobs recorded steady growth, with particularly stronggains in Japan and in the rest of Asia. The brand’s vitality isdriven by the continued success of the designer’s upscale MarcJacobs Collection. The launch of the Antonia bag received excellentacclaim. Benefiting from a strong position in the growingcontemporary fashion market, the heightened sophistication of the designer’s second line, Marc by Marc Jacobs, is buildingon its success. The Denim line also had an excellent year. Anotherhighlight of 2012 was the launch of Dot, Marc Jacobs’ newfragrance for women.

Donna Karan has moved forward with its strategy, whosemajor thrusts are the qualitative expansion of the brand’sdistribution network combined with efforts to intensify thespirit of its designs, always reflecting the pulse of New York, so central to Donna Karan’s values. The brand’s results in 2012 were buoyed by the reacquisition of the DKNY Jeans line on a direct basis, whose new market positioning, marrying chic and casual, has garnered kudos. Donna Karan is alsobuilding on the success of its DKNY accessories collection whileexpanding its presence around the world, in particular by addingnew retail locations in China and inaugurating its first stores in Russia.

Loewe performed well, in terms of both revenue and profit. In leather goods, the iconic Amazona line as well as Flamenco, amore recent addition, remain strong sellers for the brand.Loewe continued the roll-out of its new store concept designedby architect Peter Marino. A flagship store was unveiled on

Barcelona’s Paseo de Gracia, with a Galeria Loewe museumnext door. The Getafe production site will soon expand in sizewith the upcoming opening of a center dedicated to leathercutting as well as a leather crafts school. Penélope Cruz isLoewe’s new brand ambassador.

Under the guidance of the creative team of Humberto Leon andCarol Lim, Kenzo has recovered the young and modern energyand spirit responsible for its early renown. Warmly received by the press, the successes of the team’s first collections werefurther underpinned by a new advertising campaign producedby Jean-Paul Goude.

Givenchy had an excellent year, reaching record levels for bothrevenue and profit. Accessories and men’s ready-to-wear madeparticularly strong gains. In leather goods, the Antigona bagcontinues to perform well and has become a new iconic model,alongside the popular Nightingale and Pandora lines. Givenchyexpanded its presence in China during the year.

Thomas Pink has further reinforced its specialist positioningas a quintessentially British, chic and upscale shirtmaker. Thebrand has proceeded with its expansion plans in key markets,reflected in the signing of a joint venture with a Chinese partnerand store openings in South Africa and India. Its online salesare growing rapidly.

Pucci continues to revamp its brand image, as reflected in itslatest advertising campaign. The brand unveiled its new storeconcept with the opening of a flagship store in New York aswell as its first retail location in mainland China.

Berluti has seen rapid growth, driven by its creative renewaland a strengthened international presence. The ready-to-wearcollections designed by creative Director Alessandro Sartori andthe brand’s many new shoe creations have been very positivelyreceived. Berluti acquired Arnys, a specialist in made-to-measuretailoring for men, as well as the bootmaker Anthony Delos.The brand has begun the roll-out of its new boutique concept,designed to showcase all of its product categories.

Outlook

Louis Vuitton will maintain its strong innovative momentumin 2013, thus further heightening its appeal across all its productcategories. Alongside the further development of the iconicMonogram canvas, special initiatives will be focused on the leatherlines and its “Haute Maroquinerie” collection. Qualitativedevelopment of the brand’s retail network will remain a keypriority, in line with Louis Vuitton’s relentless quest to offer its customers a unique experience in each and every one of itsexceptional stores. Thanks to its talented teams and theirculture of excellence, Louis Vuitton plans to further optimizeits organization in order to accompany its revenue growth andstrengthen the various centers of expertise that constitute itsuniverse.

Fendi will continue to emphasize the development of its high-end offerings and its fur creations. More spacious storeswill be opened, as part of a revamping and expansion of thebrand’s retail network. A new store concept, currently underdevelopment, will be rolled out initially at key Fendi locations,including New Bond Street in London, Avenue Montaigne in Paris and Via Montenapoleone in Milan.



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2012 2011 2010


Revenue by product category (as %) Perfumes 48 49 48Cosmetics 35 34 34Skincare products 17 17 18

Total 100 100 100


Total 100 100 100

Profit from recurring operations (EUR millions) 408 348 332Operating margin (as %) 11 11 11


Number of stores 94 85 75

Perfumes and Cosmetics posted organic revenue growth of 8% in 2012, an exceptional performance in a competitivebusiness environment. Profit from recurring operations for thisbusiness group increased by 17%.

Thanks to the brand’s exceptional reach and appeal, ParfumsChristian Dior again reported excellent results. Perfume saleswere buoyed by the exceptional vitality of its emblematicproduct lines. J’adore further strengthened its leadership positionin France and gained market share in all countries. Miss Diorhas opened a new page in its history with the launch of EauFraîche and Miss Dior Le Parfum. Dior Homme Sport recordedstrong growth and is now firmly positioned as one of the leadingmen’s fragrances. Other notable successes of 2012 were themajor relaunches of Eau Sauvage Parfum and two new versionsof Dior Addict, targeting younger consumers. Two new exclusivefragrances were added to the Collection Privée Christian Dior.

Make-up lines maintained their excellent internationalmomentum, fueled by the successful launches of Diorshow NewLook mascara and of Diorskin Nude. The exceptional receptionfor the new lipstick Dior Addict Extrême helped solidify DiorAddict Lipstick’s position as number one in its main markets.

In skincare, the premium Prestige line, emblematic of Dior’sinnovative and high-end savoir-faire, saw solid growth duringthe year.

Guerlain maintained its strong growth momentum. Fullyreflecting its singular creative spirit, and spurred by operationalexcellence, La Petite Robe Noire turned in truly exceptionalresults, rising to the number two position in the Frenchmarket only eight months after its launch. Orchidée Impérialeagain recorded double-digit growth, confirming its position asthe mainstay of Guerlain’s skincare line. Guerlain is focusingits development efforts on its strategic markets, especiallyChina and France, where it has gained market share for thesixth consecutive year. Reaffirming its status as a top-tier luxurybrand, Guerlain further expanded its selective retail network andnow has nearly a hundred exclusive points of sale worldwide.

Parfums Givenchy performed particularly well in Russia,China, the Middle East and Latin America. The most successfullines in 2012 were Dahlia Noir, launched globally during the year, and Play pour Homme, extended with a Sport version.Strong growth was seen in the make-up segment, thanks inparticular to the success of Noir Couture mascara, now benefitingfrom wider distribution.

Kenzo Parfums was buoyed by the solid performance of its new fragrance KenzoHomme Sport. Madly Kenzo expanded itsdistribution, notably in Russia and Latin America, where thefragrance made strong headway.

Fendi Parfums strengthened its presence across a number ofcountries. The initial results achieved by Fan di Fendi Extrêmeand Fan di Fendi pour Homme, launched at the end of the year,were very promising.

Thanks to a unique positioning, appreciated for its playful andoffbeat style, Benefit again recorded double-digit revenue growthin all of its markets. They’re Real! mascara and Hello Flawless!powder foundation were in great demand. The brand has steppedup the pace of its expansion in Southeast Asia and has movedinto new, high-potential markets such as Philippines and Vietnam.

Make Up For Ever had another year of strong growth, fueledby the contributions of its two star product lines, HD andAqua. The brand successfully expanded into two new markets,Brazil and Mexico. After Paris and Los Angeles, Make Up ForEver has opened a new directly-owned store in Dallas.

Parfums Loewe delivered a fresh boost to its internationalexpansion, especially in Russia. Following its successful openingin Hong Kong, Fresh inaugurated its expansion into mainlandChina. Acqua di Parma reinforced its retail network with theopening of two new stores in Milan and Paris.

1.4. Perfumes and Cosmetics

Driven by their creative spirit, the business group’s otherbrands will continue to bolster their strategic markets in2013. A distinctive and compelling identity will serve as thefoundation for further growth, reaffirming the relevance of

the strategic choices made. By harnessing their creativity, theirpursuit of excellence, and their savoir-faire, the brands’ teamswill reinforce the effectiveness of actions across all dimensionsof business development.



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2012 2011 2010

Revenue (EUR millions) 2,836 1,949 985


Total 100 100 100



Number of stores(a) 347 327(b) 122

(a) Excluding franchises.(b) Including 170 additional stores following the integration of Bulgari.

In 2012, Watches and Jewelry posted organic revenue growthof 6%. The business group saw a 26% improvement in profitfrom recurring operations, reflecting especially the impact ofthe consolidation of Bulgari from June 30, 2011.

TAG Heuer set new records in revenue and profit in 2012.The brand delivered particularly remarkable performances inEurope, Japan and the Middle East, and proved very resilient in theUnited States. It continued to illustrate its unique savoir-fairein speed and precision control with the MikrotourbillonS model,presented at Baselworld, and the Carrera Mikrogirder chronograph,winner of the Geneva Watchmaking Grand Prix. The brandproceeded with its manufacturing integration, increasing in-houseproduction of its Calibre 1887 automatic movements and buildinga new movement manufacturing facility. TAG Heuer asserted

itself as a major Swiss market player, also producing watch casesat its Cortech unit and dials at its ArteCad subsidiary, whichjoined the Group in 2012. The brand launched its new LinkLady women’s line, embodied by Cameron Diaz, who joins theprestigious ranks of TAG Heuer’s brand ambassadors. Asponsorship deal was also set up with Oracle Team USA for theAmerica’s Cup. The brand’s retail network continued to expand,reaching nearly 155 directly-owned and franchised stores.

Hublot continued to record remarkable growth in sales volumeand value. Its Classic Fusion line met with increasing successalongside the other iconic lines King Power and Big Bang. Anew version of Big Bang, launched in partnership with Ferrari,encapsulates the two brands’ shared values of performance anddesign. Hublot reaffirmed its great creativity and upmarketstrategy by developing high-end models in women’s watchesand jewelry. Cutting-edge technology was behind the firsttimepieces produced with the brand’s new, scratch-resistantgold alloy, Magic Gold. The brand stepped up in-houseproduction of its UNICO chronograph movement and beganmanufacturing numerous complications with high added value,thus reaping the rewards of its strategy to integrate technologicaland manufacturing expertise. Hublot accelerated its worldwideexpansion with twenty new openings, bringing the number of its points of sale to 54 at year-end 2012.

Zenith kept up its solid growth in the highly exclusive worldof prestige manufacturing brands. The brand’s collection,which had been totally reworked over the past three years, wasrefocused on its five iconic product lines. The famous El PrimeroStriking 10th chronograph, true to its avant-garde technology,raised its profile thanks to the widespread media coverage ofFelix Baumgartner’s supersonic leap wearing a Zenith Stratoswatch. While the manufacturing facility in Le Locle wasundergoing major renovations, the brand’s network of storescontinued its selective expansion in high-potential markets.

Bulgari performed well and pursued its integration within thebusiness group. In jewelry, it enjoyed success with the new

1.5. Watches and Jewelry

Outlook

In keeping with the momentum developed in 2012, all LVMHbrands have a dynamic year ahead of them in 2013 and willmaintain their ambitious strategies in terms of innovation andadvertising investments. Each shows strong growth potentialand they have set new targets for market share gains.

Parfums Christian Dior will continue to affirm its status as a “Maison de Haute Parfumerie”, increasing its visibility andappeal in close association with the world of “Haute Couture”.The focus will once again be on Dior’s star fragrance lines. Thequality-driven reinforcement of the brand’s retail networkthrough an ambitious refurbishment program will be a keydevelopment priority.

Guerlain will pursue its ambitious plans for the developmentof La Petite Robe Noire, in France and internationally. It will also affirm its status as an exceptional Perfume House with thedesign of a new, revamped flagship boutique at its legendary

address, 68 Avenue des Champs-Élysées, due to open in thesecond half of 2013.

Parfums Givenchy will celebrate the 10th anniversary of theVery Irrésistible line with a new advertising campaign, and willlaunch a new men’s fragrance, a modern take on Givenchy’slong-standing core values.

At Kenzo Parfums, the FlowerbyKenzo line will be expandedwith a new version. Fendi Parfums will enhance its collection withthe launch of a new, highly luxurious women’s fragrance in thesecond half of the year.

Benefit will pursue expansion in all regions, focusing on effectiveand ingenious innovations. In Asia, the brand will move into theIndian and Indonesian markets, poised to serve as significant driversof further growth. Make Up For Ever will expand its retailnetwork in both the Middle East and Asia, and will enhance itscommunications, particularly in the digital realm.



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2012 2011 2010



Total 100 100 100



Number of stores Sephora 1,398 1,300(a) 1,070Other trade names 68 68 76

(a) Including 125 additional stores following the integration of Ile de Beauté.

Selective Retailing achieved organic revenue growth of 14%in 2012. Profit from recurring operations rose by 19%.

DFS once again reported strong growth in both sales and profits,buoyed by solid momentum from its Asian clientele, andparticularly in Hong Kong and Macao. Three major concessions

were won at Hong Kong airport in 2012, and DFS saw itsconcession renewed at the Los Angeles airport, where a majorupgrade is underway. The opening of a third Galleria in HongKong’s Causeway Bay neighborhood enabled DFS to expand its presence in this high-potential tourist destination.

While continuing to benefit from an expanding Asian clientele,DFS remained focused on diversifying both its customer baseand its geographical coverage. It continued with its strategy of upscaling across all destinations, renovating existing storesand bringing in new luxury brands aimed at strengthening the vitality and appeal of its product range.

Miami Cruiseline, which enjoys a strong position in the cruisemarket, delivered a solid performance. Business related to theAsian and South American routes saw strong growth, buoyedby rising passenger spending and an increase in cruise linecapacity. Miami Cruiseline continued to move its boutiquesfurther upmarket and adapt its sales approach and productrange to suit the specific characteristics of each region and eachcruise line’s customers.

Sephora continued to deliver an excellent set of performances,winning market share in all its regions. As the only global selectiveretailer of perfumes and cosmetics, Sephora proposes an innovativeoffering combined with a unique range of major selective brands.It has further added to its exclusive services by developingbeauty bars and nail bars. Launched in the United States in 2011,the mobile payment system, which allows customers to pay fortheir purchases directly with a sales assistant, was extended in2012 to France, where a new tool for personalizing in-storecustomer relations, MySephora, was also rolled out.

1.6. Selective Retailing


designs that enhanced the iconic Serpenti and famous B.zero1 lines.The brand’s creativity and the savoir-faire of its craftspeoplewere in the limelight at the Paris Biennale des Antiquaires,with more than a hundred new pieces on display. In the watchessegment, the new Bulgari Octo was positioned as the men’s top-of-the-line premium timepiece. Sales of accessories continuedto grow, fueled by the wide array of Isabella Rossellini handbagrange extensions. While maintaining distribution on a veryselective basis, fragrances continued their development withthe launch of Bulgari Man and Mon Jasmin Noir. The successfulprogram to raise funds from sales of the ring created specificallyfor Save the Children set new standards in corporate socialresponsibility. The brand’s retail network enhanced its upscaleimage through an ambitious store expansion and renovationproject. Bulgari unveiled its first presence in Brazil. After Rome,Paris and Beijing, a new retrospective organized in Shanghaipaid tribute to the brand’s artisanal and cultural heritage.

At the Biennale des Antiquaires, Chaumet presented its collectionof high-end jewelry, 12 Vendôme, which subtly blends modernityand the French tradition to which it remains historically linked.It successfully strengthened its position in jewelry watches and men’s watches, and continued to expand in China.

Montres Dior reinforced its upscale image with new models inthe Dior VIII collection and with the Grand Bal limited edition,

in keeping with the vision and tradition of “Haute Couture”excellence upheld by the brand. The brand coupled this strategywith ever increasing selectivity in its distribution network.

De Beers, the leading reference in the solitaire diamonds segment,showcased the full extent of its savoir-faire in a recent collectionof high-end jewelry, Imaginary Nature. De Beers continued itsexpansion in China with a fourth boutique, this time in Shanghai.

With its eminently contemporary designs, Fred recorded rapidtargeted growth in France and Japan. Its iconic Force 10 linecontinued to gain ground, and a new collection, Baie des Anges,was released.

Outlook

The favorable trends seen in the last few months of the year offerthe perspective of a confident and determined start to 2013 despitecurrent economic uncertainties. Significant marketing andcommunications investments targeted on the principal marketswill further strengthen the image and visibility of all watchand jewelry brands. The retail network will continue to expand inChina, with the opening of new boutiques, as well as on otherstrategic markets. All brands will support the development oftheir iconic product lines while at the same time maintainingrigorous control over their costs and promoting synergies,especially in manufacturing.


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LVMH’s consolidated balance sheet totaled 49.9 billion euros atyear-end 2012, representing a 6% increase from year-end 2011.Non-current assets rose by 1.9 billion euros and represented72% of total assets, the same percentage as at year-end 2011.

Tangible and intangible fixed assets grew by 1.6 billion euros.This amount includes 0.7 billion euros in respect of investments

for the year, net of disposals as well as amortization anddepreciation charges. The comments on the cash flow statementprovide further information about investments. The revaluationof purchase commitments for minority interests, reflecting in particular the strong performance of the business activities towhich those commitments correspond, also led to a 0.8 billioneuro increase in the amount of goodwill.

(EUR billions) 2012 2011 Change

Tangible and intangible assets 28.1 26.5 1.6Other non-current assets 7.6 7.3 0.3

Non-current assets 35.7 33.8 1.9

Inventories 8.1 7.5 0.6Other current assets 6.1 5.8 0.3

Current assets 14.2 13.3 0.9

Assets 49.9 47.1 2.8


Total equity 25.6 23.5 2.1Non-current liabilities 14.8 14.0 0.8

Equity and non-current liabilities 40.4 37.5 2.9

Short term borrowings 3.0 3.1 (0.1)Other current liabilities 6.5 6.5 0.0

Current liabilities 9.5 9.6 (0.1)

Liabilities and equity 49.9 47.1 2.8

1.7. Comments on the consolidated balance sheet

Sephora runs a continuous skills development program for itsstaff in order to ensure that its customers benefit from the bestpossible expertise.

As of December 31, 2012, its global network comprised 1,398stores in 30 countries. Three new online retail sites were launchedin Italy, Canada and Russia. The US site, which after beingcompletely overhauled offers an unrivaled online sales experience,stepped up the pace of its growth. A mobile application wasalso launched in the United States and France.

Sephora strengthened its positions in Europe, particularly inFrance and Italy, where the brand enjoyed sustained growth. Twonew countries – Denmark and Sweden – were added in 2012.In Russia, the Ile de Beauté chain, in which Sephora holds a65% stake, posted an excellent performance.

Exceptional growth momentum was maintained in the UnitedStates, while Sephora also consolidated its success in Canada.Brand awareness in this market was boosted by the renovationof several flagship stores in New York.

Sephora stepped up its expansion in China at the same time aslaunching a program to renovate its existing network. It madeparticularly rapid progress in Mexico, Malaysia, Singapore and the Middle East. The retailer also opened its first stores inthe high-growth markets of Brazil and India.

Le Bon Marché Rive Gauche delivered a strong performance,buoyed by the luxury and women’s fashion segments. Theworld’s first ever department store celebrated its 160th birthdayin 2012. Major commercial projects were carried out, includingthe opening of new luxury boutiques and the inauguration of anew menswear department combining high-quality productswith unique services. Work began on the transformation of LaGrande Épicerie de Paris food store with the inauguration of aspectacular wine department setting a new standard in quality.

New websites for Le Bon Marché Rive Gauche and La GrandeÉpicerie were launched at the end of the year.

Outlook

DFS is set to benefit in 2013 from a full year of activity at its newHong Kong airport concessions as well as continued work toextend and renovate its stores. DFS’s appeal will be heightenedby the installation of new facades for its Gallerias and thedevelopment of innovative marketing and service programs.The completion of renovation work at the Gallerias in Macao,Hawaii and Singapore Scottswalk will enable the business to enhance its product range. DFS will continue to look out for opportunities to diversify both its customer base and itsgeographical coverage.

Miami Cruiseline, which is well placed to leverage theglobalization of the cruise market, will continue with its storerenovation program and maintain its efforts to hone its salesapproach and target its offering to various distinct customer groups.

Sephora will continue with its ambitious international expansionplans, particularly in Southeast Asia and Latin America. InChina, one of the high points for the beginning of the new yearwill be the opening of a flagship store in Shanghai. Sephora willmore than ever place the emphasis on a customer-focused strategy,extending its loyalty program to new regions and offering new personalized services. Product and service innovation willremain at the heart of its priorities both in stores and in thedigital universe.

Le Bon Marché Rive Gauche will remain focused on theexceptional values that define its unique character as a “conceptstore”, as well as continuing to develop its commercial plans withthe opening of a new watches and accessories department and thecompletion of renovation work at La Grande Épicerie de Paris.A new customer relations program will also be implemented.



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Other non-current assets increased by 0.3 billion euros, mainlydue to an increase in deferred tax assets. The value of theinvestment in Hermès International changed little; the impactof acquisitions of shares on the market during the first sixmonths of the year was offset by a reduction in the market valueof the investment, resulting from the slight dip in the shareprice of Hermès International in 2012. At year-end 2012, the 22.6% stake in Hermès amounted to 5.4 billion euros, thesame as at year-end 2011.

Inventories increased by 0.6 billion euros, reflecting the growthof the Group’s business activities. The comments on the cashflow statement provide further information on this change.

Other current assets grew by 0.3 billion euros, mainly due tothe increased market value of foreign exchange risk hedginginstruments; other current assets thus came to 6.1 billion euros.

Purchase commitments for minority interests, which increased by0.8 billion euros, accounted for most of the change in non-currentliabilities, which grew from 14.0 billion euros at year-end2011 to 14.8 billion euros at year-end 2012. In addition tothis, provisions and other non-current liabilities increased by0.3 billion euros in total. Conversely, long term borrowingsdecreased by 0.3 billion euros.

Other current liabilities held steady at 6.5 billion euros. The0.2 billion euro increase in trade accounts payable was offset bychanges in the market value of foreign exchange risk hedginginstruments.


Long term borrowings 3.8 4.1 (0.3)Short term borrowings and derivatives 2.8 3.0 (0.2)

Gross borrowings after derivatives 6.6 7.1 (0.5)

Cash and cash equivalents and current available for sale financial assets (2.3) (2.4) 0.1

Net financial debt 4.3 4.7 (0.4)

Equity 25.6 23.5 2.1Net financial debt/Total equity ratio 17% 20% (3%)

The ratio of net financial debt to equity, which was 20% as of December 31, 2011, fell 3 points to 17%. This favorablechange was due mainly to a 2.1 billion euro increase in equity,but also to a 0.4 billion euro reduction in net financial debt.

Total equity amounted to 25.6 billion euros at year-end 2012,representing an increase of 9% compared to year-end 2011.This growth reflects the Group’s strong results, which were onlypartially distributed. As of December 31, 2012, total equityaccounted for 51% of the balance sheet total, up slightly fromthe 50% recorded at year-end 2011.

Gross borrowings after derivatives totaled 6.6 billion euros at year-end 2012, representing a 0.5 billion euro decreasecompared to year-end 2011. In June, LVMH issued five-yearbonds in a total nominal amount of 850 million US dollars(equivalent to 681 million euros as of the issue date), and issuedor subscribed to 0.3 billion euros in other borrowings. Conversely,repayments of borrowings amounted to 1.5 billion euros,including the 2005 bond (supplemented in 2008) in the amountof 0.8 billion euros, as well as miscellaneous bank borrowingsof 0.2 billion euros. In addition to this, commercial paperoutstanding decreased by 0.4 billion euros. Cash and cashequivalents and current available for sale financial assets totaled2.3 billion euros at the end of the fiscal year, down slightlyfrom 2.4 billion euros at year-end 2011.

As of year-end 2012, the Group’s undrawn confirmed creditlines amounted to 3.3 billion euros, substantially exceeding theoutstanding portion of its commercial paper program, whichcame to 1.2 billion euros as of December 31, 2012.



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Cash from operations before changes in working capital totaled7,113 million euros, compared to 6,137 million euros a yearearlier, representing an increase of 16%. Net cash from operatingactivities before changes in working capital (i.e. after interestand income tax paid) amounted to 4,989 million euros, up 12%compared to fiscal year 2011.

Interest paid, which totaled 154 million euros, was stablecompared to its 2011 amount. Lower interest rates on borrowingsand better returns on available cash offset the increase ininterest expenses related to the higher average amount of debtoutstanding compared with 2011.

Income tax paid came to 1,970 million euros, a significant increasefrom 1,544 million paid in the prior year, due to an increase in taxable profit, and a rise in the effective rate of income tax.

Working capital requirements increased by 813 million euros,primarily as a result of a rise in inventories, which generated a cashrequirement of 829 million euros. This increase in inventories,driven by growth in volume of the Group’s business activitiesand number of stores, was mainly related to Selective Retailing(DFS in particular, which won new airport concessions), Fashionand Leather Goods, and Wines and Spirits, especially as a resultof purchases of eaux-de-vie. The remaining change in workingcapital requirements was close to zero, since cash requirementsrelated to higher commercial and operational receivables werefinanced by an increase in trade accounts payable.

Operating investments net of disposals resulted in a net cash outflow of 1,702 million euros in 2012, compared to

1,730 million euros a year earlier. They consisted mainly ofinvestments by Louis Vuitton, Sephora, and DFS in their retailnetworks, investments by the Group’s Champagne Houses in their production facilities, and investments by ParfumsChristian Dior in new display counters, together with real estateinvestments for commercial or rental purposes.

Financial investments accounted for a 140 million euro outflowin 2012, of which 45 million euros related to purchase ofconsolidated investments.

Transactions relating to equity generated an outflow of1,860 million euros. A portion of this amount, 1,447 millioneuros, corresponds to dividends paid out during the fiscal yearby LVMH SA (excluding the amount attributable to treasuryshares), including 898 million euros for the final dividendpayment in respect of fiscal year 2011 and 549 million eurosfor the interim dividend payment in respect of fiscal year 2012.In addition, dividends paid out to minority shareholders of consolidated subsidiaries amounted to 314 million euros,and the impact of acquisitions of minority interests totaled206 million euros, corresponding mainly to the acquisition ofthe 20% stake not yet owned in the share capital of Benefit.Conversely, share subscription options exercised during thefiscal year generated an inflow of 94 million euros.

The net cash inflow after all operating, investment, and equity-related activities thus amounted to 474 million euros,and was used to reduce the level of debt. The cash balance at theend of the fiscal year was slightly lower than at year-end 2011.

1.8. Comments on the consolidated cash flow statement

(EUR millions) 2012 2011 Change

Cash from operations before changes in working capital 7,113 6,137 976Cost of net financial debt: interest paid (154) (152) (2)Income taxes paid (1,970) (1,544) (426)

Net cash from operating activities before changes in working capital 4,989 4,441 548

Total change in working capital (813) (534) (279)Operating investments (1,702) (1,730) 28

Free cash flow 2,474 2,177 297

Financial investments (140) (1,286) 1,146Transactions related to equity (1,860) (2,572) 712

Change in cash before financing activity 474 (1,681) 2,155



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2.1.1. Group’s image and reputation

Around the world, the LVMH group is known for its brands,unrivaled expertise and production methods unique to itsproducts. The reputation of the Group’s brands rests on the qualityand exclusiveness of its products, their distribution networks,as well as the promotional and marketing strategies applied.Products or marketing strategies not in line with brand imageobjectives, inappropriate behavior by our brand ambassadors,the Group’s employees, distributors or suppliers, as well asdetrimental information circulating in the media might endangerthe reputation of the Group’s brands and adversely impactsales. The net value of brands and goodwill recorded in theGroup’s balance sheet as of December 31, 2012 amounted to18.6 billion euros.

LVMH maintains an extremely high level of vigilance withrespect to any inappropriate use by third parties of its brandnames, in both the physical and digital worlds. In particular,this vigilance involves the systematic registration of all brandand product names, whether in France or in other countries,communications to limit the risk of confusion between LVMHbrands and others with similar names, and constant monitoring,which may prompt legal action by the Group, if required.Initiatives pursued by the Group aim to promote a legal frameworksuited to the digital world, prescribing the responsibilities ofall those involved and instilling a duty of vigilance in relationto unlawful acts online to be shared by all actors at every link inthe digital value chain.

In its Wines and Spirits and Perfumes and Cosmetics businessgroups, and to a lesser extent in its Watches and Jewelry businessgroup, LVMH sells a portion of its products to distributorsoutside the Group, which are thus responsible for sales to endcustomers. The reputation of the Group’s products thus rests in part on compliance by all distributors with the Group’srequirements in terms of their approach to the handling andpresentation of products, marketing and communications policies,retail price management, etc. In order to discourage inappropriatepractices, distribution agreements include strict guidelines onthese matters, which are also monitored on a regular basis byGroup companies.

Furthermore, the Group supports and develops the reputationsof its brands by working with seasoned and innovativeprofessionals in various fields (creative directors, oenologists,cosmetics research specialists, etc.), with the involvement of themost senior executives in strategic decision-making processes(collections, distribution and communication). In this regard,LVMH’s key priority is to respect and bring to the fore eachbrand’s unique personality. All LVMH employees are consciousof the importance of acting at all times in accordance with theethical guidelines communicated within the Group. Finally, inorder to protect against risks related to an eventual publiccampaign against the Group or one of its brands, LVMH monitorsdevelopments in the media on a constant basis and maintains a permanent crisis management unit.

2.1.2. Counterfeit and parallel retail networks

The Group’s brands, expertise and production methods can becounterfeited or copied. Its products, in particular leather goods,perfumes and cosmetics, may be distributed in parallel retailnetworks, including Web-based sales networks, without theGroup’s consent.

Counterfeiting and parallel distribution have an immediateadverse effect on revenue and profit. Activities in these illegitimatechannels may damage the brand image of the relevant productsover time and may also lower consumer confidence. LVMH takesall possible measures to protect itself against these risks.

Action plans have been specifically drawn up to address thecounterfeiting of products, in addition to the systematic protectionof brand and product names discussed above. This involvesclose cooperation with governmental authorities, customsofficials and lawyers specializing in these matters in the countriesconcerned, as well as with market participants in the digitalworld, whom LVMH also ensures are made aware of the adverseconsequences of counterfeiting. The Group also plays a key role in all of the trade bodies representing the major names in the luxury goods industry, in order to promote cooperationand a consistent global message, all of which are essential insuccessfully combating the problem. In addition, LVMH takesvarious measures to fight the sale of its products through parallelretail networks, in particular by developing product traceability,prohibiting direct sales to those networks, and taking specificinitiatives aimed at better controlling retail channels.

Beyond the borders of the European Union, LVMH is not subjectto any legal constraints that might impede the full exercise ofits selective retail distribution policy, or limit its ability tobring proceedings against any third parties distributing Groupproducts without proper approval. In the European Union,competition law guarantees strictly equal treatment of all economicoperators, particularly in terms of distribution, potentially posingan obstacle to companies refusing to distribute their productsoutside a network of authorized distributors. However,Commission Regulation (EC) No. 2790/1999 of December 22,1999 (known as the 1999 Block Exemption Regulation), byauthorizing selective retail distribution systems, established an exemption to this fundamental principle, under whichLVMH operates, thus providing greater protection for Groupcustomers. This exemption was confirmed in April 2010, whenthe Commission renewed the Block Exemption Regulation,and extended its application to retail sales over the Internet.This legal protection gives the Group more resources in thefight against counterfeit goods and the parallel distribution ofits products, a battle waged as much in the digital as in thephysical world.

In 2012, anti-counterfeiting measures generated internal andexternal costs, in the amount of approximately 27 million euros.

2. BUSINESS RISK FACTORS AND INSURANCE POLICY

2.1. Strategic and operational risks



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2.1.3. Contractual constraints

In the context of its business activities, the Group enters intomulti-year agreements with its partners and some of its suppliers(especially lease, concession, distribution and procurementagreements). Should any of these agreements be terminatedbefore its expiration date, compensation is usually provided for under the agreement in question, which would represent an expense without any immediate offsetting income item. As of December 31, 2012, the total amount of minimumcommitments undertaken by the Group in respect of multi-yearlease, concession, and procurement agreements amounted to7.1 billion euros. Detailed descriptions of these commitmentsmay be found in Notes 30.1 and 30.2 to the consolidatedfinancial statements. However, no single agreement existswhose termination would be likely to result in significant costsat Group level.

Any potential agreement that would result in a commitmentby the Group over a multi-year period is subjected to an approvalprocess at the Group company involved, adjusted depending onthe related financial and operational risk factors. Agreements arealso reviewed by the Group’s in-house legal counsel, togetherwith its insurance brokers.

In addition, the Group has entered into commitments to itspartners in some of its business activities to acquire the stakes heldby the latter in the activities in question should they express aninterest in such a sale, according to a contractual pricing formula.As of December 31, 2012, this commitment is valued at 5 billioneuros and is recognized in the Group’s balance sheet underOther non-current liabilities (see Note 20 to the consolidatedfinancial statements).

The Group has also made commitments to some of theshareholders of its subsidiaries to distribute a minimum amountof dividends, provided the subsidiaries in question have accessto sufficient cash resources. This relates in particular to thebusinesses of Moët Hennessy and DFS, for which the minimumdividend amount is contractually agreed to be 50% of theconsolidated net profit.

2.1.4. Anticipating changes in expectations of Group customers

Brands must identify new trends, changes in consumer behavior,and in consumers’ tastes, in order to offer products and experiencesthat meet their expectations, failing which the continued successof their products would be threatened. By cultivating strong ties,continually replenishing their traditional sources of inspiration,ranging from art to sports, cinema and new technologies…,the Group’s various brands aim at all times to better anticipateand fully respond to their customers’ changing needs, in linewith each brand’s specific identify and its particular affinities inits sphere of activity.

2.1.5. International exposure of the Group

The Group conducts business internationally and as a result issubject to various types of risks and uncertainties. These include

changes in customer purchasing power and the value of operatingassets located abroad, economic changes that are not necessarilysimultaneous from one geographic region to another, andprovisions of corporate or tax law, customs regulations or importrestrictions imposed by some countries that may, under certaincircumstances, penalize the Group.

In order to protect itself against the risks associated with aninadvertent failure to comply with a change in regulations, theGroup has established a regulatory monitoring system in eachof the regions where it operates.

The Group maintains very few operations in politically unstableregions. The legal and regulatory frameworks governing thecountries where the Group operates are well established. It isimportant to note that the Group’s activity is spread for the mostpart between three geographical and monetary regions: Asia,Western Europe and the United States. This geographic balancehelps to offset the risk of exposure to any one area.

Furthermore, a significant portion of Group sales is directly linkedto fluctuations in the number of tourists. This is especially the casefor the travel retail activities within Selective Retailing, but touristsalso make up a large percentage of customers frequenting theboutiques operated by companies in the Fashion and LeatherGoods business group. Events likely to reduce the number oftourists (geopolitical instability, weakening of the economicenvironment, natural catastrophes, etc.) might have an adverseimpact on Group sales.

Lastly, the Group is an active participant in current globaldiscussions in support of a new generation of free-trade agreementsbetween the European Union and non-EU countries, whichinvolves not only access to external markets, but also the signingof agreements facilitating access by tourists from non-EUcountries to the European Union.

2.1.6. Consumer safety

In France, the European Union and all other countries in whichthe Group operates, many of its products are subject to specificregulations. Regulations apply to production and manufacturingconditions, as well as to sales, consumer safety, product labelingand composition. In addition to industrial safety, the Group’scompanies also work to ensure greater product safety andtraceability to reinforce the Group’s anticipation and responsivenessin the event of a product recall. A legal intelligence team hasalso been set up in order to better manage the heightened riskof liability litigation, notably that to which the Group’s brandsare particularly exposed.

For further information on this subject, see 1.4.7 Consumer safetyin the “LVMH and the environment” section of the ManagementReport of the Board of Directors.

2.1.7. Seasonality

Nearly all of the Group’s activities are subject to seasonal variationsin demand. A significant proportion of the Group’s sales –approximately 30% of the annual total for all businesses – is generated during the peak holiday season in the fourth



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quarter of the year. Unexpected events in the final months of theyear may have a significant effect on the Group’s business volumeand earnings.

2.1.8. Supply sources and strategic competencies

The attractiveness of the Group’s products depends, from aquantitative and qualitative standpoint, on being able to ensureadequate supplies of certain raw materials. In addition, from aqualitative perspective, these products must meet the Group’sexacting quality standards. This mainly involves the supply ofgrapes and eaux-de-vie in connection with the activities of theWines and Spirits business group, of leathers, canvases and fursin connection with the activities of the Fashion and LeatherGoods business group, as well as watchmaking components,gemstones and precious metals in connection with the activitiesof the Watches and Jewelry business group. In order to guaranteesources of supply corresponding to its demands, the Group setsup preferred partnerships with the suppliers in question.Although the Group enters into these partnerships in the contextof long term commitments, it is constantly on the lookout fornew suppliers also able to meet its requirements. By way ofillustration, an assessment of the risk that a vendor may fail hasbeen carried out and good practices have been exchanged,leading notably to implementing the policy of splitting suppliesfor strategic Perfumes and Cosmetics products.

In addition, for some rarer materials, or those whose preparationrequires very specific expertise, such as certain precious leathersor high-end watchmaking components, the Group pursues avertical integration strategy on an ad hoc basis.

With respect to supply sources and sub-contracting, please referin addition to the “Business description” section of the ReferenceDocument.

LVMH’s professions also require highly specific skills andexpertise, in the areas of leather goods or watchmaking, forexample. In order to avoid any dissipation of this know-how,LVMH implements a range of measures to encourage trainingand to safeguard these professions, which are essential to thequality of its products, notably by promoting the recognitionof the luxury trades as professions of excellence, with criteriaspecific to the luxury sector and geared to respond in the bestpossible manner to its demands and requirements.

Lastly, the Group’s success also rests on the development of its retailnetwork and on its ability to obtain the best locations withoutundermining the future profitability of its points of sale. LVMHhas built up specific expertise in the real estate field which,shared with that of companies across the Group, contributes to the optimal development of its retail network.

2.1.9. Information systems

The Group is exposed to the risk of information systemsfailure, as a result of a malfunction or malicious intent. Theoccurrence of this type of risk event may result in the loss or corruption of sensitive data, including information relating

to products, customers or financial data. Such an event mayalso involve the partial or total unavailability of some systems,impeding the normal operation of the processes concerned. Inorder to protect against this risk, the Group puts in place adecentralized architecture to avoid any propagation of this risk.Supported by its network of IT security managers, the Groupcontinues to implement a full set of measures to protect itssensitive data as well as business continuity plans at each Groupcompany. This sensitive data includes personal informationobtained from the Group’s customers and employees, whichrequires very specific protection procedures. The Group hasthus developed good governance tools intended for use by allGroup companies, including guidelines for online marketingand the protection of data.

2.1.10. Industrial, environmental and meteorological risks

A detailed presentation of the Group’s environmental risk factorsand of the measures taken to ensure compliance by its businessactivities with legal and regulatory provisions is provided in the“LVMH and the environment” section of the Management Report ofthe Board of Directors.

In Wines and Spirits, production activities depend upon weatherconditions before the grape harvest. Champagne growers andmerchants have set up a mechanism in order to cope with variableharvests, which involves stockpiling wines in a qualitative reserve.For a description of this mechanism, see 1.1.4 Grape supplysources and subcontracting in the “Business description” sectionof the Reference Document.

In the context of its production and storage activities, theGroup is exposed to the occurrence of losses such as fires, waterdamage, or natural catastrophes.

To identify, analyze and provide protection against industrialand environmental risks, the Group relies on a combination of independent experts and qualified professionals from various Group companies, and in particular safety, quality andenvironmental managers. The definition and implementationof the risk management policy are handled by the FinanceDepartment.

The protection of the Group’s assets is a fundamental part ofthe industrial risk prevention policy, which meets the highestsafety standards (NFPA fire safety standards). Working with itsinsurers, LVMH has adopted HPR (Highly Protected Risk)standards, the objective of which is to significantly reduce fire riskand associated operating losses. Continuous improvement in thequality of risk prevention is an important factor taken intoaccount by insurers in evaluating these risks and, accordingly, inthe granting of comprehensive coverage at competitive rates.

This approach is combined with an industrial and environmentalrisk monitoring program. In 2012, engineering consultantsdevoted about a hundred audit days to the program.

In addition, prevention and protection schemes includecontingency planning to ensure business continuity.



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2.3.1. Credit risks

Because of the nature of its activities, a significant portion ofthe Group’s sales are not exposed to customer credit risk. Salesare made directly to customers through the Selective Retailingnetwork, the Fashion and Leather Goods stores and, to a lesserextent, the Watches and Jewelry stores. Together, these salesaccounted for approximately 63% of total revenue in 2012.

Furthermore, for the remaining 37% of revenue, the Group’sbusinesses are not dependent on a limited number of customerswhose default would have a significant impact on Group activitylevel or earnings. The extent of insurance against customercredit risk is satisfactory, with a cover ratio of around 93% as of December 31, 2012.

2.3. Financial risks

The Group has a dynamic global risk management policy basedprimarily on the following:

- systematic identification and documentation of risks;- risk prevention and mitigation procedures for both human

risk and industrial assets;- implementation of international contingency plans;- a comprehensive risk financing program to limit the

consequences of major events on the Group’s financial position;- optimization and coordination of global ‘‘master” insurance

programs.

LVMH’s overall approach is primarily based on transferring its risksto the insurance markets at reasonable financial terms, andunder conditions available in those markets both in terms ofscope of coverage and limits. The extent of insurance coverageis directly related either to a quantification of the maximumpossible loss, or to the constraints of the insurance market.

Compared with LVMH’s financial capacity, the Group’s level ofself-insurance is not significant. The deductibles payable byGroup companies in the event of a claim reflect an optimalbalance between coverage and the total cost of risk. Insurancecosts paid by Group companies are less than 0.20% of consolidatedannual revenue.

The financial ratings of the Group’s main insurance partnersare reviewed on a regular basis, and if necessary one insurermay be replaced by another.

The main insurance programs coordinated by the Group aredesigned to cover property damage and business interruption,transportation, credit, third party liability and product recall.

2.2.1. Property and business interruption insurance

Most of the Group’s manufacturing operations are covered undera consolidated international insurance program for propertydamage and resulting business interruption.

Property damage insurance limits are in line with the values ofassets insured. Business interruption insurance limits reflectgross margin exposures of the Group companies for a period ofindemnity extending from 12 to 24 months based on actual riskexposures. The coverage limit of this program is 1.7 billion eurosper claim, an amount determined following an updated analysisconducted in 2011 of the Group’s maximum possible losses.

Coverage for “natural events” provided under the Group’sinternational property insurance program have been raised sinceJuly 1, 2011 to 100 million euros per claim and 200 millioneuros per year. As a result of a Japanese earthquake risk modelingstudy performed in 2009, specific coverage in the amount of150 million euros was taken out for this risk. These limits arein line with the Group companies’ risk exposures.

2.2.2. Transportation Insurance

All Group operating entities are covered by an internationalcargo and transportation insurance contract. The coverage limitof this program (60 million euros) corresponds to the maximumpossible transport loss arising as a result of transportation inprogress at a given moment.

2.2.3. Third-party liability

The LVMH group has established a third-party liability andproduct recall insurance program for all its subsidiaries throughoutthe world. This program is designed to provide the mostcomprehensive coverage for LVMH’s risks, given the insurancecapacity and coverage available internationally.

Coverage levels are in line with those of companies withcomparable business operations.

Both environmental losses arising from gradual as well as suddenand accidental pollution and environmental liability (Directive2004/35/EC) are covered under this program.

Specific insurance policies have been implemented for countrieswhere work-related accidents are not covered by state insuranceor social security regimes, such as the United States. Coveragelevels are in line with the various legal requirements imposed by the different states.

2.2.4. Coverage for special risks

Insurance coverage for political risks, company officers’ liability,fraud and malicious intent, trade credit risk, acts of terrorism,loss of or corruption of computer data, and environmental risksis obtained through specific worldwide or local policies.

2.2. Insurance policy



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2.3.2. Counterparty risk

The financial crisis over the last few years has had a considerableimpact on the banking sector worldwide, necessitating heightenedcontrols and a more dynamic approach to the management of counterparty risk to which the Group is exposed. Riskdiversification is a key objective. Special attention is given to theexposure of our bank counterparties to financial and sovereigncredit risks, in addition to their credit ratings, which must alwaysbe in the top-level categories.

Banking counterparty risk is monitored on a regular andcomprehensive basis, a task facilitated by the centralization ofmarket and liquidity risk management.

2.3.3. Foreign exchange risk

A substantial portion of the Group’s sales is denominated incurrencies other than the euro, particularly the US dollar (orcurrencies tied to the US dollar such as the Hong Kong dollaror the Chinese yuan, among others) and the Japanese yen, whilemost of its manufacturing expenses are euro-denominated.

Exchange rate fluctuations between the euro and the maincurrencies in which the Group’s sales are denominated cantherefore significantly impact its revenue and earnings reported ineuros, and complicate comparisons of its year-on-year performance.

The Group actively manages its exposure to foreign exchangerisk in order to reduce its sensitivity to unfavorable currencyfluctuations by implementing hedges such as forward sales and options. An analysis of the sensitivity of the Group’s netprofit to fluctuations in the main currencies to which the Group is exposed, as well as a description of the extent ofcash flow hedging for 2013 relating to the main invoicingcurrencies are provided in Note 22.5 to the consolidatedfinancial statements.

Owning substantial assets denominated in currencies other thaneuros (primarily the US dollar and Swiss franc) is also a sourceof foreign exchange risk with respect to the Group’s net assets.This currency risk may be hedged either partially or in fullthrough the use of borrowings or financial futures denominatedin the same currency as the underlying asset. An analysis of theGroup’s exposure to foreign exchange risk related to its net assetsfor the main currencies involved is presented in Note 22.5 tothe consolidated financial statements.

2.3.4. Interest rate risk

The Group’s exposure to interest rate risk may be assessed withrespect to the amount of its consolidated net financial debt,which totaled 4.3 billion euros as of December 31, 2012. Afterhedging, 51% of gross financial debt outstanding was subjectto a fixed rate of interest and 49% was subject to a floating rate.An analysis of borrowings by maturity and type of rate applicableas well as an analysis of the sensitivity of the cost of net financialdebt to changes in interest rates are presented in Notes 18.5and 18.7 to the consolidated financial statements.

Since the Group’s debt is denominated in various differentcurrencies, the Group’s exposure to fluctuations in interest rates

underlying the main currency-denominated borrowings (euro,Swiss franc, Japanese yen and US dollar) varies accordingly.

This risk is managed using interest rate swaps and by purchasingoptions (protections against an increase in interest rate)designed to limit the adverse impact of unfavorable interestrate fluctuations.

2.3.5. Equity market risk

The Group’s exposure to equity market risk relates in part toits treasury shares, which are held primarily in coverage ofstock option plans and bonus share plans. LVMH treasuryshares are considered as equity instruments under IFRS, and assuch any changes in value have no impact on the consolidatedincome statement.

The Group is a shareholder in Hermès International SCA, witha 22.6% stake as of December 31, 2012. Other quoted securitiesmay be held by some of the funds in which the Group hasinvested, or directly within non-current or current available for sale financial assets.

The Group may use derivatives in order to reduce its exposureto risk. Derivatives may serve as a hedge against fluctuations inshare prices. For instance, they may be used to cover cash-settledcompensation plans index-linked to the change in the LVMHshare price. Derivatives may also be used to create a syntheticlong position.

2.3.6. Commodity market risk

The Group, mainly through its Watches and Jewelry businessgroup, may be exposed to changes in the prices of certainprecious metals, such as gold. In certain cases, in order toensure visibility with regard to production costs, hedges maybe implemented. This is achieved either by negotiating theprice of future deliveries of alloys with precious metal refiners,or the price of semi-finished products with producers, ordirectly by purchasing hedges from top-ranking banks. In thelatter case, hedging consists of purchasing gold from banks, or taking out future and/or options contracts with physicaldelivery upon maturity.

2.3.7. Liquidity risk

The Group’s local liquidity risks are generally not significant.Its overall exposure to liquidity risk can be assessed with regardto the amount of the short term portion of its net financial debtbefore hedging, net of cash and cash equivalents, 0.8 billioneuros as of December 31, 2012 or with regard to outstandingamounts in respect of its commercial paper program (1.2 billioneuros). Should any of these borrowing facilities not be renewed,the Group has access to undrawn confirmed credit lines totaling3.3 billion euros.

Therefore, the Group’s liquidity is based on the large amount of its investments and long term borrowings, the diversity ofits investor base (bonds and short term paper), and the quality of its banking relationships, whether evidenced or not byconfirmed credit lines.



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During the fiscal year, the Group’s financial policy was focusedin the following areas:

• Improving the Group’s financial structure and flexibility, as evidenced by the following key indicators:

- substantial growth in equity: equity before appropriation ofprofit rose 9% to 25.7 billion euros as of December 31, 2012,compared to 23.5 billion euros a year earlier. This improvementreflects the strong earnings achieved by companies across theGroup, distributed only partially;

- lower net debt, which came to 4.3 billion euros at year-end 2012,as against 4.7 billion euros a year earlier. This reduction wasmade possible as a result of cash flows from operating activitiesand operating investments (free cash flow), which remainedhigh in 2012, thanks in particular to the improvement inoperating profit and the stability of operating investmentscompared to 2011;

- the Group’s access to liquidity, in particular through its Frenchcommercial paper program, appreciated by investors andbenefitting from attractive conditions;

- maintaining a substantial level of cash and cash equivalentswith a diversified range of top-tier banking counterparties:cash benefited from attractive yields offered by top-qualityissuers, with a permanent focus on ensuring a proactive,dynamic approach to counterparty risk management;

- the Group’s financial flexibility, facilitated by a significantreserve of undrawn confirmed credit lines totaling 3.4 billioneuros, including a 2 billion euro syndicated loan with a

remaining term to maturity of 5 years, which offers the optionto extend this maturity by an additional year.

• Maintaining a prudent foreign exchange and interest rate risk management policy designed primarily to hedge the risksgenerated directly and indirectly by the Group’s operations and to hedge its assets.

The Group maintained its debt position at a level allowing it to benefit from the significant decline in interest rates. Withregard to foreign exchange risks, the Group continued tohedge the risks of exporting companies using call options or collars to protect against the negative impact of currencydepreciation while retaining some of the gains in the event ofcurrency appreciation. This strategy was successful in an extremelyvolatile year. It enabled the Group to obtain a rate afterhedging for the US dollar lower than the average exchange ratefor the year, which was also lower than the rate after hedgingobtained in 2011. The rate after hedging obtained for theJapanese yen was slightly higher than the average exchange ratefor the year, but still lower than the rate obtained after hedgingin 2011.

• Greater concentration of Group liquidity owing to the ongoingroll-out of cash pooling practices worldwide, ensuring thefluidity of cash flows across the Group and optimal managementof surplus cash. As a rule, the Group applies a diversified shortand long term investment policy.

• The slight drop in the cost of net financial debt to 140 millioneuros in 2012, from 150 million euros in 2011, chieflyattributable to the decline in interest rates during the fiscal year.

3. FINANCIAL POLICY

In addition, as is customary, the applicable margin on drawdownsof certain long term credit lines depends on the Group’s ratingby Standard & Poor’s. As of December 31, 2012, no drawdownhad been performed under these schemes. Furthermore, shouldthese clauses be triggered, this would not have a significantimpact on the Group’s cash flow.

Agreements governing financial debt and liabilities are notassociated with any specific clause likely to significantly modifytheir terms and conditions.

The breakdown of financial liabilities by contractual maturityis presented in Note 22.7 to the consolidated financial statements.

2.3.8. Organization of foreign exchange, interest rateand equity market risk management

The Group applies an exchange rate and interest rate managementstrategy designed primarily to reduce any negative impacts of foreign currency or interest rate fluctuations on its businessand investments.

This management is centralized for the most part, whether atthe level of the parent company or the subsidiary responsible for the Group’s cash pooling arrangement.

The Group has implemented a stringent policy, as well as rigorousmanagement guidelines to measure, manage and monitor thesemarket risks.

These activities are organized based on a segregation of dutiesbetween risk measurement, hedging (treasury and front office),administration (back office) and financial control.

The backbone of this organization is an integrated informationsystem which allows hedging transactions to be monitoredquickly.

The Group’s hedging strategy is presented to the PerformanceAudit Committee.

Hedging decisions are taken by means of a clearly establishedprocess that includes regular presentations to the Group’sExecutive Committee and detailed supporting documentation.



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Apart from investments in communication, promotion andresearch and development, operating investments are gearedtowards improving and developing retail networks as well asguaranteeing adequate production capabilities.

Purchases of property, plant and equipment and intangibleassets for the last three fiscal years were as follows, in absolutevalues and as a percentage of cash from operations before changesin working capital:

Purchase of tangible 2012 2011 2010and intangible fixed assets:

- in millions euros 1,710 1,749 1,002- as % of cash from operations before changes in working capital 24 29 21

Following the model of the Group’s Selective Retailingcompanies which directly operate their own stores, LouisVuitton distributes its products exclusively through its own

stores. The products of the Group’s other brands are marketedby agents, wholesalers, or distributors in the case of wholesalebusiness, and by a network of directly owned stores or franchisesfor retail sales.

In 2012, apart from acquisitions of property assets, operatinginvestments mainly related to points of sale, with the Group’stotal retail network increasing from 3,040 to 3,204 stores. In particular, Sephora continued to expand its worldwide retailnetwork, which reached 1,398 stores as of December 31, 2012,compared to 1,300 the previous year. In 2012, DFS opened itsthird Galleria in Hong Kong and began operations at the threemain concessions at Hong Kong International Airport.

In Wines and Spirits, in addition to necessary replacements ofbarrels and industrial equipment, investments in 2012 relatedto the acquisition of vineyards and a site in the Champagneregion where facilities will be installed in connection with the first phase of a project to expand the business group’sindustrial capacity.

4.3. Investments in production facilities and retail networks

The Group’s research and development investments in the lastthree fiscal years were as follows:

(EUR millions) 2012 2011 2010

Research and development costs 69 63 46

Most of these amounts cover scientific research and developmentcosts for skincare and make-up products of the Perfumes andCosmetics business group.

4.2. Research and development costs

Over the last three fiscal years the Group’s total investments incommunication, in absolute values and as a percentage of revenue,were as follows:

Communication and promotion 2012 2011 2010expenses:

- millions of euros 3,277 2,711 2,267- as % of revenue 11.7 11.5 11.2

These expenses mainly correspond to advertising campaigncosts, especially for the launch of new products, public relationsand promotional events, and expenses incurred by marketingteams responsible for all of these activities.

4. OPERATING INVESTMENTS

4.1. Communication and promotion expenses

• Pursuing a dynamic policy of dividend payouts to shareholders,to enable them to benefit from the very strong performanceover the year:

- an interim dividend for 2012 of 1.10 euros was paid inDecember 2012;

- proposal of a dividend payment of 2.90 euros per share for the fiscal year (i.e. a final dividend of 1.80 euros availablefor distribution in 2013). As a result, total dividend paymentsto shareholders by LVMH in respect of 2012 amount to1,474 million euros, before the impact of treasury shares.



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In the table above, the total number of hectares owned presentedis determined exclusive of surfaces not useable for viticulture.The difference between the total number of hectares ownedand the number of hectares under production represents areasthat are planted, but not yet productive, and areas left fallow.

The Group also owns industrial and office buildings, wineries,cellars, warehouses, and visitor and customer centers for each of its main Champagne brands or production operations inFrance, California, Argentina, Australia, Spain, Brazil and New Zealand, as well as distilleries and warehouses in Cognac,the United Kingdom and Poland. The total surface area is approximately 1,050,000 square meters in France and280,000 square meters abroad.


Louis Vuitton owns seventeen leather goods and shoe productionfacilities located primarily in France, although some significantworkshops are also located near Barcelona in Spain, and in San Dimas, California. The company owns its warehouses in France; those located outside France are leased. Overall,production facilities and warehouses owned by the Grouprepresent approximately 185,000 square meters.

Fendi owns its own manufacturing facility near Florence, Italy,as well as its company headquarters, the Fendi Palazzo, inRome, Italy.

Céline also owns manufacturing and logistics facilities nearFlorence in Italy.

Berluti’s shoe production factory in Ferrara (Italy) is owned bythe Group.

Rossimoda owns its office premises and its production facilityin Strà and Vigonza in Italy.

The other facilities utilized by this business group are leased.


Buildings located near Orleans in France housing the Group’sResearch and Development operations of Perfumes and Cosmeticsas well as the manufacturing and distribution of ParfumsChristian Dior are owned by Parfums Christian Dior and occupya surface area of 122,000 square meters.

Guerlain acquired a 90,000 sq.m plot of land in Chartres in2012, where it plans to build a new production site to replace itscurrent site in the same region. The brand also owns anotherproduction site in Orphin, France.

Parfums Givenchy owns two plants in France, one in Beauvaisand the other in Vervins, which handles the production of bothGivenchy and Kenzo product lines, corresponding to a totalsurface area of 19,000 square meters. The company also ownsdistribution facilities in Hersham, United Kingdom.

Watches and Jewelry

TAG Heuer leases all of its manufacturing facilities in LaChaux-de-Fonds and the Jura region of Switzerland.

Zenith owns the Manufacture, which houses its movement and watch manufacturing facilities in Le Locle, Switzerland.All of its European warehouses are leased.

Hublot owns its production facilities and its office premises.

Bulgari owns its production facilities in Italy and Switzerland.

The facilities operated by this business group’s remainingbrands, Chaumet, Fred, De Beers and Montres Dior, are leased.

5. MAIN LOCATIONS AND PROPERTIES

5.1. Production

Wines and Spirits

The surface areas of vineyards in France and abroad that are owned by the Group are as follows:

(in hectares) 2012 2011

Total Of which under Total Of which under production production

France Champagne appellation 1,857 1,717 1,833 1,697Cognac appellation 245 173 245 177Vineyards in Bordeaux 252 154 253 159

International California (United States) 440 321 475 345Argentina 1,398 882 1,397 878Australia, New Zealand 525 481 525 481Brazil 231 72 232 75Spain 56 52 55 49China 68 - - -



LVMH group

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As part of its day-to-day management, the Group is party to various legal proceedings concerning trademark rights, theprotection of intellectual property rights, the protection ofSelective Retailing networks, licensing agreements, employeerelations, tax audits, and any other matters inherent to itsbusiness. The Group believes that the provisions recorded in thebalance sheet in respect of these risks, litigation proceedingsand disputes that are in progress and any others of which it is aware at the year-end, are sufficient to avoid its consolidated

financial net worth being materially impacted in the event ofan unfavorable outcome.

Following the decision delivered in March 2006 by the Conseilde la Concurrence (the French antitrust authority) regarding theluxury perfume sector in France, and the judgment renderedon June 26, 2007 by the Paris Court of Appeal, the Groupcompanies concerned took their case to the Cour de cassation, thehighest court in France. In July 2008, the Cour de cassation

6. STOCK OPTION PLANS IN FORCE AT SUBSIDIARIES

Nil.

7. EXCEPTIONAL EVENTS AND LITIGATION

Most of the Group’s administrative buildings are leased, with theexception of the headquarters of certain brands, particularlythose of Louis Vuitton, Parfums Christian Dior and Zenith.

The Group holds a 40% stake in the company owning thebuilding housing its headquarters on Avenue Montaigne inParis. The Group also owns three buildings in New York (totalsurface area of about 26,000 square meters) and a building in Osaka (about 5,000 square meters) that house the offices ofsubsidiaries.

Lastly, the Group owns investment property, in central Parisand in London, corresponding to a total surface area of 50,000 square meters and 10,000 square meters, respectively.

The group of properties previously used for the businessoperations of La Samaritaine’s department store are the focus ofa redevelopment project, which will transform it into a complexcomprising mainly offices, shops and a luxury hotel.

5.3. Administrative sites and investment property

(in number of stores) 2012 2011 2010


Total 3,204 3,040 2,545

(in number of stores) 2012 2011 2010

Fashion and Leather Goods 1,280 1,246 1,188Perfumes and Cosmetics 94 85 75Watches and Jewelry 347 327 122Selective Retailing 1,466 1,368 1,146

Of which: Sephora 1,398 1,300 1,070Other, including DFS 68 68 76

Other 17 14 14

Total 3,204 3,040 2,545

As of December 31, 2012, the Group’s store network breaks down as follows:

Retail distribution of the Group’s products is most often carriedout through exclusive stores. Most of the stores in the Group’sretail network are leased and only in exceptional cases doesLVMH own the buildings that house its stores.

Louis Vuitton owns certain buildings that house its stores in Tokyo,Guam, Hawaii, Seoul, Cannes, Saint-Tropez, for a total surfacearea of approximately 8,000 square meters.

Céline and Loewe also own the buildings housing some of theirstores in Paris and Spain.

In the Selective Retailing business group:

- Le Bon Marché and Franck et Fils own the buildings in Paristhat house their department stores, corresponding to a totalsales area of about 70,000 square meters;

- DFS owns its stores in Guam, Saipan and Hawaii.



LVMH group

5.2. Distribution

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Despite an uncertain economic environment in Europe, LVMHis well-equipped to continue its growth momentum across allbusiness groups in 2013. The Group will maintain a strategyfocused on developing its brands by continuing to build up itssavoir-faire, as well as through strong innovation and expansionin fast growing markets.

Driven by the agility of its organization, the balance of itsdifferent businesses and geographic diversity, LVMH group enters2013 with confidence and has, once again, set an objective ofincreasing its global leadership position in luxury goods.

8. SUBSEQUENT EVENTS

No significant subsequent events occurred between December 31, 2012 and January 31, 2013, the date on which the financialstatements were approved for publication by the Board of Directors.

9. RECENT DEVELOPMENTS AND PROSPECTS

overturned the decision of the Paris Court of Appeal and referredthe case to the same jurisdiction, formed differently. In November2009, the Court of Appeal set aside the judgment of the Conseilde la Concurrence due to the excessive length of the proceedings.In November 2010, the Cour de cassation overturned the decisionof the Court of Appeal and referred the matter back to the samejurisdiction, formed differently. On January 26, 2012, theParis Court of Appeal, while reaffirming the decision handeddown in 2006 by the Conseil de la Concurrence against France’sleading manufacturers and distributors of luxury perfumes andcosmetics relating to events dating back to the period 1997–2000, reduced the total amount of fines imposed on the Group’scompanies active in this sector to 13 million euros. An appealwas filed with the Cour de cassation in response to this ruling bythe Paris Court of Appeal.

In 2006, Louis Vuitton Malletier and the French companies ofthe Perfumes and Cosmetics business group filed lawsuitsagainst eBay in the Paris Commercial Court. Louis VuittonMalletier demanded compensation for losses caused by eBay’sparticipation in the commercialization of counterfeit productsand its refusal to implement appropriate procedures to preventthe sale of such goods on its site. The Perfumes and Cosmeticsbrands sued eBay for undermining their selective Retailingnetworks. In a decision delivered on June 30, 2008, the ParisCommercial Court ruled in favor of LVMH, ordering eBay topay 19.3 million euros to Louis Vuitton Malletier and3.2 million euros to the Group’s Perfumes and Cosmeticsbrands. The court also barred eBay from running listings forperfumes and cosmetics under the Dior, Guerlain, Givenchyand Kenzo brands. eBay filed a petition with the Paris Court of Appeal. On July 11, 2008, the President of the Paris Courtof Appeal denied eBay’s petition to stay the provisionalexecution order delivered by the Paris Commercial Court. InSeptember 2010, the Paris Court of Appeal confirmed the ruling against eBay handed down in 2008, classifying thiscompany’s business as that of a broker and not merely an Internet host. Asserting that it did not have jurisdiction toevaluate the extent of losses caused by some of eBay’s sitesoutside France, the Court reduced the amount of punitivedamages to 2.2 million euros for Louis Vuitton Malletier and

0.7 million euros for the Group’s Perfumes and Cosmeticsbrands, as the initial amount had been determined on the basisof eBay’s worldwide operations. In response to the appeal filedby eBay, on May 3, 2012 the Cour de cassation confirmed theanalysis carried out by the Paris Court of Appeal, which hadheld that eBay’s activity was not merely that of a hostingservice provider, but that it also acted as a broker. However, theCour de cassation reversed the Paris Court of Appeal’s decisionwith regard to its jurisdiction for activity conducted on theeBay Inc. and referred the case back for retrial by the Paris Courtof Appeal.

Following the announcement by LVMH in October 2010 of itsacquisition of a stake in the share capital of Hermès International,the Autorité des Marchés Financiers (the French financial marketsregulation authority) decided to launch an investigation intothe market and financial disclosures relating to Hermès andLVMH shares. On August 13, 2012, the AMF served LVMH witha statement of objections for alleged infringements of financialand public disclosure requirements, a copy of which has beenforwarded to the AMF’s Enforcement Committee, which willmeet on May 31, 2013.

In January 2011, the Paris Administrative Court canceled theorder issued in 2007 that had granted Fondation Louis Vuittona building permit for the construction of a modern andcontemporary art museum in the Bois de Boulogne. The Fondationis financed by Group contributions as part of the Group’s culturalsponsorship activities. The Fondation and the City of Parishave appealed the ruling of the Paris Administrative Court. Inview of the nature of this project as beneficial to society and inkeeping with the public interest, the French Parliament passeda resolution validating the canceled building permits on thegrounds advanced by the Administrative Court. The buildingpermit granted in 2007 was approved by the Paris AdministrativeCourt of Appeal on June 18, 2012.

To the best of the Company’s knowledge, there are no pendingor impending administrative, judicial or arbitration proceduresthat are likely to have, or have had over the twelve-month periodunder review, any significant impact on the financial positionor profitability of the Company and/or the Group.



LVMH group

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MANAGEMENT REPORT OF THE BOARD OF DIRECTORSParent company: LVMH Moët Hennessy – Louis Vuitton

1. COMMENTS ON THE FINANCIAL STATEMENTS 481.1. Comments on the balance sheet 48

1.2. Parent company results and outlook for the future 48

2. APPROPRIATION OF NET PROFIT FOR THE YEAR 49

3. SHAREHOLDERS – SHARE CAPITAL – STOCK OPTION PLANS – ALLOCATION OF BONUS SHARES 503.1. Main shareholders 50

3.2. Shares held by members of the management and supervisory bodies 50

3.3. Employee share ownership 50

3.4. Share purchase option plans and share subscription option plans 50

3.5. Allocation of bonus shares and performance shares 53

4. FINANCIAL AUTHORIZATIONS 574.1. Status of current delegations and authorizations 57

4.2. Authorizations proposed to the Shareholders’ Meeting 58

5. SHARE REPURCHASE PROGRAMS 605.1. Information on share repurchase programs 60

5.2. Description of the main characteristics of the share repurchase program presented to the Combined Shareholders’ Meeting of April 18, 2013 61

5.3. Summary table disclosing the transactions performed by the issuer involving its own shares from January 1 to December 31, 2012 61

6. REMUNERATION OF COMPANY OFFICERS 626.1. Summary of the remuneration, options and performance

bonus shares granted to senior executive officers 62

6.2. Summary of the remuneration of each senior executive officer 62

6.3. Work contract, specific pension, leaving indemnities and non-competition clause in favor of senior executive officers 63

6.4. Summary of directors’ fees, compensation, benefits in kind and commitments given to other company officers 63

6.5. Breakdown of equity shares or securities granting access to capital allocated to members of the Board of Directors during the fiscal year 64

7. SUMMARY OF TRANSACTIONS INVOLVING LVMH SHARES DURING THE FISCAL YEAR BY DIRECTORS AND RELATED PERSONS 64

8. ADMINISTRATIVE MATTERS 658.1. List of positions and offices held by the members of the Board of Directors 65

8.2. Membership of the Board of Directors 65

8.3. Amendment of the Bylaws 65

9. INFORMATION THAT COULD HAVE A BEARING ON A TAKEOVER BID OR EXCHANGE OFFER 65

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For 2012, the Company reported net financial income of 1,823.8 million euros, compared with net financial income of 2,420.6 million euros for the previous year.

Net income from the management of subsidiaries and otherinvestments amounted to 1,958.9 million euros in 2012, asagainst 2,655.2 million euros the previous year. This change ismainly due to a decrease in financial income from subsidiariesand other investments (1,950.7 million euros in 2012, down from 2,603.1 million euros in 2011) and to a combinedeffect of more limited reversals of impairment losses and lowerprovisions recognized with respect to subsidiaries and otherinvestments (8.2 million euros in 2012, compared with52.1 million euros in 2011).

Financial income from subsidiaries and other investmentsessentially consisted of dividends received. The change in thisitem during the fiscal year was due in particular to the decreasein the dividends paid by LV Group SA, formerly LVMHFashion Group SA, offset by the increase in dividends paid bySofidiv SAS and Moët Hennessy International SAS.

The net financial income also includes the cost of net financialdebt and related interest rate derivatives in the amount of133.6 million euros and profits on foreign exchange transactionsand derivatives in the amount of 4.4 million euros.

Net operating loss reflects operating expenses not recharged tosubsidiaries and other investments, which amounted to a netexpense of 92.9 million euros in 2012, down from 160.2 millioneuros in 2011. This change is due in particular to the decision,beginning with the 2012 fiscal year, to recharge the cost of sharepurchase options exercised and of bonus shares allocated, to thesubsidiaries employing the beneficiaries.

Taking into account the negative impact of corporate incometax in the amount of 64.2 million euros, including the effect of tax consolidation, net profit came to 1,666.7 million euros,thus decreasing compared to 2011, when net profit was2,325.5 million euros.

Given the results achieved in 2012 by subsidiaries and otherinvestments held by LVMH, the Company anticipates asatisfactory level of dividend distribution in 2013.

1.2. Parent company results and outlook for the future

1.1.1. Change in the equity investment portfolio

The gross value of the equity investment portfolio was 18.5 billioneuros, stable compared to year-end 2011.

1.1.2. Financial structure

In 2012, LVMH issued public bonds in a total amount of850 million US dollars. These bonds, redeemable at par onmaturity in June 2017, bear interest at 1.625% per annum andwere swapped on issuance, thus converting the entire issue intoa floating-rate euro-denominated financing arrangement.

In June 2012, LVMH redeemed the 760 million euros of bondsissued in two tranches in 2005 and 2008.

1.1.3. Hedging transactions

LVMH regularly uses financial instruments. This practicemeets the foreign currency and interest rate hedging needs forfinancial assets and liabilities, including dividends receivablefrom foreign investments; each instrument used is allocated tothe financial balances or hedged transactions.

Given the role of LVMH within the Group, financial instrumentsdesigned to hedge net assets denominated in foreign currencymay be used in the consolidated financial statements but notmatched in the parent company financial statements, or allocatedto underlying amounts maintained at historical exchange rates,such as equity investments.

Counterparties for hedging contracts are selected on the basisof their credit rating as well as for reasons of diversification.

1.1.4. Share capital

As of December 31, 2012, the share capital comprised 508,163,349fully paid-up shares and amounted to 152.4 million euros.

During the fiscal year, 1,344,975 shares were issued in connectionwith the exercise of share subscription options; moreover997,250 shares were retired.

1.1.5. Information on payment terms

As of December 31, 2012, trade accounts payable amounted to109 million euros (94 million euros in 2011), the major portionof which were not yet due. The average payment term is 45 days, unchanged from 2011.

1. COMMENTS ON THE FINANCIAL STATEMENTS

The balance sheet, income statement and notes to the financial statements of LVMH Moët Hennessy – Louis Vuitton SA (hereafter,“LVMH” or “the Company”) for the year ended December 31, 2012 have been prepared in accordance with French legalrequirements and the same accounting policies and methods as those used in the previous year.

1.1. Comments on the balance sheet



Parent company: LVMH Moët Hennessy – Louis Vuitton

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Fiscal year Nature Payment date Gross dividend Tax deduction(a)

(EUR)

2011 Interim December 2, 2011 0.80 0.32 Final April 25, 2012 1.80 0.72

Total 2.60 1.04

2010 Interim December 2, 2010 0.70 0.28 Final May 25, 2011 1.40 0.56

Total 2.10 0.84

2009 Interim December 2, 2009 0.35 0.14 Final May 25, 2010 1.30 0.52

Total 1.65 0.66

(a) For individuals with tax residence in France.

(EUR)

Net profit for the year ended December 31, 2012 1,666,669,490.86Allocation to the legal reserve (10,431.75)Retained earnings 4,937,293,782.41

Total amount available for distribution 6,603,952,841.52

Proposed appropriation: Statutory dividend of 5% or EUR 0.015 per share 7,622,450.24Additional dividend of EUR 2.885 per share 1,466,051,261.87Retained earnings 5,130,279,129.41

6,603,952,841.52

For information, as of December 31, 2012, the Company held 8,167,519 of its own shares,corresponding to an amount not available for distribution of 414.2 million euros, equivalentto the acquisition cost of the shares.

Should this appropriation be approved, the total dividend wouldbe 2.90 euros per share. As an interim dividend of 1.10 eurosper share was paid on December 4, 2012, the final dividend pershare is 1.80 euros; this will be paid as of April 25, 2013.

With respect to this dividend distribution, individuals whosetax residence is in France will be entitled to the 40% deductionprovided under Article 158 of the French Tax Code.

Finally, should the Company hold, at the time of payment ofthis balance, any treasury shares under prior authorizations, thecorresponding amount of unpaid dividends will be allocated to retained earnings.

As required by law, the Board of Directors observes that thedividends per share paid out in respect of the past three fiscalyears were as follows:

2. APPROPRIATION OF NET PROFIT FOR THE YEAR

The proposed appropriation of the amount available for distribution for the fiscal year is as follows:

Finally, with regard to the preparation of the Company’sincome tax return, no expenses were considered as having to be re-integrated into taxable profit or non-deductible within the

meaning of Articles 39-4, 39-5, 54 quater and 223 quinquiesof the French General Tax Code.




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The beneficiaries of the option plans are selected in accordancewith the following criteria: performance, development potentialand contribution to a key position.

A share purchase option plan and seven share subscriptionoption plans set up by LVMH between 2003 and 2009 were in force as of December 31, 2012. The exercise price of optionsis equal to the reference price calculated in accordance withapplicable laws for the plans launched since 2007, and to 95%of this same reference price for all earlier plans. Each plan has a term of ten years. Options granted before 2004 may beexercised after the end of a period of three years from the plan’scommencement date, while options granted in 2004 and lateryears may be exercised after the end of a period of four years.

For all plans, one option gives the right to one share.

Apart from conditions relating to attendance within the Group,the exercise of options granted in 2009 is contingent onperformance conditions, based on the following three indicators:profit from recurring operations, net cash from operatingactivities and operating investments, or the Group’s currentoperating margin.

Options granted to senior executive officers may only beexercised if, in three of the four fiscal years from 2009 to 2012,at least one of those three indicators shows a positive changecompared to 2008. The performance condition was met withrespect to the 2009, 2010, 2011 and 2012 fiscal years.

Options granted to other beneficiaries may only be exercised if,for fiscal years 2009 and 2010, at least one of these indicatorsshows a positive change compared to 2008. The performancecondition was met with respect to the 2009 and 2010 fiscalyears.

Both senior executive officers and other company employeesmust also comply with operating restrictions relating to theexercise period for their options.

In relation to options granted under plans set up in 2008 and2009, if either the Chairman and Chief Executive Officer or the Group Managing Director decides to exercise his options,he must retain possession, until the conclusion of his term ofoffice, of a number of shares determined on the basis of theexercise date and corresponding to a percentage of his total grosscompensation.

3. SHAREHOLDERS – SHARE CAPITAL – STOCK OPTION PLANS –ALLOCATION OF BONUS SHARES

3.1. Main shareholders

As of December 31, 2012, the Arnault family group controlled 46.42% of the Company’s capital, compared with 46.48% as ofDecember 31, 2011 and held 62.65% of the voting rights, compared with 62.38% as of December 31, 2011.

3.2. Shares held by members of the management and supervisory bodies

As of December 31, 2012, the members of the Board of Directors and Executive Committee held directly, personally and in the formof registered shares, less than 1% of the share capital.

3.3. Employee share ownership

As of December 31, 2012, the employees of the Company and its affiliates, within the meaning of Article L. 225-180 of the FrenchCommercial Code, held less than 0.5% of the share capital in connection with company savings plans.

3.4. Share purchase option plans and share subscription option plans




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3.4.1. Share purchase option plans

Date of Shareholders’ Meeting 05/17/2000 05/17/2000 05/17/2000

Date of Board of Directors’ meeting 01/22/2002 05/15/2002 01/22/2003 Total

Total number of options granted 3,284,100 8,560 3,213,725 6,506,385

o/w Company officers(a) 1,215,000 - 1,220,000 2,435,000

Bernard Arnault(b) 600,000 - 600,000 1,200,000Nicolas Bazire(b) 200,000 - 200,000 400,000Antonio Belloni(b) 200,000 - 200,000 400,000Pierre Godé(b) 200,000 - 200,000 400,000Gilles Hennessy(b) 15,000 - 20,000 35,000

o/w First ten employees(c) 505,000 8,560 495,000 1,008,560

Number of beneficiaries 993 2 979

Earliest option exercise date 01/22/2005 05/15/2005 01/22/2006 Expiry date 01/21/2012 05/14/2012 01/21/2013

Purchase price (EUR) 43.30(d) 54.83 37.00(d)

Number of options exercised in 2012 50,002 - 86,098 136,100Number of options expired in 2012 119,250 - 24,400 143,650Total number of options exercised as of 12/31/2012 2,892,172 8,560 2,917,580 5,818,312Total number of options expired as of 12/31/2012 391,928 - 190,825 582,753

Options outstanding as of December 31 - - 105,320 105,320

(a) Number of options allocated to active company officers as of the plan’s commencement date.(b) Company officers active as of December 31, 2012.(c) Options granted to active employees other than company officers as of the plan’s commencement date.(d) Exercise price in euros for Italian and American residents:

Plans Italian Americanresidents residents

01/22/2002 45.70 43.8601/22/2003 38.73 -

Exercise of such options does not lead to any dilution for shareholders, since they are options to purchase existing shares.




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3.4.2. Share subscription option plans

Date of Shareholders’ Meeting 05/15/2003 05/15/2003 05/11/2006 05/11/2006 05/11/2006 05/11/2006 05/14/2009

Date of Board of Directors’ meeting 01/21/2004 05/12/2005 05/11/2006 05/10/2007 05/15/2008 05/14/2009 07/29/2009 Total

Total number of options granted 2,747,475 1,924,400 1,789,359 1,679,988 1,698,320 1,301,770 2,500 11,143,812

o/w Company officers(a) 972,500 862,500 852,500 805,875 766,000 541,000 - 4,800,375

Bernard Arnault(b) 450,000 450,000 450,000 427,500 400,000 200,000 - 2,377,500Antoine Arnault(b) - - - 9,500 9,500 9,500 - 28,500Delphine Arnault(b) 10,000 10,000 10,000 9,500 9,500 9,500 - 58,500Nicolas Bazire(b) 150,000 150,000 150,000 142,500 142,500 100,000 - 835,000Antonio Belloni(b) 150,000 150,000 150,000 142,500 142,500 100,000 - 835,000Pierre Godé(b) 150,000 40,000 30,000 15,000 40,000 100,000 - 375,000Gilles Hennessy(b) 20,000 20,000 20,000 19,000 22,000 22,000 - 123,000

o/w First ten employees(c) 457,500 342,375 339,875 311,544 346,138 327,013 2,500 2,126,945

Number of beneficiaries 906 495 520 524 545 653 1

Earliest option exercise date 01/21/2008 05/12/2009 05/11/2010 05/10/2011 05/15/2012 05/14/2013 07/29/2013Expiry date 01/20/2014 05/11/2015 05/10/2016 05/09/2017 05/14/2018 05/13/2019 07/28/2019

Subscription price (EUR) 55.70(d) 52.82(d) 78.84(d) 86.12 72.50(d) 56.50(d) 57.10

Number of options exercised in 2012 211,069 238,496 236,263 245,643 398,504 15,000 - 1,344,975Number of options expired in 2012 3,600 2,200 1,150 3,345 9,225 10,026 - 29,546Total number of options exercised as of 12/31/2012 1,888,359 1,594,118 815,746 683,365 398,504 23,000 - 5,403,092Total number of options expired as of 12/31/2012 113,350 91,425 94,248 87,417 84,894 39,990 - 511,324

Options outstanding as of December 31 745,766 238,857 879,365 909,206 1,214,922 1,238,780 2,500 5,229,396

(a) Options granted to active company officers as of the plan’s commencement date.(b) Company officers active as of December 31, 2012.(c) Options granted to active employees other than company officers as of the plan’s commencement date.(d) Exercise price in euros for Italian residents:

Plans Exercise price

01/21/2004 58.9005/12/2005 55.8305/11/2006 82.4105/15/2008 72.7005/14/2009 56.52

As of December 31, 2012, the potential dilutive effect resulting from the allocation of these options represents 1.03% of share capital.However, since LVMH retires a number of shares equivalent to the number of shares issued in connection with the exercise ofoptions, there is no dilutive effect for shareholders when the subscription options are exercised.




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Beneficiaries of bonus shares are selected among the employeesand senior executives of the Group’s companies on the basis oftheir level of responsibility and their individual performance.

The allocation of bonus shares to their beneficiaries is definitiveafter a two or three-year vesting period, depending on theplans, which is followed by a two-year holding period, afterwhich beneficiaries are free to sell them. Since 2009, bonusshares allocated to beneficiaries who are not French residentsfor tax purposes have been definitive after a vesting period offour years and are freely transferable at that time.

The schemes launched on April 15, 2010 and March 31, 2011combine the allocation of traditional bonus shares and theallocation of performance bonus shares (“performance shares”),in proportions determined in accordance with the beneficiary’slevel in the hierarchy and status. The plan launched on April 5,2012 involves the allocation of performance shares only.

Shares subject to performance conditions are definitively allocatedonly if LVMH’s consolidated financial statements both for thefiscal year in which the plan is set up (fiscal year “Y”) and forfiscal year Y+1 show a positive change compared to fiscal year

3.4.3. Options granted to and exercised by company officers and by the Group’s top ten employees during the fiscal year

Options granted

No option plans were created in 2012.

Options exercised by senior executive officers of the Company

Beneficiaries Company granting Date of Number Exercise the options the plan of options price (EUR)

Antonio Belloni LVMH 05/12/2005 130,000 52.82

Options exercised by other executive officers of the Company

Beneficiaries Company granting Date of Number Exercise the options the plan of options price (EUR)

Antoine Arnault LVMH 05/10/2007 9,500 86.12

Delphine Arnault Christian Dior 01/31/2007 25,000 85.00 LVMH 05/11/2006 10,000 78.84 ” 05/10/2007 9,500 86.12

Nicolas Bazire LVMH 05/15/2008 25,000 72.50

Pierre Godé LVMH 05/11/2006 30,000 78.84 ” 05/10/2007 15,000 86.12 ” 05/15/2008 40,000 72.50

Options exercised by the ten employees of the Group, other than company officers, having exercised the largest number of options

Company granting the options Date of Number Exercise the plan of options price (EUR)

LVMH Moët Hennessy – Louis Vuitton 01/21/2004 79,600 55.70 05/12/2005 25,000 52.82 05/12/2005 30,000 55.83 05/11/2006 100,100 78.84 05/11/2006 30,000 82.41 05/10/2007 128,038 86.12 05/15/2008 101,034 72.50 05/15/2008 30,000 72.70

3.5. Allocation of bonus shares and performance shares




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3.5.1. Bonus share and performance share allocation plans

Date of Shareholders’ Meeting 05/15/2008 05/15/2008 05/15/2008 05/15/2008 05/15/2008 05/15/2008 03/31/2011 03/31/2011 03/31/2011 03/31/2011 03/31/2011

Date of Board of Directors’ meeting 05/14/2009 07/29/2009 04/15/2010 04/15/2010 03/31/2011 03/31/2011 10/20/2011 10/20/2011 04/05/2012 07/26/2012 07/26/2012

Bonus Bonus Bonus Performance Bonus Performance Bonus Bonus Performance Bonus Performance Total shares shares shares shares shares shares shares shares shares shares shares

Number of shares provisionally allocated 311,209 833 195,069 274,367 184,328 257,724 95,000 20,000 416,609 45,000 830 1,800,969

o/w Company officers(a) - - 108,837 - 100,071 - - 85,913 45,000 - 339,821

Bernard Arnault(b) - - 40,235 - 36,994 - - 28,008 - - 105,237Antoine Arnault(b) - - 1,911 - 1,757 - - 1,478 - - 5,146Delphine Arnault(b) - - 1,911 - 1,757 - - 1,478 - - 5,146Nicolas Bazire(b) - - 20,118 - 18,498 - - 15,560 - - 54,176Antonio Belloni(b) - - 20,118 - 18,498 - - 15,560 - - 54,176Pierre Godé(b) - - 20,118 - 18,498 - - 15,560 45,000 - 99,176Gilles Hennessy(b) - - 4,426 - 4,069 - - 3,422 - - 11,917Francesco Trapani(b) - - - - - - - 4,847 - - 4,847

o/w First ten employees(c) 48,165 833 27,372 67,350 23,387 64,611 95,000 20,000 90,078 - 830 437,626

Number of beneficiaries 642 1 627 639 698 712 1 1 747 1 1

Vesting date 05/14/2011(d) 07/29/2013 04/15/2012(d) 04/15/2012(d) 03/31/2014(e) 03/31/2014(e) 10/20/2013(f) 10/20/2013 04/05/2015(e) 07/26/2015(e) 07/26/2015(e)

Date as of which the shares may be sold 05/14/2013 07/29/2013 04/15/2014 04/15/2014 03/31/2016(e) 03/31/2016(e) 10/20/2015(g) 10/20/2015 04/05/2017(e) 07/26/2017(e) 07/26/2017(e)

Number of share allocations vested in 2012 6,698(h) - 97,517 209,594 - - - - - - - 313,809Number of share allocations expired in 2012 8,588 - 7,492 3,174 9,156 3,762 - - 3,763 - - 35,935Total number of share allocations vested as of 12/31/2012 153,010 - 97,517 209,594 - - - - - - - 460,121Total number of shareallocations expired as of 12/31/2012 31,527 - 12,644 5,442 10,219 4,117 - - 3,763 - - 67,712

Remaining bonus share allocations as of December 31 126,672 833 84,908 59,331 174,109 253,607 95,000 20,000 412,846 45,000 830 1,273,136

(a) Bonus shares allocated to company officers active as of the provisional allocation date.(b) Company officers active as of December 31, 2012.(c) Bonus shares allocated to active employees other than company officers as of the provisional allocation date.(d) Definitive allocation on May 14, 2013 and April 15, 2014 for beneficiaries who are not French residents for tax purposes.(e) Definitive allocation of shares on March 31, 2015, April 5, 2016 and July 26, 2016 which then become transferable for beneficiaries who are not French residents for tax purposes.(f) Definitive allocation in two tranches of 47,500 shares, with the second tranche of shares to be definitively allocated on October 20, 2014.(g) Shares in the first tranche will become transferable on October 20, 2015 and those in the second tranche will become transferable on October 20, 2016.(h) Definitive allocations for beneficiaries who were French residents for tax purposes in fiscal year 2012.

Bonus shares vested do not involve any dilution for the shareholders, since existing shares are remitted for the settlement.

Y-1 in relation to one or more of the following indicators: profitfrom recurring operations, net cash from operating activitiesand operating investments, current operating margin. Withrespect to the plan set up on April 15, 2010, the performancecondition was satisfied in 2010 and 2011. With respect to the plan set up on March 31, 2011, the condition was satisfiedin 2011 and 2012. With respect to the plan set up on April 5,2012, the condition was satisfied in 2012.

In the event of the vesting of their share allocations, the Chairmanand Chief Executive Officer or the Group Managing Directorare required to retain possession of half of these shares in pureregistered form until the conclusion of their term in office.

In addition, two specific bonus share allocation plans were set upon October 20, 2011 and one specific bonus and performanceshare plan was set up on July 26, 2012, in favor of Group’semployees and senior executives.




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3.5.2. Share allocations during the fiscal year to company officers and to the top ten employees of the Group

Provisional allocations of performance shares during the fiscal year to senior executive officers of the Company

Beneficiaries Company granting Date of Number Exercise the shares the plan of options price (EUR)

Bernard Arnault LVMH 04/05/2012 28,008 3,195,153 Christian Dior 04/05/2012 22,982 2,383,923

Antonio Belloni LVMH 04/05/2012 15,560 1,775,085

See also the table shown on page 53 for the other terms and conditions of allocation.

Bonus shares and performance shares allocated on a provisional basis during the fiscal year to other company officers of the Company

Beneficiaries Company granting Date of Number of Number of the shares the plan bonus shares performance shares

Antoine Arnault LVMH 04/05/2012 - 1,478

Delphine Arnault Christian Dior 04/05/2012 - 6,095 LVMH 04/05/2012 - 1,478

Nicolas Bazire LVMH 04/05/2012 - 15,560

Pierre Godé LVMH 04/05/2012 - 15,560 ” 07/26/2012 45,000 -

Gilles Hennessy LVMH 04/05/2012 - 3,422

Francesco Trapani LVMH 04/05/2012 - 4,847

Performance shares vested during the fiscal year to senior executive officers of the Company

Beneficiaries Company granting Date of Number of the shares the plan performance shares

Bernard Arnault Christian Dior 04/15/2010 27,000 LVMH 04/15/2010 40,235

Antonio Belloni LVMH 04/15/2010 20,118

Bonus shares and performance shares vested during the fiscal year to other company officers of the Company

Beneficiaries Company granting Date of Number of Number of the shares the plan bonus shares performance shares

Antoine Arnault LVMH 04/15/2010 - 1,911

Delphine Arnault Christian Dior 04/15/2010 2,362 4,388 LVMH 04/15/2010 - 1,911

Nicolas Bazire LVMH 04/15/2010 - 20,118

Pierre Godé LVMH 04/15/2010 - 20,118

Gilles Hennessy LVMH 04/15/2010 - 4,426

2012 Reference Document 55



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Bonus shares and performance shares vested during the year to the Group’s ten employees(a), other than company officers, having received the largest number of shares

Company granting the shares Plan commencement Number of Number of date bonus shares performance shares

LVMH Moët Hennessy – Louis Vuitton 04/15/2010 20,652 58,567

(a) Active employees as of the date of definitive allocation.




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4. FINANCIAL AUTHORIZATIONS

4.1. Status of current delegations and authorizations

Share repurchase program (L. 225-209 et seq. of the French Commercial Code)

Type Authorization Expiry/ Amount Use as of date Duration authorized December 31, 2012

Share repurchase program April 5, 2012 October 4, 2013 10% of the share capital Movements during the fiscal year(b)

Maximum purchase price: 200 euros (13th resol.) (18 months)(a) 50,766,986 shares(c) Purchases: 1,666,617 shares Disposals: 1,576,617 shares

Reduction of capital through April 5, 2012 October 4, 2013 10% of the share capital Shares retired during the fiscal year:the retirement of shares purchased (14th resol.) (18 months)(a) per 24-month period 997,250 sharesunder the repurchase program 50,766,986 shares(c)

(a) A resolution renewing this authorization will be presented to the Shareholders’ Meeting of April 18, 2013. See §4.2 below.(b) Movements between April 5 and December 31, 2012. For purchases, including calls exercised. See also §5.1 below.(c) On the basis of the share capital mentioned in the Bylaws.

Authorizations to increase the share capital (L. 225-129, L. 225-129-2 and L. 228-92 of the French Commercial Code)

Type Authorization Expiry/ Amount Issue price Use as of date Duration authorized determination December 31, 2012 method

Through incorporation of reserves March 31, 2011 May 30, 2013 50 million euros Not applicable None(L. 225-130) (15th resol.) (26 months) (a) 166,666,666 shares(b)

With preferential subscription rights: March 31, 2011 May 30, 2013 50 million euros Free Noneordinary shares and investment securities (17th resol.) (26 months)(a) 166,666,666 shares(b) (c)

giving access to the share capital

Without preferential subscription rights: ordinary shares and investment securities giving access to the share capital

- by means of public offer March 31, 2011 May 30, 2013 50 million euros At least equal to None(L. 225-135 et seq.) (18th resol.) (26 months)(a) 166,666,666 shares(b) (c) the minimum price required by regulations(d)

- by means of private placement March 31, 2011 May 30, 2013 50 million euros At least equal to None(L. 225-135 et seq.) (19th resol.) (26 months)(a) 166,666,666 shares(b) (c) the minimum price required by regulations(d)

In connection with a public March 31, 2011 May 30, 2013 50 million euros Free Noneexchange offer (L. 225-148) (22nd resol.) (26 months)(a) 166,666,666 shares(b)

In connection with in-kind March 31, 2011 May 30, 2013 10% of share capital Free Number of shares contributions (L. 225-147) (23rd resol.) (26 months) (a) 50,781,562 shares(b) (e) issued: 18,037,011(f)

(a) A resolution renewing this authorization will be presented to the Shareholders’ Meeting of April 18, 2013. See §4.2 below.(b) Maximum nominal amount. The nominal amount of any capital increase decided in application of other delegations of authority would be offset against this amount (Shareholders’

Meeting of March 31, 2011, 25th resolution).(c) Provided the overall maximum ceiling of 50 million euros referred to in (b) is not exceeded, this amount may be increased subject to the limit of 15% of the initial issue in the event that the

issue is oversubscribed (Shareholders’ Meeting of March 31, 2011, 21st resolution) (L. 225-135-1).(d) Up to 10% of the share capital, the Board of Directors may freely determine the issue price, provided that this price is at least equal to 90% of the weighted average of the share price over

the three days preceding its determination (Shareholders’ Meeting of March 31, 2011, 20th resolution).(e) On the basis of the share capital mentioned in the Bylaws.(f) Capital increase in connection with the in-kind contribution of Bulgari shares.




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It is proposed that you authorize your Board of Directors toacquire Company shares particularly in order to (i) providemarket liquidity services; (ii) cover stock option plans, theallocation of bonus shares or any other employee share ownershipoperations; (iii) cover investment securities conferring entitlementto the Company’s shares; (iv) be retired; or (v) be held so as tobe exchanged or presented as consideration at a later date for

external growth operations (further details on operations carriedout under the previous program are set out in §5 below).

The authorization to reduce the share capital through theretirement of shares acquired under the share repurchase programmay be used in particular to offset the dilution resulting fromthe exercise of share subscription options.

Employee share ownership

Type Authorization Expiry/ Amount Issue price Use as of date Duration authorized determination December 31, 2012 method

Share subscription or purchase April 5, 2012 June 4, 2015 1% of share capital Average share • granted: noneoptions (L. 225-177 et seq.) (15th resol.) (38 months) 5,076,698 shares(a) price over the 20 • available

trading days preceding to be granted: the grant date 5,076,698 options

Bonus shares allocation March 31, 2011 May 30, 2014 1% of share capital Not applicable • granted: (L. 225-197-1 et seq.) (26th resol.) (38 months)(b) 4,896,328 shares 577,439 shares

• available to be granted: 4,318,889 shares

Capital increase reserved April 5, 2012 June 4, 2014 1% of share capital Average share price Nonefor employees who are members (16th resol.) (26 months)(c) 5,076,698 shares(d) over the 20 trading daysof a company savings plan preceding the grant date(L. 225-129-6) subject to a maximum

discount of 20%

(a) A resolution to include this authorization in the overall ceiling of 50 million euros mentioned in §4.2 will be presented to the Shareholders’ Meeting of April 18, 2013.(b) A resolution renewing this authorization, in advance of its expiration, for a period of 26 months will be presented to the Shareholders’ Meeting of April 18, 2013. See §4.2 below.(c) A resolution renewing this authorization will be presented to the Shareholders’ Meeting of April 18, 2013. See §4.2 below.(d) Subject to not exceeding the overall ceiling of 50 million euros mentioned in (a), against which this amount would be offset.

4.2. Authorizations proposed to the Shareholders’ Meeting

Share repurchase program (L. 225-209 et seq. of the French Commercial Code)

Type Resolution Duration Amount authorized

Share repurchase program 11th 18 months 10% of share capital Maximum purchase price: 250 euros 50,766,986 shares

Reduction of capital through the retirement 12th 18 months 10% of share capital per 24-month periodof shares purchased under the repurchase program 50,766,986 shares




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Employee share ownership

Type Resolution Duration Amount Issue price authorized determination method

Bonus share allocations 23rd 26 months 1% of share capital Not applicable(L. 225-197-1 et seq.) 5,076,698 shares(a) (b)

Capital increase reserved for employees 21st 26 months 1% of share capital Average share price overwho are members of a company savings 5,076,698 shares(a) (b) the 20 trading days precedingplan (L. 225-129-6) the grant date subject to a maximum discount of 20%

(a) Subject to not exceeding a total ceiling of 50 million euros defined by the 22nd resolution submitted to shareholders’ approval by the Shareholders’ Meeting of April 18, 2013, against whichthis amount would be offset.

(b) On the basis of the share capital mentioned in the Bylaws.




It is proposed that you authorize the Board of Directors to issueshares, either with preferential subscription rights for existingshareholders or without these rights but with the potential to grant a priority subscription option to existing shareholdersif the issues are performed on the French market.

In the event of an issue without preferential rights for existingshareholders, the issue price of shares shall be at least equal tothe minimum price set forth in legislative and regulatoryprovisions in force at the time of the issue.

In the event of any excess subscriptions in connection with acapital increase, the number of shares to be issued may be increased

by the Board of Directors in accordance with applicable laws.

It is also proposed that you authorize the Board of Directors toincrease the share capital by issuing shares as considerationeither for shares contributed to a public offer of exchange or, inan amount not to exceed 10% of the Company’s share capital,for contributions in kind consisting of shares or investmentsecurities giving access to the Company’s share capital.

These proposed authorizations would offer your Board ofDirectors greater agility to seize market opportunities or carry outexternal growth operations, as was the case for the acquisitionof Bulgari.

Share capital increases (L. 225-129, L. 225-129-2 and L. 228-92 of the French Commercial Code)

Type Resolution Duration Amount Issue price authorized determination method

Through incorporation of reserves 13th 26 months 50 million euros Not applicable(L. 225-130) 166,666,666 shares(a)

With preferential subscription rights: 14th 26 months 50 million euros Freeordinary shares and investment securities 166,666,666 shares(a)

giving access to the share capital

Without preferential subscription rights: ordinary shares and investment securities giving access to the share capital - by means of a public offering 15th 26 months 50 million euros At least equal to the minimum

(L. 225-135 et seq.) 166,666,666 shares(a) (b) price required by regulations(c)

- by means of private placement 16th 26 months 50 million euros At least equal to the minimum(L. 225-135 et seq.) 166,666,666 shares(a) (b) price required by regulations(c)

In connection with a public offer 19th 26 months 50 million euros Freeof exchange (L. 225-148) 166,666,666 shares(a)

In connection with in-kind contributions 20th 26 months 10% of share capital Free(L. 225-147) 50,766,986 shares(a)

(a) Maximum total nominal amount. The nominal amount of any capital increases decided in application of other delegations of authority would be offset against this amount (22nd resolution).(b) Provided the overall ceiling of 50 million euros referred to in (a) is not exceeded, this amount may be increased subject to the limit of 15% of the initial issue in the event that the issue

is oversubscribed (18th resolution) (L. 225-135-1).(c) Up to a maximum of 10% of the share capital, the Board of Directors may freely determine the issue price, provided that this price is at least equal to 90% of the weighted average price

of the Company’s shares over the three trading days preceding its determination (17th resolution).

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• During this period, the Company exercised call options on 100,000 shares. As of December 31, 2012, the Company no longer held call options.

• Between January 1 and December 31, 2012, the Companyretired 997,250 shares which had been purchased to covershare subscription option plans.

(number of shares Liquidity Coverage Coverage of Exchange or Share Totalunless otherwise stated) contract of plans securities giving payment in retirements access to Company connection with shares acquisitions

Balance as of December 31, 2011 119,000 9,417,678 - - - 9,536,678

Purchases 383,697 - - - - 383,697Average price (EUR) 123.07 - - - - 123.07Sales (395,697) - - - - (395,697)Average price (EUR) 121.80 - - - - 121.80Share purchase options exercised - (86,978) - - - (86,978)Average price (EUR) - 40.72 - - - 40.72Call options exercised - - - - - -Average price (EUR) - - - - - -Allocations of bonus shares - (1,063) - - - (1,063)Reallocations for other purposes - - - - - -Shares retired - (145,759) - - - (145,759)

Balance as of April 5, 2012 107,000 9,183,878 - - - 9,290,878

Purchases 1,566,617 - - - - 1,566,617Average price (EUR) 124.52 - - - - 124.52Sales (1,576,617) - - - - (1,576,617)Average price (EUR) 125.09 - - - - 125.09Share purchase options exercised - (49,122) - - - (49,122)Average price (EUR) - 37.01 - - - 37.01Call options exercised - 100,000 - - - 100,000Average price (EUR) - 37.00 - - - 37.00Allocations of bonus shares - (312,746) - - - (312,746)Reallocations for other purposes - - - - - -Shares retired - (851,491) - - - (851,491)

Balance as of December 31, 2012 97,000 8,070,519 - - - 8,167,519

5.1. Information on share repurchase programs

The purpose of this section is to inform the Shareholders’Meeting of the purchase transactions in treasury shares that werecarried out, between January 1, 2012 and December 31, 2012,by the Company as part of the share repurchase programsauthorized by the Combined Shareholders’ Meetings held onMarch 31, 2011 and April 5, 2012, respectively.

Under the liquidity contract concluded by the Company with

Oddo & Cie Entreprise d’Investissement and Oddo CorporateFinance on September 23, 2005, the Company acquired1,950,314 LVMH shares at the average price per share of124.23 euros and sold 1,972,314 LVMH shares at the averageprice per share of 124.43 euros.

These transactions generated expenses of 0.3 million euros.

The table below groups by purpose the transactions carried outat value date during the period January 1, 2012 to December 31,2012:




5. SHARE REPURCHASE PROGRAMS

The authorization to allocate bonus shares to Group employeesand executives will give the Board of Directors access to amechanism to reward those Group employees and executivesmaking the most direct contribution to the results of the Group’sresults by associating them with the Group’s future performance.

The various authorizations to increase the share capital proposedto the Shareholders’ Meeting entail the obligation to submitfor the Meeting’s approval a resolution authorizing the Boardof Directors to carry out capital increases reserved for Groupemployees enrolled in a company savings plan.

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As of December 31, 2012

Percentage of own share capital held directly or indirectly 1.61%Number of shares retired in the last 24 months 3,256,704Number of shares held in the portfolio 8,167,519Book value of the portfolio 414,151,587 eurosMarket value of the portfolio 1,133,651,637 euros

Cumulative gross transactions Open positions as of December 31, 2012

Purchases Sales/ Purchases Sales/Transfers

Transfers Purchased call Forward Sold call Forward options purchases options sales

Number of shares 2,050,314 3,419,473 - - - -Of which:

- liquidity contract 1,950,314 1,972,314 - - - -- purchases to cover plans - - - - - -- exercise of purchase options - 136,100 - - - -- exercise of call options 100,000 - - - - -- bonus share allocations - 313,809 - - - -- purchases of shares to be retired - - - - - -- share retirements - 997,250 - - - -

Average maximum maturity - - - - - -Average trading price(a) (EUR) 124.23 124.43 - - - -Average exercise price (EUR) 37.00 39.38 - - - -Amounts (EUR) 245,991,233 250,776,679 - - - -

(a) Excluding bonus share awards and share retirements.

The table below, prepared in accordance with the provisions of AMF Instruction No. 2005-06 of February 22, 2005 inapplication of Article 241-2 of the AMF’s General Regulations,

provides a summary overview of the transactions performed by the Company involving its own shares from January 1, 2012to December 31, 2012:

5.3. Summary table disclosing the transactions performed by the issuer involving its own shares from January 1 to December 31, 2012

• Securities concerned: shares issued by LVMH Moët Hennessy –Louis Vuitton SA.

• Maximum portion of the capital that may be purchased bythe Company: 10%.

• Maximum number of its own shares that may be acquired by the Company, based on the number of shares making upshare capital as of December 31, 2012: 50,766,986, but takinginto account the 8,167,519 shares held as treasury shares,only 42,599,467 treasury shares are available to be acquired.

• Maximum price per share: 250 euros.

• Objectives:

- buy and sell securities under the liquidity contractimplemented by the Company;

- buy shares to cover stock option plans, the granting ofbonus shares or any other allocation of shares or share-basedpayment schemes, benefiting employees or companyofficers of LVMH or a related company as defined underArticle L. 225-180 of the French Commercial Code;

- retire the shares acquired;- buy shares to cover securities giving access to the Company’s

shares, notably by way of conversion, tendering of acoupon, reimbursement or exchange;

- buy shares to be held and later presented for considerationas an exchange or payment in connection with externalgrowth operations.

• Term of the program: 18 months as from the OrdinaryShareholders’ Meeting of April 18, 2013.

5.2. Description of the main characteristics of the share repurchase program presented to the Combined Shareholders’ Meeting of April 18, 2013




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6. REMUNERATION OF COMPANY OFFICERS

6.1. Summary of the remuneration, options and performance bonus shares granted to senior executive officers(a)

(EUR) Remuneration due in Valuation of options granted Valuation of performanceSenior respect of the fiscal year during the fiscal year bonus shares granted executive officers during the fiscal year(b)

2012 2011 2012 2011 2012 2011

Bernard Arnault 3,790,620 4,428,399 - - 5,579,076 6,268,271Antonio Belloni 5,553,780 5,489,552 - - 1,775,085 1,942,290

(a) Gross remuneration and benefits in kind paid or borne by the Company and companies controlled, in addition to remuneration and benefits in kind paid or borne by Financière Jean Goujonand Christian Dior, subject to the provisions of Article L. 225-102-1 of the French Commercial Code, excluding directors’ fees.

(b) The breakdown of equity securities or securities conferring entitlement to capital allocated to members of the Board of Directors during the fiscal year as well as the performance conditionsto be met for the definitive allocation of shares are presented in §3.5.

6.2. Summary of the remuneration of each senior executive officer(a)

Bernard Arnault

Compensation (EUR) Amounts due for the fiscal year Amounts paid in the fiscal year

2012 2011 2012 2011

Fixed compensation 1,590,620 1,728,399 1,191,563 1,713,101(b)

Variable compensation(c) 2,200,000 2,200,000 2,200,000(d) 2,200,000(d)

Exceptional compensation - 500,000 - 500,000Directors’ fees 118,464 118,464 127,953 118,464Benefits in kind Company car Company car Company car Company car

Total 3,909,084 4,546,863 3,519,516 4,531,565

Antonio Belloni

Compensation (EUR) Amounts due for the fiscal year Amounts paid in the fiscal year

2012 2011 2012 2011

Fixed compensation 3,238,530 3,174,302 3,445,786(g) 3,185,192(f)

Variable compensation(e) 2,315,250 2,315,250 2,315,250(d) 2,315,250(d)

Exceptional compensation - - - -Directors’ fees 87,245 87,245 87,245 87,245Benefits in kind Company car Company car Company car Company car

Total 5,641,025 5,576,797 5,848,281 5,587,687

(a) Gross remuneration and benefits in kind paid or borne by the Company and companies controlled, in addition to remuneration and benefits in kind paid or borne by Financière Jean Goujonand Christian Dior, subject to the provisions of Article L. 225-102-1 of the French Commercial Code.

(b) The differences between the amounts due and the amounts paid are attributable to changes in foreign exchange rates.(c) 50% based on the achievement of qualitative objectives and 50% based on the achievement of budget objectives regarding revenue, operating profit and cash flow, each item bearing

the same weight.(d) Amounts paid in respect of the prior fiscal year.(e) One-third based on the achievement of qualitative objectives and two-thirds based on the achievement of budget objectives regarding revenue, operating profit and cash flow, each item

bearing the same weight.(f) Including the change in housing allowance.(g) The difference between amounts paid and amounts due will be settled in 2013.




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63

6.3. Work contract, specific pension, leaving indemnities and non-competition clause in favor of senior executive officers

Senior Work contract Supplementary Indemnities or benefits Indemnities relatingexecutive officers pension(a) due or likely to become to a non-competition due on the cessation or clause change of functions

Yes No Yes No Yes No Yes No

Bernard Arnault Chairman and Chief Executive Officer X X X X

Antonio Belloni Group Managing Director X X X X(b)

(a) This supplementary pension is only acquired if the potential beneficiary has been present for at least six years on the Group’s Executive Committee and simultaneously asserts his rights to hisstandard legal pension entitlement. This is not required however if they leave the Group at the latter’s request after the age of 55 and resume no other professional activity until their externalpension plans are liquidated. It is determined on the basis of a reference remuneration corresponding to the average of the three highest yearly remunerations received over the course oftheir career within the Group, subject to a maximum of thirty-five times the annual social security ceiling. The annual supplementary pension is equal to the difference between 60% of thereference remuneration (i.e. 777,672 euros as of January 1, 2013) and all pension amounts paid by the general social security regime and the additional ARRCO and AGIRC regimes.Amount of the commitment as of December 31, 2012, determined in accordance with the principles defined by IAS 19 Employee benefits:- Bernard Arnault: 15,335,044 euros;- Antonio Belloni: 9,992,467 euros.

(b) Covenant not to compete for a twelve-month period included in the employment contract – suspended during the term of the mandate of Group Managing Director – providing for the monthlypayment during its application of a compensation equal to the monthly remuneration on the termination date of his functions, supplemented by one twelfth of the last bonus received.

6.4. Summary of directors’ fees, compensation, benefits in kind and commitments given to other company officers(a)

Members of the Board of Directors Directors’ fees paid in Fixed remuneration paid Variable remuneration paid(EUR unless otherwise stated) during the fiscal year during the fiscal year

2012 2011 2012 2011 2012 2011

Antoine Arnault(b) 45,000 45,000 350,000 300,000 180,000 135,000Delphine Arnault(b) 58,803 58,158 90,000 90,000 30,000 30,000Nicolas Bazire(b) (c) (d) 55,000 55,000 1,235,000 1,235,000 2,700,000 2,700,000Antoine Bernheim 48,882 268,111 - - - -Bernadette Chirac 45,000 35,000 - - - -Nicholas Clive Worms 67,500 51,875 - - - -Charles de Croisset 67,500 62,500 - - - -Diego Della Valle 30,000 35,000 - - - -Albert Frère 69,375 25,000 - - - -Pierre Godé(b) 180,796 154,686 800,000 1,500,000 2,200,000 4,000,000Gilles Hennessy(b) (c) (d) 67,500 62,500 551,560(f) 540,000(f) 397,400 364,920Marie-Josée Kravis 37,500 22,500 - - - -Lord Powell of Bayswater 45,000 40,000 205,000(e) 205,000(e) - -Yves-Thibault de Silguy 95,625 45,000 - - - -Francesco Trapani(b) 45,000 33,750 1,600,000(f) 1,000,000(f) 1,595,835 -Hubert Védrine 45,000 35,000 - - - -

(a) Directors’ fees, gross remuneration and/or fees and benefits in kind paid or borne by the Company and the companies controlled, in addition to remuneration and benefits in kind paid or borneby Financière Jean Goujon and Christian Dior, subject to the provisions of Article L. 225-102-1 of the French Commercial Code.

(b) The breakdown of equity securities or securities conferring entitlement to capital granted to members of the Board of Directors during the financial year is presented in §3.5.(c) Benefits in kind: company car.(d) Other benefit: supplementary pension.(e) In pounds sterling.(f) Medium term profit sharing scheme.




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Moreover, the attendance fees paid by the Company to the Advisory Board members in 2012 amounted to:

(EUR)

Paolo Bulgari 30,000Patrick Houël 45,000Felix G. Rohatyn 15,000

6.5. Breakdown of equity shares or securities granting access to capital allocated to members of the Board of Directors during the fiscal year

This breakdown appears in §3.5 above.

7. SUMMARY OF TRANSACTIONS INVOLVING LVMH SHARES DURING THEFISCAL YEAR BY DIRECTORS AND RELATED PERSONS(a)

Directors concerned Type of transaction Number of shares/ Average price other securities (EUR)

Antoine Arnault Purchase of shares(b) 9,500 86.12 Sale of shares 94,500 133.26

Person(s)/company(ies) Sale of shares 91,200 124.21related to Bernard Arnault Purchase of share sale options 515,965 17.46 Sale of share purchase options 515,965 17.46

Delphine Arnault Purchase of shares(b) 19,500 82.39 Sale of shares 19,500 123.59

Company(ies) related to Loan of shares 5,000,000 NABernard Arnault, Antoine Arnault Sale of share purchase options 500,000 0.078and Delphine Arnault

Nicolas Bazire Purchase of shares(b) 25,000 72.50Person(s) related to Nicolas Bazire Sale of shares 25,000 138.05

Antonio Belloni Purchase of shares(b) 130,000 52,82 Sale of shares 130,000 137.88

Pierre Godé Purchase of shares(b) 85,000 77.14

Gilles Hennessy Sale of shares 42,000 129.16

Francesco Trapani Purchase of shares 500 126.60 Sale of shares 180,000 124.50

(a) Related persons defined in Article R. 621-43-1 of the Code monétaire et financier.(b) Exercise of share purchase or share subscription options.




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Pursuant to the provisions of Article L. 225-100-3 of the FrenchCommercial Code, information that could have a bearing on a takeover bid or exchange offer is presented below:

• capital structure of the Company: the Company is controlledby the Arnault family group, which controlled 46.42% of thecapital and 62.65% of the voting rights as of December 31, 2012;

• share issuance and buybacks: under various resolutions, theShareholders’ Meeting has delegated to the Board of Directorsfull powers to:

- increase the share capital, with or without shareholders’preferential rights and via public offer or private placement,

in a total nominal amount not to exceed 50 million euros,or 33% of the Company’s current share capital,

- grant share subscription options, within the limit of 1% ofthe share capital,

- allocate bonus shares, to be issued, within the limit of 1%of the share capital,

- acquire Company shares up to 10% of the share capital.

Any delegation whose application would be likely to cause theoperation to fail is suspended during the period of a takeoverbid or exchange offer.

9. INFORMATION THAT COULD HAVE A BEARING ON A TAKEOVER BID OR EXCHANGE OFFER

- take into account the provisions of Law 2011-525 of May 17,2011 relating to the simplification and improvement of thequality of law by eliminating all references in the Bylaws tosignificant related-party agreements concluded within thenormal course of operations and at arm’s length (Article 18);

- offer the Shareholders’ Meeting the ability to grant eachshareholder the option to receive all or a portion of his or her dividend payment in the form of shares (Article 29).

8.3. Amendment of the Bylaws

We propose that the Company’s Bylaws be amended in order to:

It is proposed that you renew the appointments of Mrs. BernadetteChirac and Messrs. Bernard Arnault, Nicholas Clive Worms,

Charles de Croisset, Francesco Trapani and Hubert Védrine asDirectors.

8.2. Membership of the Board of Directors

The list of all offices and positions held by each member of the Board of Directors, currently and during the last five years,

is provided in the “Other information – Governance” section ofthe Reference Document.


8. ADMINISTRATIVE MATTERS

8.1. List of positions and offices held by the members of the Board of Directors



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MANAGEMENT REPORT OF THE BOARD OF DIRECTORS Human resources

1. GROUP REPORTING ON EMPLOYEE-RELATED ISSUES 681.1. Analysis and development of the workforce 681.2. Work time 721.3. Compensation 731.4. Social responsibility 741.5. Professional development of employees 761.6. Health and safety 781.7. Employee relations 791.8. Relations with third parties 791.9. Compliance with international conventions 82

2. ATTESTATION OF COMPLETENESS AND LIMITED ASSURANCE REPORT BY ONE OF THE STATUTORY AUDITORS ON SELECTED SOCIAL AND CORPORATE INFORMATION 83


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1.1.1. Breakdown of the workforce

The total workforce as of December 31, 2012 amounted to106,348 employees, an increase of 9% compared to 2011. Of thistotal, 96,096 employees worked under permanent contractsand 10,252 worked under fixed-term contracts. Part-timeemployees represented some 18.5% of the total workforce, or19,666 individuals. The portion of staff outside France increasedby 1.4% on the previous year to 79% of the workforceworldwide.

The Group’s average Full Time Equivalent (FTE) workforce in2012 comprised 91,837 employees, a rise of 13% on 2011.The main changes are due to the opening of new stores, mainlyin the United States, Europe and China. This increase in the FullTime Equivalent workforce is also related to Sephora Russiaand Bulgari, which were acquired on June 30, 2011, beingconsolidated over a full year for 2012. Watches and Jewelryand Selective Retailing increased their average workforce by 50% and 18%, respectively.

The tables below show the breakdown of the workforce, bybusiness group, geographic region and professional category.

1.1. Analysis and development of the workforce

Since 2010, all staff members involved in social reporting havehad access to an e-learning module. The purpose of this onlinetraining tool is to familiarize users with the objectives of socialreporting, and deepen understanding of key indicators and the calculation methodology used. Control procedures havealso been reinforced at each organizational entity through theimplementation of an electronic signature system on the finalvalidation of social reporting documents and the signing of a representation letter by the Director of Human Resources of each House.

The mapping between organizational and legal entities ensuresconsistency between the social and financial reporting systems.Accordingly, the scope of social reporting covers all staff employedby Group companies consolidated on a full or proportionalbasis, but does not include equity-accounted associates.

A descriptive sheet is available for each social indicator specifyingits relevance, the elements of information tracked, the procedureto be applied to gather information, and the various controls tobe performed when entering data. In addition, informationsystem controls are in place throughout reporting proceduresin order to verify the reliability and consistency of data entered.

Workforce information provided below relates to all consolidatedcompanies on December 31, including LVMH’s share in jointventures. Other social indicators were calculated for a scope of605 organizational entities covering more than 99% of the globalworkforce and encompass all staff employed during the year,including those employed by joint ventures.

Since the 2007 fiscal year, selected employee-related disclosuresfor the Group have been audited each year by one of theGroup’s Statutory Auditors, Deloitte & Associés, assisted by itsDepartment in charge of Social and Environmental Responsibility,in accordance with Article R. 225-105-2 of the French CommercialCode. This year, Deloitte & Associés has examined the entireHuman Resources section of this Management Report. Theiropinions are expressed in a report at the end of the section.

LVMH’s employees in China are counted in the number of staffworking under permanent contracts (9,092 as of December 31,2012). Although Chinese law limits the duration of employmentcontracts, which become permanent only after several years,the LVMH group considers employees working under suchcontracts as permanent, given the nature of Chinese laborlegislation.

1. GROUP REPORTING ON EMPLOYEE-RELATED ISSUES



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Breakdown by business group

Total headcount as of December 31(a) 2012 % 2011 % 2010 %

Wines and Spirits 6,634 7 6,372 7 6,063 7Fashion and Leather Goods 28,504 27 27,137 28 25,013 30Perfumes and Cosmetics 19,578 18 18,423 19 17,715 21Watches and Jewelry 7,729 7 7,249 7 2,332 3Selective Retailing 42,352 40 36,905 38 30,998 37Other 1,551 1 1,473 1 1,421 2

Total 106,348 100 97,559 100 83,542 100

(a) Total permanent and fixed-term headcount.

Breakdown by geographic region


France 21,095 21 20,456 21 19,495 23Europe (excluding France) 25,250 24 23,859 24 17,428 21United States 24,867 23 22,986 24 19,650 23Japan 5,473 5 5,192 5 4,658 6Asia (excluding Japan) 23,846 22 20,258 21 18,168 22Other 5,817 5 4,808 5 4,143 5

Total 106,348 100 97,559 100 83,542 100


Breakdown by professional category


Executives and managers 17,851 17 16,009 16 13,915 16Technicians and supervisors 9,960 9 9,078 9 8,141 10Administrative and sales employees 65,415 62 60,070 62 50,055 60Production workers 13,122 12 12,402 13 11,431 14

Total 106,348 100 97,559 100 83,542 100


Average age and breakdown by age

The average age of the worldwide workforce employed under permanent contracts is 36 years and the median age is 33 years. Theyoungest age ranges are found among sales personnel, mainly in the Asia-Pacific region, in the United States and in the Other markets.

(as %) Global France Europe USA Japan Asia Other workforce (excluding France) (excluding Japan) markets

Age: less than 25 years 12.8 6.8 9.5 19.3 2.6 17.1 18.225-29 years 21.3 14.9 18.7 21.3 16.9 30.0 22.830-34 years 19.3 16.4 19.8 15.8 26.6 22.2 21.135-39 years 14.3 15.0 17.6 10.5 25.7 11.2 14.840-44 years 11.3 14.0 14.0 9.3 14.5 7.6 9.545-49 years 8.6 12.6 9.3 7.7 7.6 5.9 6.450-54 years 6.1 10.5 5.9 6.4 4.1 3.3 3.455-59 years 4.2 7.7 3.6 4.9 1.8 1.9 2.560 years and over 2.1 2.1 1.6 4.8 0.2 0.8 1.3

100.0 100.0 100.0 100.0 100.0 100.0 100.0

Average age 36 39 37 36 36 33 34



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1.1.2. Recruitment policy

LVMH sees the identification and recruitment of talent as a keymanagement task and a determining element for the success of each of its entities in the short, medium and long term. For businesses where creativity and know-how are of theutmost importance, it is clearly essential to be able to enlist thehighest-performing, most appropriate and promising talent. In this highly competitive business environment, the quality ofteams and of each of their members make the difference.

Over the course of 2012, LVMH bolstered its appeal to leadingcolleges and universities, organizing more than a hundredevents worldwide to promote the Group and Group companiesto up-and-coming talents while reaffirming its commitment tobe a fully-fledged partner. These events were organized as partof the Group’s sponsorship initiatives in France, including theLVMH endowed chair in luxury brand management at ESSECBusiness School, the orientation seminar for internationalstudents at HEC, grants for students from the Antilles atSciences Po, and other programs involving the Institut Françaisde la Mode as well as the École Duperré. Events were alsoorganized abroad as part of LVMH’s sponsorship role with theCEMS alliance, which builds bridges between multinationalcorporations and major European business schools. OutsideEurope, events such as MBA meet-ups were held in the UnitedStates, Hong Kong and Shanghai, where different Groupcompanies were introduced to students from four prestigiousbusiness schools; endowment initiatives included the “LVMHChair in Luxury Branding” at Waseda University in Japan, the“Luxury Business Management Track Bulgari” at SDA Bocconiin Italy, and a sponsorship agreement with the Central SaintMartins College of Art and Design in the United Kingdom tofoster the development of creative, cross-disciplinary projects atGroup companies.

The Group’s recruitment policy is part of an overall HumanResources strategy designed to highlight all of its strengthsand identify the right personality fit. For this purpose, the Group

develops recruitment and integration tools built specifically tosingle out enterprising individuals with the skills to drivefuture growth, using methods which respect the candidatesinvolved. LVMH has expanded its Recruitment Days programto every part of the world where the Group operates in order torecruit high-potential graduates from international backgrounds.The rigorous methodology used for these Recruitment Days,involving exercises simulating real-life business scenarios, ishighly popular with applicants, who receive systematic,personalized feedback on their participation.

Since 2009, LVMH has decided to make the career opportunitieswithin what the Group calls its “ecosystem” better known.This has a unique appeal in the luxury world, and motivatesthe best applicants to join one of the Group companies. Thisdetermination to give the Group the means to continuallyreinforce its image as an employer of choice is already verywidely recognized in France. Initiatives taken by all Groupcompanies have been popular with business school students in France, who ranked LVMH first among preferred employersfor the 7th consecutive year in the Universum poll run byTrendence. Randstad, an HR consulting firm, also awarded the Group first prize in its Consumer Goods category. Thesedistinctions honor the efforts made by all Group companies to bolster their appeal to young graduates and, by doing so,heighten their ability to attract diverse, top-tier talent.

Outside France, the Group was one of the 50 most attractiveemployers worldwide in 2012 among business school studentsaccording to Universum’s consolidated poll results from 12different countries, ranking at position 25, two places higherthan in the previous survey. The Group also ranked in the Top 50for engineering students. The Group’s appeal was reaffirmed in2012, with a 25% increase in applications on LVMH’s Careerwebsites, which received some 240,000 job applications in 2012.

The LVMH Code of Conduct for Recruitment has been widelydisseminated to all employees active in recruitment processesacross the Group. It sets forth the ethical principles to be


Length of service: less than 5 years 59.4 38.3 55.4 70.5 39.7 73.5 72.25-9 years 20.4 19.4 24.8 19.0 35.7 15.4 15.210-14 years 9.8 16.5 11.2 6.2 15.9 5.0 7.115-19 years 4.0 7.2 4.2 2.1 4.4 3.1 2.420-24 years 3.0 7.5 2.4 1.2 3.2 1.8 1.225-29 years 1.6 5.0 0.9 0.5 0.7 0.7 1.130 years and over 1.8 6.1 1.1 0.5 0.4 0.5 0.8

100.0 100.0 100.0 100.0 100.0 100.0 100.0

Average length of service 6 11 6 5 7 5 5

The average length of service within the Group is eleven years inFrance and ranges from five to seven years in the other geographicregions. This difference is mainly due to the predominance in these other regions of retail activities characterized by a high

turnover rate. It is also the result of recent expansion by Groupcompanies into high-growth markets, where there is a greaterfluidity of employment.

Average length of service and breakdown by length of service



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Turnover by geographic region

(as %) 2012 France Europe USA Japan Asia Other 2011 2010 (excluding (excluding markets France) Japan)

Total turnover(a) 20.1 9.3 17.4 31.5 8.7 24.6 21.0 19.1 19.3o/w: voluntary turnover(b) 14.8 4.2 12.5 24.7 8.1 19.0 15.6 14.3 13.5

involuntary turnover(c) 5.0 4.3 4.5 6.5 0.4 5.5 5.2 4.4 5.1

(a) All reasons.(b) Resignations.(c) Dismissals/end of trial period.

observed at LVMH and guarantees that fair hiring practices aredisseminated at all of the Group’s operations worldwide. ThisCode of Conduct is embodied in fourteen commitments, whichaim in particular to prevent any form of discrimination and topromote diversity. Ethical principles to be applied inrecruitment and the LVMH Code of Conduct for Recruitmentare reinforced by the training program “Recruitment withoutDiscrimination”. This training initiative, introduced in 2011for Human Resources managers at various Group companies,invites participants to dissect the recruitment process andassess the impact of stereotypes and prejudices with the goal ofreducing the risk of discrimination at each stage in the process.To date, 150 Human Resources managers have completed thistraining. Lastly, LVMH has also had discrimination testsperformed since 2008, by an independent and highly regardedfirm, on job offers published on its Web site. By means of thisscrupulous self-assessment procedure using the services of anindependent, external provider on an ongoing basis, the Groupstrictly monitors the excellence of its recruitment practices.

1.1.3. Movements during the year: joiners, leavers and internal mobility

In 2012, 26,688 individuals were hired under permanent contracts,including 2,762 in France. Over 4,900 people were recruitedin France under fixed-term contracts. The seasonal sales peaks,at the end of year holiday season and the harvest season, are twomain reasons for using fixed-term contracts.

Departures from Group companies in 2012 (all causes combined)affected a total of 19,235 employees working under permanentcontracts, of which nearly 47% were employed within theSelective Retailing business group, which traditionally experiencesa high turnover rate. The leading causes for departure wereresignations (73%) and individual dismissals (15%).

The overall turnover rate is rising compared to 2011 and showsmarked differences across geographic regions: the highest ratesare recorded in North America and Asia, where labor marketsare more fluid.



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1.2. Work time

1.2.1. Work time organization

Worldwide, 13% of employees benefit from variable or adjusted working hours and 45% work as a team or alternate their working hours.

Global workforce affected by various forms of working hours adjustment: breakdown by geographic region

Employees affected(a) (as %) Global France Europe USA Japan Asia Other workforce (excluding (excluding markets France) Japan)

Variable/adjusted schedules 13 34 16 1 13 1 5Part-time 19 10 20 42 1 5 23Teamwork or alternating hours 45 10 30 77 86 55 54

(a) The percentages are calculated in relation to the total number of employee under permanent and fixed-term contracts in France. For the other regions, they are calculated in relation to the number of employees under permanent contracts, except for part-time workers, in which case the percentages are calculated with respect to the total headcount.

The Group has made internal mobility, whether geographic orfunctional, one of the pillars of its Human Resources policy.The LVMH ecosystem offers an excellent springboard for careeradvancement: the diversity of business activities and jobs, thenumber of brands, and the Group’s broad geographicalpresence all make it possible for employees to enjoy individually-tailored careers, while Group companies benefit from fresh skills,experience, and knowledge. LVMH posts vacant positions onits Intranet, Voices, as part of its internal career mobility scheme,where applicants looking for a career transition can register.This tool is designed to give employees better up-to-dateinformation on opportunities within the Group, regardless of brand, job, or location, and can be used to directly submitapplications. As such initiatives show, LVMH is committed to

helping its employees grow within the Group through skillbuilding and structured career development opportunities.Since the first listing of jobs in March 2012, more than 1,500positions earmarked for internal candidates on a priority basishave been posted on Voices. The resulting number of views(over 34,000) overwhelmingly illustrate the usefulness of thistool for providing motivation and holding onto talent.

These new initiatives supplement the existing system of monthlyinternal mobility committees, where open positions are matchedup to individuals interested in developing their careers. Thisapplies to all seniority levels, job types, and geographical regions.Significant results have been seen over the past few years, withmore than 2,100 internal opportunities taken up in 2012.

Breakdown of movements(a) of employees working under permanent contracts by business group and geographic region

(number) Joiners Leavers

2012 2011 2010 2012 2011 2010

Wines and Spirits 797 902 526 553 543 637Fashion and Leather Goods 6,276 5,870 4,964 4,411 3,761 3,461Perfumes and Cosmetics 4,912 4,559 4,213 3,805 3,504 3,185Watches and Jewelry 1,546 758 472 1,298 382 355Selective Retailing 12,947 10,467 8,648 9,018 7,158 6,470Other 210 179 139 150 133 142

Total 26,688 22,735 18,962 19 235 15,481 14,250

France 2,762 2,869 2,268 1,868 1,879 1,838Europe (excluding France) 5,147 3,911 3,240 3,987 2,681 2,607United States 7,221 7,070 5,804 6,092 4,757 4,197Japan 567 406 405 426 391 365Asia (excluding Japan) 9,169 7,124 6,266 5,768 4,915 4,431Other 1,822 1,355 979 1,094 858 812

Total 26,688 22,735 18,962 19,235 15,481 14,250

(a) Under permanent contract, including conversions of fixed-term contracts to permanent contracts and excluding internal mobility within the Group.



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Group companies offer attractive and motivating compensationpackages. International salary surveys, in relation to specificprofessions and sectors, are carried out annually and are used toensure that the Group maintains a favorable position againstthe market on a permanent basis. By means of variable paycomponents based on both individual performance and that of the Group, managers have a vested interest in the success ofits companies.

Initiatives and tools specific to each entity are put in place toreduce the salary gap between men and women within the sameprofessional category. Studies and actions conducted at thebrands in the field of professional equality mainly relate to pay,promotion to positions of greater responsibility, and thedistribution of levels of individual performance.

The studies conducted in 2012 on the distribution of levels ofindividual performance evidenced an identical distribution forwomen and men.

Workforce in France affected by various forms of working hours adjustment: breakdown by professional category

Employees affected(a) (as %) Workforce Executives Technicians Administrative Production France and and and sales workers managers supervisors employees

Variable/adjusted schedules 34 33 50 50 1Part-time 10 3 6 22 7Teamwork or alternating hours 10 - 8 2 37Employees benefiting from time off in lieu 9 - 13 15 11

(a) Percentages are calculated on the basis of the total headcount (employees under both permanent and fixed-term contracts).

1.2.2. Overtime

The cost of the volume of overtime is 55 million euros, or an average of 1.6% of the worldwide payroll.

Percentage of overtime by region

(as % of payroll) Global France Europe USA Japan Asia Other workforce (excluding France) (excluding Japan) markets

Overtime 1.6 1.4 1.7 1.4 2.7 1.6 1.0

1.2.3. Absenteeism

The worldwide absentee rate of the Group for employees working under permanent and fixed-term contracts is 4.7%. It has decreasedslightly compared with the previous years (4.8% in 2011 and 2010). The two main causes of absence are illness (2.2%) andmaternity leave (1.5%). The overall absentee rate of the European entities is twice as high as that recorded in other geographicregions.

Absentee rate(a) by region and by reason


Illness 2.2 3.6 3.2 1.0 0.4 1.8 1.1Work/work-travel accidents 0.2 0.5 0.1 0.1 - - 0.2Maternity 1.5 1.4 2.8 0.5 3.0 1.2 0.9Paid absences (family events) 0.4 0.2 0.4 0.1 0.4 0.7 0.7Unpaid absences 0.4 0.5 0.4 0.3 0.1 0.4 0.3Overall absentee rate 4.7 6.2 6.9 2.0 3.9 4.1 3.2

(a) Number of days absent divided by the theoretical number of days worked.

1.3. Compensation



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Integrity, constant vigilance to maintain a healthy environment,and respect at all levels are the pillars of social responsibility at LVMH. Over the last five years, the Group has reiterated its commitments in this regard and increased the number ofprograms in place wherever it is present.

Social responsibility is an approach adopted by all Groupcompanies. It is applied in different ways in different places,depending on local concerns or specific history and heritage.Coordination takes place at Group level through regularmeetings of Group company representatives in charge of socialand environmental responsibility. At each year-end, a fullinternational report is drawn up, covering Group companieswith the largest workforce. This report lists all the actionsimplemented by Group companies over the previous twelvemonths. Subjects include preventing discrimination, promotingprofessional equality, employees’ wellbeing, workforce integration,the employment of disabled persons, parenting, and efforts to stem socio-economic marginalization.

These achievements demonstrate the extent to which Groupcompanies monitor the impact of their business activities andbehaviors on people, communities and the regions in which theyoperate. Such initiatives are rooted in a clear acknowledgmentof the Group’s responsibilities towards all stakeholders, a driveto increase the positive social impact of their business, and a generous vision of excellence.

LVMH is a signatory of the United Nations Global Compactand, in France, of the Diversity Charter and the Enterprise

Charter for Equal Opportunity in Education.

Thus, LVMH has met all of the necessary criteria for admissionto the main leading indexes of responsible investment stocks: theDow Jones Sustainability World Index and the FTSE4Good Index.

1.4.1. Equality of opportunity for men and women

Gender diversity is an integral part of LVMH’s corporate culture.Women account for three-quarters of the Group’s workforce.This strong feminine presence is an essential characteristic ofthe Group. It is related in part to the very nature of LVMH’sbusinesses. Women are particularly prominent in Perfumes andCosmetics (83% women), Selective Retailing (81% women),and Fashion and Leather Goods (72% women). Conversely,the majority of staff in Wines and Spirits are men, representing63% of the workforce in this business group.

In 2012, the initiatives begun back in 2009 to promote women’saccess to executive positions already produced results. The Grouphas had more and more women on its executive committeesevery year, from 28% in 2010 to 36% in 2012. This comes asconfirmation of the Group’s ambition to build diverse leadershipteams that reflect its true economic and social profile. TheGroup’s gender equality policy sets a target of 40% for womenon executive bodies by 2015. All major human resourcesmanagement decisions are informed by a desire for genderequality, the source of a greater diversity and complementarityof sensitivities.

1.4. Social responsibility

1.3.1. Average salary

The table below shows the gross average monthly compensationpaid to Group employees in France under full-time permanentcontracts who were employed throughout the year:

Employees concerned (as %) 2012 2011 2010

Less than 1,500 euros 2.8 1.3 4.01,501 to 2,250 euros 27.2 32.6 34.32,251 to 3,000 euros 23.9 22.3 21.9Over 3,000 euros 46.1 43.8 39.8

Total 100.0 100.0 100.0

1.3.2. Personnel costs

Worldwide personnel costs break down as follows:

(EUR millions) 2012 2011 2010

Gross payroll - Fixed term or permanent contracts 3,471.4 2,807.6 2,528.8Employers’ social security contributions 873.0 720.4 653.5Temporary staffing costs 157.7 140.0 113.4

Total personnel costs 4,502.1 3,668.0 3,295.8

Outsourcing and temporary staffing costs were stable comparedto the previous year, accounting for 6.4% of the total payrollworldwide, including employer’s social security contributions.

1.3.3. Incentive schemes, profit sharing and company savings plans

All companies in France with at least 50 employees have an incentive scheme, profit sharing or company savings plan.These plans accounted for a total expense of 187.8 million eurosin 2012, paid in respect of 2011, a strong increase compared toprevious years.

(EUR millions) 2012 2011 2010

Profit sharing 93.2 71.6 53.2Incentive 66.9 57.4 32.6Employer’s contribution to company savings plans 15.0 9.1 6.3Profit sharing bonuses(a) 12.7 NA NA

Total 187.8 138.1 92.1

(a) For 2011, the amount paid in relation to the Prime de partage des profits (Profit sharingbonus) is included in Incentives and Profit sharing.



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Through its EllesVMH program, the Group aims to facilitatewomen’s access to positions of greater responsibility: access tomanagement training, diversity considerations in the contextof succession planning for key positions or in the recruitment ofmanagers. In addition to an initial pilot project, a new one-yearmentoring program was set up at the end of the year. TheGroup has also built up women’s networks in the five biggestcountries where it operates. Events organized by these networksbrought together more than 350 women in 2012. Numerousevents were held worldwide in March 2012 to celebrateInternational Women’s Day. As regards online networking,EllesVMH is now one of the largest Intranet communities,with 500 members around the world.

The Group remains ever vigilant with regard to gender equality,from the hiring stage throughout each employee’s career. In Francein 2012, all Group companies either signed labor agreementsor established action plans on the topic of gender equality.These measures include stipulations on working conditions,career development opportunities, and better work-life balance.

1.4.2. Actions in favor of older employees

The ability of older workers to find and keep jobs is a constantpriority for the Group. Workgroups formed at the instigationof the Group’s Human Resources Department have sought toimplement a global approach to the management and professionaldevelopment of older staff, and Group companies have beenable to adapt this policy to their specific characteristics. In thisconnection, among the priorities identified, 80% of the Group’s

Houses took on quantified commitments to end-of-careerplanning, while 70% vowed to improve workplace conditions.

In France, action plans and collective agreements have beenimplemented to promote the recruitment, employment andcareer development of staff over the age of 50. Louis Vuitton,Céline and Guerlain are among Group companies that havedeveloped “Senior-Junior” mentoring schemes to ensure thesuccessful transmission of their unequaled know-how.

Human Resources managers at all of the brands have receivedtraining in the conduct of a mid-career interview, following a program established by the Group’s Human ResourcesDepartment. These interviews are used at all Group companiesto improve career management for older employees and offersystematic career plan assessments to those over the age of 50.Information meetings about retirement have also been offeredto older employees at companies such as Le Bon Marché andParfums Christian Dior.

Further measures to promote the employment of older staffhave been implemented in several Group companies. Moët &Chandon, Parfums Christian Dior, LVMH Fragrance Brands,Guerlain and Le Bon Marché have signed agreements with theirunion representatives relating to the anticipatory managementof jobs and skills in order to organize and develop the careerprospects of older employees, with a particular focus on workingtime arrangements.

Worldwide, 12.4% of the LVMH group’s active workforce are over the age of 50. In France, this population accounts for20.3% of employees.

Proportion of female employees in new joiners(a) and in the Group’s active workforce

(as % of women) Joiners Group employees

2012 2011 2010 2012 2011 2010

Breakdown by business group Wines and Spirits 44 47 46 37 36 35Fashion and Leather Goods 68 68 70 72 72 73Perfumes and Cosmetics 84 85 86 83 84 84Watches and Jewelry 62 57 56 62 56 57Selective Retailing 81 82 81 81 81 81Other 57 57 50 47 46 44

Breakdown of personnel by professional category Executives and managers 63 64 61 62 62 61Technicians and supervisors 70 73 70 69 68 67Administrative and sales employees 81 81 81 81 81 81Production workers 47 55 66 61 63 64

Breakdown by geographic region France 73 74 72 69 69 68Europe (excluding France) 78 76 79 74 75 76United States 77 80 79 77 77 76Japan 74 79 81 75 78 78Asia (excluding Japan) 75 75 77 75 75 76Other 74 74 75 66 66 65

LVMH group 76% 77% 77% 74% 74% 74%

(a) Under permanent contracts, including internal mobility and transfers from fixed-term to permanent contract.



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The annual review of organization and talents run by the HumanResources department in close collaboration with operationalmanagers forms the backbone of the Group’s Human Resourcespolicy. It is fueled by the business-related issues pinpointed ineach Group company’s strategic plan, and highlights theirimplications in terms of Human Resources. This review providesforward-looking insights into the most critical positions andsuccession plans. It also aims to identify and develop talentswithin the Group through short term and medium term careeropportunities and by putting together individual developmentplans to prepare staff for their future responsibilities. Reviewshave shown that the Group’s pool of senior executives is stableand loyal, as well as increasingly international, with most keypositions held by non-French managers. The organization isalso proving capable of revealing talent within the Group, withmore than two thirds of key positions filled by internalpromotions. This policy has also reinforced the use of careerinterviews, adopting a complementary approach to existing annualassessments, with a greater focus on personal development.

LVMH also fosters mobility between professional categories byencouraging its employees to acquire new skills, especiallythrough certificate or degree programs. More than 7,700 staffmembers were promoted in 2012, i.e. 8% of the permanentworkforce.

The Group continued and increased its investments in trainingin 2012 so as to support growth and provide a broad array ofopportunities for personal and professional development. Apartfrom encouraging internal mobility across the various Groupcompanies, training serves as a powerful driver for buildingcareers, enabling the acquisition or enhancement of skills, andencouraging exchanges both inside and outside the Group.

Programs and forums are a reflection of the Group’s increasinglyinternational character, be it through the development of e-learning technologies or the growing variety of locationsinvolved. The opening of an ambitious Asia Pacific TalentDevelopment Centre in Singapore stands as a testament toLVMH’s global ties.

1.5. Professional development of employees

1.4.3. Employment of disabled persons

In January 2011, the Group signed its second partnershipagreement with AGEFIPH, a key French stakeholder in theemployment of disabled persons. With this new agreement,LVMH reinforces its commitments relating to the recruitmentand accommodation of employees affected by disabilities. Inthese efforts, LVMH is supported by a network of more than30 disability correspondents in Group companies through itsMission Handicap initiative. Awareness sessions are organizedon a regular basis for these correspondents, addressing thevarious issues raised by disabilities. In 2012 the Group also tooka particular interest in suppliers specializing in the employmentof disabled persons. In France, between 2007 and 2012, theemployment rate for disabled persons increased from 1.6% to4.1% based on official standards for the definition of disabilities.

The Group is particularly attentive to the need to ensure thatemployees who become disabled are able to continue working,as illustrated already by the specially designed facilities atMoët & Chandon, Parfums Christian Dior and Guerlain, whichallow staff members with medical limitations to continue towork in their jobs under appropriate conditions. A forerunnerin this area, Moët & Chandon founded MHEA in March 2011,a company offering facilities adapted for disabled employees. A fully autonomous entity, MHEA maintains a disabledemployment rate of at least 80% and provides the best possibleworking conditions for employees affected by disabilities,without any change in the terms of their compensation.

In the area of recruitment, LVMH has developed a methodology(“Handi-Talents”) based on professional-life scenarios fordisabled applicants. These innovative recruitment sessions payno heed to the applicants’ résumés but instead seek to make therecruitment process objective and identify skills and competencies

which are transferable into the professional sphere.

Informing and training employees is an essential part ofproviding job opportunities to disabled persons. Les Echos grouporganized awareness training for more than 60 employees in2012. On February 10, 2012 the Group organized a conferenceinvolving more than 50 managers on the subject of disabilitiesand management. This initiative has continued in the form of a training program called Le Manager et le Handicap.

In keeping with the international reach of its business activities,LVMH sees to it that its policies with respect to the employmentof persons with disabilities are consistently applied outsideFrance as well. In London, the LVMH House and the Down’sSyndrome Association (DSA) organized an event to promotethe social and professional integration of people with Down’ssyndrome (otherwise known as Trisomy 21). In Spain, Loewefunded training for 300 disabled individuals to increase theirability to find employment.

The Group encourages recourse to organizations that specializein the employment of disabled persons in a protected environmentwhere they are not independent enough to work in conventionalsettings. On November 7, 2012 the Group organized its firstexhibition on Disabilities and Responsible Procurement as partof its approach to responsible decision-making in procurement.Presented by Group Managing Director Antonio Belloni and Group Human Resources Director Chantal Gaemperle,this exhibition showcased various organizations specializing in disability employment as well as the sponsorships run byHennessy, Moët & Chandon, Guerlain, Louis Vuitton, Make Up For Ever and Parfums Christian Dior. The event wasattended by about 170 managers from all Group companies. Inaddition, services subcontracted to sheltered workshops totaledabout 7.7 million euros in 2012, equivalent to the addition ofmore than 190 indirect jobs.



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Moreover, LVMH organizes integration and awareness seminarsfor new hires focusing on the culture of the Group, its values,its key management principles and knowledge of its brands.

More than 25,600 employees attended seminars of this type in 2012.

A total of 60.4% of employees received training during the year and the average number of days training came to 2.3 days per employee.The training investment is spread across all professional categories and geographic regions in accordance with the table below:

France Europe USA Japan Asia Other (excluding France) (excluding Japan) markets

Training investment (EUR millions) 30.2 14.6 17.1 6.9 15.6 3.7Portion of total payroll (as %) 3.4 1.8 2.2 2.5 2.7 2.8Employees trained during the year (as %) 61.7 59.3 48.1 85.8 63.0 69.6o/w: Executives and managers 67.8 69.4 58.4 83.8 73.2 72.6

Technicians and supervisors 72.9 58.8 41.0 81.4 70.4 68.9Administrative and sales employees 51.5 60.3 44.6 87.2 60.1 68.3Production workers 57.6 49.8 56.4 82.1 67.1 81.0

Note: Indicators are calculated on the basis of the total headcount (employees under both permanent and fixed-term contracts) present at the workplace during the year, with the exception of the percentage of employees trained during the year, which is calculated on the basis of those employed under permanent contracts and present at the workplace as of December 31of the year.

In 2012, training expenses incurred by the Group’s companiesthroughout the world represented a total of 88.1 million euros,or 2.5% of total payroll.

The average training investment per full-time equivalentperson amounts to approximately 819 euros. In 2012, the totalnumber of training days amounted to nearly 247,500 days,representing an equivalent of around 1,076 people receivingfull-time training for the entire year.

A substantial portion of training also takes place on the job on a daily basis and is not factored into the indicators presented below:

Global workforce 2012 2011 2010

Training investment (EUR millions) 88.1 69.8 61.7Portion of total payroll (as %) 2.5 2.5 2.4Number of days training per employee 2.3 2.5 2.5Average cost of training per employee (EUR) 819 761 728Employees trained during the year (as %) 60.4 65.0 65.0

Note: Indicators are calculated on the basis of the total headcount (employees under both permanent and fixed-term contracts) present at the workplace during the year, with the exception of the percentage of employees trained during the year, which is calculated on the basis of those employed under permanent contracts and present at the workplace as of December 31of the year.

After Shanghai and Paris, New York played host to the finalsegment of the 2011/2012 LVMH Inspiring Entrepreneursprogram, offered to a select group of highly experienced managers.This innovative program was developed as a counterpart to the array of forums offered by the LVMH House in London, to demonstrate the Group’s commitment to excellence for itsexecutives. Participants were offered the chance to hear frominspiring, high-profile guest speakers as well as in-house leaders,including the LVMH group’s entire Executive Committee, andto engage with them on a variety of current topics.

On a global scale, the Group’s major regional Human Resourcesteams substantially increased the number of trainingopportunities available to local organizations, involving over800 managers in Asia and more than 400 in the United States,with a worldwide total in excess of 3,000 participants. TheGroup’s first ever middle management leadership program wasoffered jointly in French and English in the United States, France,Hong Kong, Singapore, Spain, Italy, and China (Shanghai).

A diverse selection of training programs is also available tonon-executive employees for career development in the Group’sboutiques, manufacturing facilities, and administrative offices.



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LVMH invested over 19.4 million euros in health and safety in2012. This includes expenses for occupational medical services,protective equipment as well as programs for improvingpersonal safety and health, such as compliance, the posting ofwarnings, replacement of protective devices, fire preventiontraining and noise reduction.

The total amount of expenditure and investments promotinghealth and safety in the workplace and improvements inworking conditions amounted to almost 57.6 million euros,representing 1.7% of the Group’s gross payroll worldwide.More than 27,600 Group company employees received safetytraining worldwide.

All Group companies constantly strive to look after the health,safety, and wellbeing of their employees, who themselves take a widely active role in promoting proper working conditions at manufacturing sites, stores and company head offices. The Health and Safety initiatives undertaken by Groupcompanies such as Louis Vuitton, Parfums Christian Dior, and Moët & Chandon are highly structured and ambitious.Glenmorangie’s “Zero accidents” program is one example of this. Companies including Bulgari, Donna Karan, and Loewemanage these initiatives via health and safety committees andworking groups. Programs are designed to help employeesmanage the work-life balance (day-care at Hublot, conciergeservices at Berluti) and increase their job satisfaction (sales

employee training at Céline). Special efforts have also been madeto improve workstation ergonomics at companies such as LouisVuitton, Bulgari, Fendi, Chaumet, etc.

The Group makes every effort to prevent and deal withphenomena such as harassment and stress in the workplace.Over the course of 2012, LVMH continued taking action to prevent psychosocial distress through risk assessment andgauging (Moët & Chandon), steering committees, training andawareness raising, support units (Hennessy, Parfums ChristianDior, Veuve Clicquot, Loewe, Guerlain, Sephora Inc., etc.),work organization reviews, work-life balance adjustments,organizational overhauls, and harassment prevention.

Moët & Chandon, Le Bon Marché and Sephora have signedagreements to prevent psychosocial risks which in some casesprovide for some of them the creation of a dedicated Observatory,in which the Occupational Medicine unit and the Committeeon Health, Safety and Working Conditions are both involved.Parfums Christian Dior has committed to a process to improvethe quality of life in the workplace and prevent psychosocialrisks, involving in particular the creation of a manager-levelposition responsible for risk prevention and occupationalhealth. Louis Vuitton has also developed a prevention programthat supports all of its entities. Other innovative initiativeshave been taken, in collaboration with occupational healthservices staff: for example, holistic massages for production

Lost time accidents by business group and geographic region break down as follows:

Number of Frequency Severity accidents rate(a) rate(b)

Breakdown by business group Wines and Spirits 117 8.25 0.23Fashion and Leather Goods 240 4.42 0.08Perfumes and Cosmetics 165 4.41 0.08Watches and Jewelry 45 3.01 0.08Selective Retailing 442 6.15 0.15Other activities 15 4.57 0.12

Breakdown by geographic region France 454 13.95 0.32Europe (excluding France) 158 3.30 0.06United States 178 4.65 0.16Japan 5 0.45 -Asia (excluding Japan) 175 3.69 0.05Other 54 5.20 0.15

LVMH group 2012 1,024 5.46 0.122011 885 5.59 0.122010 863 5.87 0.11

(a) The Frequency rate is equal to the number of accidents resulting in leave of absence, multiplied by 1,000,000 and divided by the total number of hours worked(c).(b) The Severity rate is equal to the number of workdays lost, multiplied by 1,000 and divided by the total number of hours worked(c).(c) For companies located outside France, the total number of hours worked per employee is estimated at 2,000 on a full-time equivalent basis. This number of hours may vary slightly from

the number of hours actually worked depending on the country.

In 2012, there were a total of 1,024 work accidents resulting inleave of absence which resulted in 22,762 lost working days.Frequency rates have been improving steadily for several years

and severity rates are stable. 391 commuting accidents werealso recorded, resulting in 8,780 lost working days.

1.6. Health and safety



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1.8.1. Relations with suppliers

LVMH places a priority on maintaining and promoting stablerelations with responsible partners (suppliers, distributors,subcontractors, etc.).

Since 2008, all of the Group’s brands have adopted andpromulgated the Supplier Code of Conduct which sets forththe Group’s requirements in terms of social responsibility (forcedlabor, discrimination, harassment, child labor, compensation,hours of work, freedom of association and collective bargaining,health and safety, etc.), the environment (reducing environmentalimpacts, use of green technologies, waste reduction, compliancewith regulations and standards), and the fight againstcorruption. Relations with any partner necessitate the latter’scommitment to comply with all ethical principles enunciatedin this Code. This Code of Conduct also sets forth the principleand procedures for the control and audit of compliance withthese guidelines.

Among many initiatives by Group companies illustrating this commitment, all the brands of Moët Hennessy establish a specifications document presented for signature to theirsubcontractors that addresses respect for the environment andfundamental labor law compliance, among other issues; everyyear, supplier audits are carried out to minimize the mostsignificant risks. In its supplier specifications documents, Sephoraincludes clauses dealing with the individual rights of employees,child labor prevention, equality of opportunity and treatment,working time policy, and the protection of the environment.Louis Vuitton has put in place an ethical system of preliminary

audits founded on compliance with local regulations as well as the SA 8000 social accountability standard, which is basedon international workplace norms included in the InternationalLabor Organization (ILO) conventions: no child labor, workingconditions, health and safety, freedom of association and theright to collective bargaining, no discrimination, disciplinarypractices, compliance with working hour and wage regulations.To ensure that they will be able to perform preliminary auditsindependently, Louis Vuitton’s buyers receive theoretical trainingcovering the approach and criteria as well as field training inthe company of an SA 8000 auditor. Donna Karan has developeda Vendor Code of Conduct designed to ensure respect forfundamental principles of labor law and targeting the highestethical standards. It has also developed a Vendor ProfileQuestionnaire, a document signed by the subcontractor whenthe pre-approval request is submitted. Donna Karan has alsointroduced a Vendor Compliance Agreement, which plans forindependent audits of suppliers to ensure that commitmentshave been observed. In order to encourage such practices andshare its own expertise, Donna Karan organizes supplier trainingprograms in partnership with Marc Jacobs. These trainingprograms are run by expert third parties and mainly concernemployee working hours, the greening of manufacturingfacilities, improved corrective action plans, and updates onregulated substances. TAG Heuer and Loewe require that allnew suppliers submit a written pledge indicating theircompliance with the SA 8000 standard. The same is true forParfums Christian Dior, Parfums Givenchy, and Guerlain, whohave introduced specifications documents including compliancewith the SA 8000 standard among their provisions.

1.8. Relations with third parties


1.7.1. Status of collective agreements

In France, Group companies have works councils, employeerepresentatives, as well as health and safety committees. TheGroup Committee was formed in 1985.

In 2012, employee representatives attended 1,587 meetings:

Nature of the meetings Number

Works council 583Employee representatives 523Health and Safety Committee 266Other 215

Total 1,587

As a result of these meetings, 123 company-wide agreementswere signed, such as annual negotiations on wages and workschedules, incentive and profit sharing agreements and companysavings plans, agreements on the payment of the Prime de partagedes profits. Specific agreements and amendments related to theemployment of disabled persons, professional equality betweenwomen and men, anticipatory management of jobs and skills,labor-management dialogue, and the prevention of psychosocialrisks have been signed at Group companies.

1.7.2. Social and cultural activities

In 2012, in France, the Group allocated a budget of over15.9 million euros, or 1.8% of total payroll expenses, to social andcultural activities in France via contributions to works councils.

Total catering costs for all Group employees represent a budgetof 16.2 million euros.

1.7. Employee relations

staff at Guerlain’s sites and in Céline’s workshops during thestressful periods when runway shows are being prepared.

A posture and movement training program is also implementedat all manufacturing sites to prevent musculoskeletal disordersand accompany employees’ career path with a policy of improved

working conditions. The ergonomics and working conditionsat vineyards, workshops and manufacturing sites are reevaluatedon a regular basis. For five years, Veuve Clicquot has run aworking group on how best to handle the physical strainencountered by certain agricultural laborers.


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1.8.2. Impact of the business on local communities in terms of employment and regional development

LVMH follows a policy of maintaining and developingemployment. Thanks to the strong and consistent growthachieved by its brands, many sales positions are created in allcountries where the Group is present, particularly as a result ofthe expansion of the brands’ retail networks.

Non-disciplinary layoffs, including those due to economicconditions, represent 3.2% of total departures.

A number of the Group’s companies have been established formany years in specific regions of France and play a major rolein creating jobs in their respective regions: Parfums ChristianDior in Saint-Jean de Braye (near Orléans), Veuve ClicquotPonsardin and Moët & Chandon in the Champagne region, andHennessy in the Cognac region have developed long-standingrelationships with local authorities, covering cultural andeducational aspects as well as employment. Sephora, which hasstores throughout France (two-thirds of its workforce isemployed outside the Paris region), regularly carries out a rangeof measures encouraging the development of job opportunitiesat the local level.

As major employers in several labor markets, the Group’scompanies are attentive to the social particularities of theirregions and have forged partnerships, as described below, withassociations or non governmental organizations to help withthe social and professional integration of the underprivileged.

1.8.3. Promotion of education and relations with educational institutions and apprenticeship associations

Around the world, Group companies are involved in efforts tofacilitate access to education for young people in disadvantagedregions and in those having experienced traumatic events. InChina, Moët Hennessy Diageo has mentored a group of middleschool students from Sichuan province since the earthquake in2009, with remedial assistance provided by its employees andthe funding of educational materials. Similarly, through theoperation “Hand in Hand for Haiti” launched in the aftermathof the earthquake in January 2010, DFS contributed torebuilding and maintaining a school complex for the mostdisadvantaged children in the town of Saint-Marc. In SouthAmerica, Moët Hennessy participates in Brazil in initiativespromoting the occupational integration of struggling youths orthose from underprivileged backgrounds and offers in Argentinaparental training programs for the families of its employees inpartnership with training organizations. For the third year in arow, through its partnership with Spectaculu in Brazil, LouisVuitton is sponsoring an annual photography course for aroundtwenty underprivileged students in Rio de Janeiro, who willget the opportunity to develop their cultural and professionalqualifications. In India, Moët Hennessy supports the work ofAseema, a non-governmental organization working to promoteaccess to education for underprivileged children in Mumbai. In 2010, Louis Vuitton and SOS Children’s Villages enteredinto a five-year worldwide alliance with the aim of developing

Suppliers and audits break down as follows, by region:

Europe Asia North Africa Other America

Breakdown of suppliers (as %) 65 20 12 - 3Breakdown of audits(a) (as %) 27 63 5 2 3

(a) Of which 12% preliminary audits, 37% initial audits, and 51% follow-up audits.Scope: Wines & Spirits, Louis Vuitton, Berluti, Donna Karan, Fendi, Givenchy, Kenzo, Loewe, Marc Jacobs, Bulgari, Chaumet, Montres Dior, Fred, Hublot, TAG Heuer, Zenith, Acqua di Parma,Perfumes & Cosmetics, DFS, Sephora.

Workgroups comprising experts from various Group Housespresented, as they have each year, a review of their accomplishmentsand progress made during an annual meeting that provides an opportunity to exchange best practices, to implement sharedtools and reference guides, and to identify new areas meritingattention.

In 2012, over 650 social and/or environmental audits werecarried out, nearly 80% of which by specialized external service providers, at 546 of our suppliers. Among these audits,526 related exclusively to social criteria. More than one-third ofthese audits showed results in line with our standards and 40%identified minor non-compliance issues. Audits whose conclusionsindicated a need for significant improvement by suppliers or the existence of major non-compliance issues accounted for 20% and 2% of audits performed, respectively. In all,

141 corrective action plans were implemented at our supplierswhere audits had identified areas in need of improvement.

The increasing use of preliminary audits (81 performed in 2012)enabled better advance identification of supplier practices, thusleading to the decision to refrain from working with certainpotential suppliers. For example, Louis Vuitton decided not to begin working with one of its potential suppliers afterreceiving unsatisfactory results from a preliminary audit. Inaddition, some Group companies were prompted to put an endto their existing relationships with suppliers whose social auditfindings revealed major issues of non-compliance with ourCode of Conduct.

In the interest of continued improvement in this area, theGroup’s Houses will continue their supplier audit programs in 2013, together with follow-ups on action plans.



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a program entitled “Partnership for Children’s Futures”. Thisproject seeks to improve future prospects for underprivilegedchildren around the world, building a future based on safety,education and apprenticeship training. This partnership is inkeeping with the values espoused by Louis Vuitton. Throughthis initiative, the brand supports the development of scholasticprograms for children in China, the Philippines, Vietnam, theDominican Republic, and also in Europe.

Local solidarity also showed through during Hurricane Sandy’sassault on the east coast of the United States and especially theNew York metropolitan area. The violent storm affected manyemployees and clients, some tragically. LVMH and Groupcompanies provided support to employees affected by thehurricane, including financial support in the most urgent cases.Together, they also contributed a total of one million US dollarsin support to aid organizations for hurricane victims, such as the American Red Cross and the Mayor’s Fund to AdvanceNew York City.

In all countries, LVMH continues to nurture many partnershipsand develop its multiple ties with educational institutions toraise the profile of the Group’s professions. These partnershipsoften result in scholarships and funding for schools trainingyoung people in the fashion and leather goods professions.Over the years, LVMH has forged strong ties with the InstitutFrançais de la Mode, in relation to the training of its employeesand the recruitment of the institute’s graduates, whose dualspecialization is appreciated. LVMH is also a privileged partnerof CEMS, a strategic global alliance of leading business schoolsand multinational companies, that takes part in many actionsin favor of graduates of top universities in more than twentycountries. Key Group companies give presentations on thecampuses of these universities several times a year.

The Group is continually developing resources and partnershipsto promote access to employment for disadvantaged populations.In France, many initiatives to promote occupational integrationare undertaken to allow all employees to participate actively in the Group’s commitment to society. For example, inpartnership with the association “Nos Quartiers ont desTalents”, about a hundred senior-level staff members havementored more than 150 young graduates from underprivilegedneighborhoods. Under partnerships with municipal authorities,presentations on the Group’s professions are given to middleschool students in these localities, thus contributing to youthguidance efforts, a condition for successful occupational integration.

Since 2010, LVMH has been involved in a partnership withMontfermeil, a diversely populated suburb of Paris benefitingfrom a strong commitment by its political leadership in favorof the more vulnerable members of its community. Driven by a shared commitment to excellence, this partnership is helpingto facilitate social advancement for disadvantaged populations,by arranging internships for young people and hiring oldermembers of the community. In this context, Montfermeil alsoreceives support from the Group to raise awareness of its richcultural makeup and the talents of its inhabitants, expressedthrough the annual Cultures et création runway event. Thanks tothe support of LVMH, the collection by the designer awardedthe grand prize at this event was exhibited at the 2012 editionof the Ethical Fashion Show, held at the Carrousel du Louvre

in Paris. Young people are the beneficiaries of a wide range ofinitiatives: internships for middle school pupils, visits to Groupcompanies, preparatory programs for high school students,career orientation, etc. On December 18, 2012, LVMHreceived the Trophée national de l’entreprise citoyenne, a corporatecitizenship award, for its partnership with Montfermeil. Theaward was presented by France’s Minister of Urban Development,François Lamy, at a ceremony attended by the President of theSenate, Jean-Pierre Bel.

In the same spirit, for the third consecutive year, ParfumsChristian Dior helped recipients of basic social security benefitsreturn to work. This program, carried out in partnership with the association “Programme d’Accompagnement de Retour versl’Emploi ” (PARE), gives people outside the labor market theopportunity to work under a work/training alternation contract atthe company’s production site in Saint-Jean de Braye, culminatingin official qualification by way of a professional diploma. Twentypeople have been recruited this way since the start of theoperation. The positive regional impact of the Saint-Jean de Brayeemployment policy is well known to stakeholders in the site’sactivity, who awarded it the Trophée de l’entreprise du Loiretcorporate citizenship prize on October 25, 2012 in Orléans.

Always with the aim of furthering access to employment basedonly on merit and commitment, LVMH is a participatingmember of the RNEECE, a network of French companiespromoting equal opportunities in education and training. Thisassociation arranges actions by companies in schools located inunderprivileged areas and welcomes their graduates as interns.

In order to promote the integration of young people througheducation regardless of their background or origin, LVMHsupports the priority education program run by the Institutd’Études Politiques (Sciences Po), which offers grants tostudents from disadvantaged backgrounds and gives youngSciences Po graduates the chance of being mentored bymanagers. Moreover, Hennessy funds scholarships for African-American students in the United States.

Lastly, as a signatory of the Apprenticeship Charter, the Group devotes considerable efforts to the development ofapprenticeship opportunities, which facilitate young people’saccess to qualifications. In 2012, more than 700 employees wereable to take advantage of work-study arrangements in France.The majority of those offered a professionalization contract havefound stable employment afterwards. As of December 31, 2012,there were 860 young people working under apprenticeship or professionalization contracts in all of the Group’s Frenchcompanies.

1.8.4. Corporate sponsorship

LVMH’s corporate sponsorship initiatives are undertaken topreserve artistic heritage in France and elsewhere, by supportingthe restoration of historical monuments, expanding thecollections of leading museums, contributing to major nationalexhibits, and engaging in creation with artists emblematic of thecontemporary era. In 2012, LVMH supported the retrospectivededicated by the Centre Pompidou in Paris to the German artistGerhard Richter. It also sponsored an “Impressionism and



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Taking each individual, his or her freedom and dignity, personalgrowth and health into consideration in each decision is thefoundation of a doctrine of responsibility to which all Groupcompanies adhere.

Accordingly, all Group companies have policies for equalopportunity and treatment irrespective of gender, race, religionand political opinion, etc. as defined in the standards of theInternational Labor Organization. This culture and these practicesalso generate respect for freedom of association, respect for theindividual, and the prohibition of child and forced labor.

1.9. Compliance with international conventions

fashion” exhibit at the Musée d’Orsay (Paris), a Picasso series at the Hong Kong Heritage Museum, and a Thomas Schütteshow at the Serpentine Gallery in London. In addition to this, the Fondation Louis Vuitton pour la Création, under constructionat the Jardin d’Acclimatation in Paris, will enter a key phase of its completion in 2013.

LVMH has long been involved in educational and youthactivities, including the loan of Stradivarius violins from itscollection to young virtuosos, free tickets for Parisian conservatorystudents to the city’s greatest concerts through the “1000 placespour les jeunes” project for the last 15 years, and support for

the International Music Academy founded in Switzerland bythe conductor Seiji Ozawa.

The Group also supports a great number of institutions knownfor their involvement with children, such as the Fondation desHôpitaux de Paris – Hôpitaux de France, Save the Children(Japan), the Robin Hood Foundation (New York), and more.LVMH stands behind scientists conducting advanced researchon public health, such as the teams at the Institut Pasteur inParis, the American Foundation for AIDS Research, and theParkinson’s Disease Foundation in New York.



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2. ATTESTATION OF COMPLETENESS AND LIMITED ASSURANCE REPORT BY ONE OF THE STATUTORY AUDITORS ON SELECTED SOCIAL ANDCORPORATE INFORMATION

Pursuant to your request and in our capacity as Statutory Auditors of the LVMH group, we hereby present you with our report on the consolidated social and corporate information presented in the Management Report prepared for the year endedDecember 31, 2012 pursuant to Article L.225-102-1 of the French Commercial Code (Code de commerce).

Responsibility of management

The Board of Directors is responsible for preparing a Management Report including the consolidated social and corporateinformation provided for in Article R. 225-105-1 of the French Commercial Code (hereinafter the “Information”), prepared in accordance with the reporting criteria (the “Reporting Criteria”) used by the Company and available at the Group’s HumanResources Department.

Independence and quality control

Our independence is defined by regulatory texts, the profession’s code of ethics as well as the provisions set forth in Article L. 822-11of the French Commercial Code. Furthermore, we have set up a quality control system that includes the documented policies andprocedures that aim to ensure compliance with rules of ethics, professional standards and the applicable legal texts and regulations.

Responsibility of the Statutory Auditor

Based on our work, our responsibility is:

• to attest that the required Information is presented in the Management Report or, in the event of omission, is explained pursuantto the third paragraph of Article R. 225-105 of the French Commercial Code and Decree no. 2012-557 of April 24, 2012(Attestation of completeness);

• to express limited assurance on the fact that the Information is presented fairly, in all material aspects, in accordance with theadopted Reporting Criteria.

To assist us in conducting our work, we referred to the corporate responsibility experts of our Firm.

2.1. Attestation of completeness

We conducted the following procedures in accordance with professional standards applicable in France:

• We have compared the Information presented in the Management Report with the list set forth in Article R. 225-105-1 of theFrench Commercial Code.

• We have verified that the Information covered the consolidated scope, i.e., the Company and its subsidiaries within the meaningof Article L. 233-1 of the French Commercial Code and the companies that it controls within the meaning of Article L. 233-3 of the French Commercial Code, subject to the limits presented in the methodological description set forth in theintroduction of the section on Human Resources.

• In the event of the omission of certain consolidated information, we have verified that explanations were provided in accordancewith Decree no. 2012-557 of April 24, 2012.

Based on our work, we attest to the inclusion of the required Information in the Management Report.



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2.2. Limited assurance report

Nature and scope of procedures

We conducted our procedures in accordance with ISAE 3000 (International Standard on Assurance Engagements) and professionalguidelines applicable in France. We have carried out the following work to obtain limited assurance on the fact that the Informationpresented in the Management Report does not contain any material anomalies that would call into question its fairness, in allmaterial aspects, in accordance with the Reporting Criteria. A higher level of assurance would have required more extensive work.

We performed the following procedures:

• We assessed the appropriateness of the Reporting Criteria with respect to its relevance, completeness, neutrality, clarity andreliability, by taking into consideration, when relevant, the sector’s best practices.

• We have verified the set-up within the Group of a process to collect, compile, process and check the Information with regard to itscompleteness and consistency. We have familiarized ourselves with the internal control and risk management procedures relatingto the compilation of the Information. We have conducted interviews with individuals responsible for social and corporate reporting.

• We have selected the consolidated information to be tested (1) and determined the nature and scope of the tests by taking intoconsideration their significance with respect to the social and corporate consequences relating to the Group’s activity and characteristicsas well as its corporate commitments.

- Concerning the consolidated quantitative information that we consider to be the most significant:

- for the consolidating entity and controlled entities, we have set up analytical procedures and verified, using samplingtechniques, the calculations as well as the consolidation of this information;

- at the sites that we have selected (2) based on their activity, their contribution to consolidated indicators, their location and arisk analysis, we have:

- conducted interviews to verify the proper application of procedures and obtained information to perform our verifications;- conducted substantive tests, using sampling techniques, to verify the calculations performed and reconcile data with

supporting evidence.

The selected sample represents 31% of employees.

- Concerning the consolidated qualitative information that we consider to be the most significant, we have conducted interviewsand reviewed the related source documents to corroborate this information and assess its fairness.

• Regarding the other published consolidated information, we have assessed its fairness and consistency in relation to ourunderstanding of the Group and, where necessary, through interviews or by consulting documentary sources.

• Finally, we have assessed the relevance of the explanations relating to, where necessary, the absence of certain information.

Conclusion

Based on the work we performed, we have not identified any material anomaly likely to call into question the fact that theInformation has been presented fairly, in all material aspects, in accordance with the Reporting Criteria.

Neuilly-sur-Seine, February 21, 2013,

One of the Statutory Auditors

DELOITTE & ASSOCIÉS

Thierry BENOIT



Human resources

(1) Total employees as of December 31 broken down by category, sex and geographical area, percentage of women executives, hirings by gender, voluntary and involuntary employee turnover rate, work-related accidents with sick leave, frequency and severity rates, percentage of employees trained over the last 12 months, average number of days of training per employee,absenteeism, compensation, alternative work arrangements, number of meetings with employee representatives.

(2) Louis Vuitton Malletier France (Société Louis Vuitton Services, Société Louis Vuitton Magasins, Société des Ateliers Louis Vuitton), Louis Vuitton SCTA (Spain), Sephora (Sephora SA, SephoraUSA and Canada, Sephora China), Hennessy (France), Fendi (Italy), Bulgari (Italy), Donna Karan (USA) and Marc Jacobs (USA).

This is a free translation into English of the Statutory Auditor’s report issued in French and is provided solely for the convenience of English speaking readers.This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

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MANAGEMENT REPORT OF THE BOARD OF DIRECTORSLVMH and the environment

1. EFFECTS OF OPERATIONS ON THE ENVIRONMENT 861.1. Water, energy consumption and raw material requirements 871.2. Soil use conditions, emissions into the air, water and soil 891.3. Limitation of damage to ecosystem balance, natural habitats,

animal and plant species 921.4. Environmental protection methods within the Group 92

2. INDEPENDENT VERIFIER'S ATTESTATION AND ASSURANCE REPORT ON ENVIRONMENTAL INFORMATION 95

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For waste production, only stores operated by DFS or Le BonMarché, and certain Louis Vuitton stores, are included in thescope. For seven DFS stores, 2011 data were applied again for

2012. The environmental indicators for the stores that are notpart of the scope are deduced by extrapolation: estimates areincluded in the comments rather than in the tables themselves.

The reporting scope for environmental indicators included the following sites in 2012:

Production facilities, warehouses and administrative sites 2012 2011 Change(number) (as %)

Sites covered 214 181 18(b)

Sites not covered 33(a) 29 (1)

Total number of sites 247 208 17

(a) Including mainly: a Louis Vuitton workshop recently opened, the Heng Long (Singapore) and La Comète (Belgium) tanneries and the administrative sites of Benefit, Fresh, Pucci,Acqua di Parma, Radio Classique, Marc Jacobs, De Beers, StefanoBi, Dona Karan and Thomas Pink.

(b) The change in reporting scope in comparison to 2011 mainly concerns the inclusion of Bulgari, Berluti, Château Cheval Blanc and Wenjun.

Sales floor area included in the scope of reporting, per indicator Energy consumption Water consumption(as % of total sales floor area or of the Group company’s sales floor area)(a) and greenhouse gas emissions

2012(b) 2011 2012(c) 2011

Group total 46 40 24 26

Of which, mainly: DFS 70 65 53 33Louis Vuitton 43 27 10 11Sephora Americas 57 63 53 59Sephora Europe 45 41 10 11

(a) The reporting scope does not cover the stores operated under franchise for Fashion and Leather Goods, Perfumes and Cosmetics, and Watches and Jewelry.(b) Also includes all French stores operated by Berluti, Guerlain, Kenzo, Le Bon Marché, Make Up For Ever, and certain stores operated by Bulgari, Fendi, Loewe, and Marc Jacobs.(c) Also includes certain stores operated by Berluti, Bulgari, Fendi, and Guerlain.

In accordance with Decree no. 2002-221 of February 20, 2002,known as the NRE decree (Nouvelles régulations économiques) and Decree no. 2012-557 of April 24, 2012 regardingcompanies’ transparency obligations with respect to social andenvironmental issues, the following sections provide informationon the type and significance of relevant and significant impactsonly, with regard to business operations. The environmentalinformation contained in this report has been verified by an independent auditor in accordance with Article 225 of theGrenelle II law of July 12, 2010. The Environment Departmentconducted a materiality assessment in 2012 to identify the

disclosures and key indicators to be subject, at the request ofLVMH, to verification by this same independent auditor withthe aim of obtaining a higher level of assurance (“reasonableassurance”). This auditor’s findings are presented immediatelyfollowing the section entitled “Effects of operations on theenvironment”.

A copy of the LVMH Environment Reporting Protocol can berequested from: [email protected]. More information andexplanations may be found in the 2012 LVMH EnvironmentalReport.

1. EFFECTS OF OPERATIONS ON THE ENVIRONMENT



LVMH and the environment

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Pfister’s water scarcity index was used to analyze sensitivity tolocal constraints at each Group company. Pfister’s index providesa sensitivity assessment of each geographic area by comparingwater consumption to available resources at the local level.Four Group companies with significant water consumptiondue to vineyard irrigation were identified in areas of high waterstress: Domaine Chandon California, Newton, Cheval desAndes, and Terrazas de Los Andes.

Vineyard irrigation is an authorized and supervised practice in California and Argentina due to the climate. It is essentialfor the preservation of vines. The Group has also taken measuresto limit water consumption: recovery of rain water, drafting of agreements on measures and specifications with respect towater requirements, standardized drip method of irrigation,weather forecasts for optimized irrigation or adoption of the “reduced loss irrigation” technique, which reduces waterconsumption and actually improves the quality of the grapesand the size of the vine, yielding an enhanced concentration ofaroma and color.

1.1.2. Energy consumption

Energy consumption corresponds to primary energy sources(such as fuel oil, butane, propane and natural gas) added tosecondary energy sources (such as electricity and steam) mainlyused for the implementation of manufacturing processes inaddition to buildings’ air conditioning and heating systems.

In 2012, the subsidiaries included in the reporting scopeconsumed 663,232 MWh provided by the following sources:66% electricity, 19% natural gas, 6% heavy fuel oil, 5% fuel oil,1% butane propane, 1% steam, and 1% renewable energies.Consumption increased by 20% compared to 2011.

This consumption corresponds, in decreasing order of use toSelective Retailing, for 33%, Wines and Spirits, for 28%, Fashionand Leather Goods, for 25%, and Perfumes and Cosmetics, for the remaining 10%. The remaining 4% was generated byWatches and Jewelry and the other activities of the Group.

Energy consumption by retail sales areas excluded from thereporting scope, representing 54% of total retail space, isestimated at 310,000 MWh.

(in m3) 2012 2011 Change (as %)

Process requirements 1,927,065 1,816,716 6Agricultural requirements (vine irrigation) 6,424,228 6,618,614 (3)

Water consumption by retail sales areas excluded from the reporting scope (76% of total retail space) is estimated at 760,000 cubicmeters.

Water consumption for process requirements can be broken down as follows, per business group:

(Process requirements in m3) 2012 2011 Change (as %)

Wines and Spirits 1,238,748 993,306 25 (a)

Fashion and Leather Goods 175,813 249,271 (29) (b)

Perfumes and Cosmetics 170,652 202,274 (16)Watches and Jewelry 21,686 12,573 72(c)

Selective Retailing 306,797 332,014 (8)Other activities 13,369 27,278 (51)

Total 1,927,065 1,816,716 6

(a) Change essentially due to the inclusion of Wenjun and the increase in other Wines and Spirits companies’ business volumes.(b) Change due mainly to the increased reliability of data on one of the Group companies.(c) Change due to the inclusion of Bulgari manufacturing sites.

1.1.1. Water consumption

Water consumption is analyzed based on the following:

- process requirements: use of water for cleaning purposes (tanks,products, equipment, floors), air conditioning, employees,product manufacturing, etc.; such water consumption generateswaste water;

- agricultural requirements: water consumption for vine irrigationoutside France, as irrigation is not used in France for the Group’svineyards. As such, water is taken directly from its naturalenvironment for irrigation purposes. Its consumption varieseach year according to changes in weather conditions. However,it is worth noting that the measurement by the sites of waterconsumption for agricultural purposes is less precise than the measurement of process water consumption.

1.1. Water, energy consumption and raw material requirements




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1.1.3. Raw material consumption

The main raw materials consumed by the Group are:

- grapes (see section 1.2.1 Soil use);- leather (see section 1.3 Limitation of damage to ecosystem

balance, natural habitats, protected animal and plant species);- essential oils (see section 1.3 Limitation of damage to ecosystem

balance, natural habitats, protected animal and plant species);- precious metals and gemstones (see section 1.4.2 Evaluation

and certification programs).

The only significant, relevant criterion used by all of the Group’sbrands for the analysis of raw material consumption is thequantity, measured in metric tons, of primary and secondarypackaging used for consumer goods placed on the market:

- Wines and Spirits: bottles, boxes, caps, etc.- Fashion and Leather Goods: boutique bags, pouches, cases, etc.- Perfumes and Cosmetics: bottles, cases, etc.- Watches and Jewelry: cases and boxes, etc.- Selective Retailing: boutique bags, pouches, cases, etc.

The packaging used for transport is excluded from this analysis.

Energy consumption by business group

(in MWh) 2012 2011 Change (as %)

Wines and Spirits 188,541 167,737 12(a)

Fashion and Leather Goods 163,044 104,904 55(b)

Perfumes and Cosmetics 64,313 60,939 6Watches and Jewelry 16,129 10,083 60(c)

Selective Retailing 219,437 196,623 12(d)

Other activities 11,768 14,068 (16)

Total 663,232 554,354 20

(a) Change essentially due to the inclusion of Wenjun and the increase in other Wines and Spirits business volumes.(b) Change essentially due to the inclusion of stores operated by Louis Vuitton, Kenzo, Givenchy, Fendi, Berluti and Marc Jacobs.(c) Change due to the inclusion of Bulgari manufacturing sites.(d) Change due to the inclusion of stores operated by Sephora Italy and Sephora Portugal.

Consumption by energy source in 2012

(in MWh) Electricity Natural gas Heavy fuel oil Fuel oil Butane Steam Renewable Propane energies

Wines and Spirits 65,476 60,732 36,402 18,407 5,531 - 1,993Fashion and Leather Goods 131,868 23,785 - 2,380 2,836 1,439 736Perfumes and Cosmetics 38,671 24,466 - 121 - 885 170Watches and Jewelry 9,849 5,749 - 294 - - 237Selective Retailing 184,222 13,411 - 12,197 - 4,736 4,871Other activities 8,191 3,281 - 64 35 197 -

Total 438,277 131,424 36,402 33,463 8,402 7,257 8,007

Bilan Carbone® assessments and energy audits provide insightsthat Group companies can use to develop suitable strategies forreducing energy consumption. A variety of solutions are beingimplemented by Group companies with regard to store lightingand air conditioning, transport, energy efficiency, and thepromotion of renewable energy sources. In 2012, Louis Vuittoncontinued its photovoltaic energy production program at theSan Dimas workshop in California, the Cergy 1 storage center

in France, and the Fiesso d’Artico workshop in Italy. The Cergy 1array alone has had 2,000 square meters of solar roofingmembrane and 64 photovoltaic panels in service since earlyOctober 2010, for a total output of 100 MWh in 2012. TAGHeuer’s La Chaux-de-Fonds manufacturing facilities boast the largest solar roof ever built in western Switzerland. In 2012,Sephora Europe installed photovoltaic roofing on its SantaCristina e Bissone storage center near Milan, Italy.




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1.2.1. Soil use

Soil pollution arising from old manufacturing facilities(cognac, wine and champagne production, trunk production) isinsignificant. The more recent production facilities aregenerally located on farmland with no history of pollution. TheGroup’s manufacturing operations require very little soil use,except for wine production.

The Group’s Wines and Spirits Houses are doubly committed tosustainable viticulture, for reasons both historic and strategic.They are pursuing a variety of initiatives in eco-conscious andorganic farming that drastically reduce the need for phytosanitaryproducts with a high environmental impact. Hennessy, forexample, has adopted a sustainable winegrowing approachdesigned to do just this. In January 2011, 12-hectare parcels ofvineyard under Group management in the Cognac area, wereselected by the French government as benchmarks for itsEcophyto 2018 plan. This plan continued in 2012. An action

plan was implemented, which included setting up weatherstations to modulate treatment doses. More advanced testingwas carried out on certain parcels of land, involving sexualconfusion techniques instead of insecticides.

1.2.2. Greenhouse gas emissions

Given the nature of the Group’s operations, the only emissionsthat have a significant impact on the environment are greenhousegas emissions.

Estimated greenhouse gas emissions in tons of CO2 (carbondioxide) equivalent correspond to the site energy consumptionemissions, as defined in section 1.1.2 Energy consumption.These include direct and indirect emissions (scope 1 and 2) anddo not cover emissions caused by transporting raw materials or finished products (scope 3). CO2 emission factors areupdated every year for each energy source, notably for electricity.

1.2. Soil use conditions, emissions into the air, water and soil

The brands have adapted different tools and training to ensurethat there is optimum consideration of the environment inproduct design. In 2012, a major enhancement and adaptationprocess was carried out with the aim of replacing the Excelformat of the environmental performance index (IPE) with theEdibox (EcoDesign Indicators Box) application to ensure the continuity, reliability, and universal adoption of this tool.In December 2012, the Edibox software package was releasedby LVMH, as a joint endeavor with Parfums Christian Dior,Guerlain, LVMH Fragrance Brands, Make Up For Ever, Louis

Vuitton (Perfumes), and Bulgari (Perfumes) in order to integrateenvironmental concerns into the early design stages for allpackaging. IPE scores, which are combined with data on CO2

emissions, at this stage only apply to packaging materials.Further developments are planned to take into account otherstages of the product life cycle (transport, production, etc.) and other indicators such as the consumption of water andnon-renewable resources. Each Group company is responsiblefor setting its own targets accordingly.

Packaging placed on the market

(in metric tons) 2012 2011 Change (as %)

Wines and Spirits 176,265 163,186 8Fashion and Leather Goods 6,367 6,100 4Perfumes and Cosmetics 19,900 23,798 (16)Watches and Jewelry 486 527 (8)Selective Retailing 1,548 1,563 (1)

Total 204,566(a) 195,174 5

(a) Does not include Berluti, Bulgari, Château Cheval Blanc, Chaumet, Hublot and Marc Jacobs.

Breakdown of the total weight of packaging placed on the market, by type of material, in 2012

(in metric tons) Glass Paper- Plastic Metal Fabric Other packaging cardboard material

Wines and Spirits 147,813 22,920 1,943 1,526 60 2,003Fashion and Leather Goods - 5,497 16 5 140 709Perfumes and Cosmetics 10,173 3,376 4,727 814 96 714Watches and Jewelry - 174 - 1 6 305Selective Retailing 253 208 996 53 38 -

Total 158,239 32,175 7,682 2,399 340 3,731




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COD after treatment (metric tons/year) 2012 2011 Change (as %)

Wines and Spirits 2,790.9 2,227.3 25(a)

Perfumes and Cosmetics 23.2 13.6 71(b)

Total 2,814.1 2,240.9 26

(a) Change mainly due to Glenmorangie’s increased business activity.(b) Change due to more regular monitoring of discharges at Parfums Givenchy.

Greenhouse gas emissions generated by retail space excludedfrom the reporting scope (56% of total retail space) are estimatedat 154,144 metric tons of CO2 equivalent. LVMH has longstressed the importance of addressing climate change in itsbusiness activities, having carried out its first Bilan Carbone®

assessments at the following Group companies in 2002: Moët& Chandon, Veuve Clicquot, Hennessy, Parfums ChristianDior, Guerlain, Parfums Kenzo, Parfums Givenchy, Givenchy,Make Up For Ever, DFS, Sephora and Le Bon Marché.Greenhouse gas emissions are retested using this assessmentprotocol every three years.

The Group is also studying the impact of climate change onlocally available water resources (see section 1.1.1 Waterconsumption) and potential changes in certain ecosystems,especially as pertains to winegrowing and producing specificplant species used to manufacture Perfumes and Cosmetics.

1.2.3. Discharges to water

The discharges of substances causing eutrophization by Winesand Spirits and Perfumes and Cosmetics operations are consideredas the only significant and relevant emissions into water. TheGroup’s other business groups have a very limited impact onwater quality. Eutrophization is the excessive build-up of algaeand aquatic plants caused by excess nutrients in the water(particularly phosphorus), which reduces water oxygenationand adversely impacts the environment. The parameter used is the Chemical Oxygen Demand (COD) calculated aftertreatment of the discharges in the Group’s own plants or externalplants with which the Group has partnership agreements. The following operations are considered as treatment: city andcounty waste water collection and treatment, independentcollection and treatment (aeration basin) and land application.In 2012, COD discharges increased by 26%. Research isunderway to identify reduction opportunities at the Group’sWines and Spirits companies.

Breakdown of emissions by business group in 2012

(in metric tons of CO2 equivalent) CO2 emissions Of which: direct Indirect CO2 emissions Change (as %) in 2012 CO2 emissions CO2 emissions in 2011

Wines and Spirits 43,573 29,053 14,520 39,416 11Fashion and Leather Goods 55,978 6,206 49,772 32,714 71(a)

Perfumes and Cosmetics 10,391 5,073 5,318 10,036 4Watches and Jewelry 2,310 1,264 1,046 1,001 130(b)

Selective Retailing 78,856 6,068 72,788 69,593 13Other activities 2,263 701 1,562 2,602 (13)

Total 193,371 48,365 145,006 155,362 25

(a) Change essentially due to the inclusion of stores operated by Louis Vuitton, Kenzo, Givenchy, Fendi, Berluti and Marc Jacobs.(b) Change due to the inclusion of Bulgari manufacturing sites.

This update may lead to significant changes. The main scope 1and 2 greenhouse gas emission reduction initiatives involvelessening the amount of energy used for lighting and air conditioning, and optimizing the energy consumed by

manufacturing processes. A special working group made up ofthe architects responsible for opening and renovating stores isworking to identify and expand the use of higher-performing,more energy-efficient lighting sources.




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The Perfumes and Cosmetics brands as well as Sephora since2010, and Louis Vuitton since 2011, have used the CEDRErecovery and recycling facility (Centre Environnemental deDéconditionnement, Recyclage Écologique) to handle all the wastegenerated by the manufacturing, packaging, distribution, andsale of cosmetic products. CEDRE accepts several types of articles:obsolete packaging, alcohol-based products, advertising

materials, store testers, and empty packaging returned to storesby customers. Over the course of 2012, the facility processedapproximately 1,625 metric tons of waste and was able to resellvarious materials such as glass, cardboard, wood, metal, plastics,alcohol and cellophane to a network of specialized recyclers. TheWines and Spirits companies continued their efforts to reducemanufacturing-related waste production and maximize recovery.

Waste produced

(in metric tons) Waste produced Of which: Waste produced Change in waste in 2012 hazardous waste in 2011 produced (as %) produced in 2012(a)

Wines and Spirits 60,037 346 43,447 38(c)

Fashion and Leather Goods 7,657 163 7,509 2Perfumes and Cosmetics 7,246 980(b) 7,379 (2)Watches and Jewelry 267 26 283 (6)Selective Retailing 6,672 127 4,738 41(d)

Other activities 991 77 1,212 (18)

Total 82,870 1,719 64,568 28

(a) Waste to be sorted and treated separately from other “common” waste (boxes, plastic, wood, paper, etc.).(b) Some products that are removed from the manufacturing cycle are treated in the same way as hazardous waste to prevent counterfeiting attempts.(c) Change due to the inclusion of Wenjun and the increase in business activity.(d) Change due to the inclusion of Sephora France in the waste production indicator.

Waste recovery in 2012

(as % of waste produced) Re-used Material Energy Total recovery recovery recovery

Wines and Spirits 3 64 3 70Fashion and Leather Goods 6 38 31 75Perfumes and Cosmetics 4 66 27 97Watches and Jewelry 5 51 22 78Selective Retailing 3 37 50 90Other activities - 86 14 100

Total 4 60 12 76

1.2.4. Waste

In 2012, 76% of the waste was recovered in 2012 (89% in 2011).In parallel, waste production increased by 28% in 2012. The lower rate of recovery and overall increase are mainly dueto the inclusion of Wenjun, which produces a large quantity ofunrecovered waste.

Recovered waste is waste for which the final use corresponds to one of the following channels:

- re-use, i.e. the waste is used for the same purpose for whichthe product was initially designed;

- recycling, i.e. the direct reintroduction of waste into itsoriginal manufacturing cycle resulting in the total or partialreplacement of an unused raw material, controlled compostingor land treatment of organic waste to be used as fertilizer;

- incineration for energy production, i.e. the recovery of theenergy in the form of electricity or heat by burning the waste.




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1.4.1. Organization

The Group has had an Environment Management team since1992. In 2001 LVMH established an “Environment Charter”signed by the Chairman of the Group, which requires that each company undertakes to set up an effective environmentmanagement system, create think-tanks to assess theenvironmental impacts of the Group’s products, manage risksand adopt the best environmental practices. The Charter ispresented in greater detail in the LVMH Environmental Report.In 2003, Bernard Arnault joined the United Nations’ GlobalCompact program. In 2007, he also endorsed Gordon Brown’sMillennium Development Goals.

The Group undertakes to adopt the following environmentalmeasures:

- apply precaution to all issues impacting the environment;- undertake initiatives to promote greater environmental

responsibility;- favor the development and distribution of environmentally-

friendly technologies.

The Group’s environment management team was set up withthe following objectives:

- implement the environmental policies of the Group companies,based on the LVMH Charter;

- conduct audits to assess Group companies’ environmentalperformance;

- monitor regulatory and technical issues;- create management tools;- help Group companies anticipate risks;- train employees and increase environmental awareness at all

management levels;- define and consolidate the environmental indicators;- work alongside the various key players (associations, rating

agencies, government authorities, etc.).

In 2012, almost all of the Houses, in all of the Group’s businessgroups, continued their employee training and awarenessprograms on environment. These programs comprised 17,766hours, a 14% increase compared to 2011 (15,602 hours).

In 2011, LVMH initiated a strategic thought process to identifykey themes in order to better deal with the Group’s environmentalconcerns. This process was implemented by a Steering Committeecomprised of representatives from seven pilot Group companiesand overseen by LVMH’s main Executive Committee. In 2012,it resulted in formulation of the “LIFE - LVMH Indicators for Environment” program, based on nine key aspects ofenvironmental performance:

- eco-design;- strategic raw materials and supply channels;- traceability and compliance of materials;- relations with suppliers;- know-how;- reduction of greenhouse gas emissions;- environmentally friendly manufacturing processes;- product life span;- customer information.

This initiative involved seven pilot Group companies fromLVMH’s five business groups, which launched the process, thusrepresenting a diverse array of environmental concerns. EachGroup company drew up an action plan to illustrate and definepriorities for its strategic issues, coupled with indicators totrack performance. This methodology led to clearer distinctionsbetween specific and shared indicators, while also defining ingreater deal how to build a shared model which groupingcombining the environmental challenges facing Group companies.

From this perspective, the LIFE program represents a new forumfor sharing views and thinking strategically at the Group level,with cross-cutting learning points, which will be progressivelyrolled out to all Group companies. The program was designed in

1.4. Environmental protection methods within the Group

Fashion and Leather Goods, as well as Watches and Jewelry,implemented procedures to ensure that all of their products complywith the terms of the requirements of international trade inendangered species (CITES). Through a system of import-exportpermits, this convention was set up to prevent certain speciesof endangered fauna and flora against overexploitation.

The Research & Development teams of the Perfumes andCosmetics business group have been working in the field ofethno botany for a number of years. They seek to identify plantspecies with a particular interest as components of cosmeticsproducts while contributing to the preservation of these speciesand to local economic development. Guerlain continued itssponsorship of TianZi, a nature reserve in China, as part of aten-year funding agreement focusing on three areas: reforestation,

the introduction of orchids, and social initiatives in support oflocal populations. For several years, Group companies havesupported programs to save bees, the natural defenders of ourplanet’s ecosystems. Chaumet has been working with Terred’Abeilles, a bee protection initiative, since 2002, and Guerlainhas signed an environmental funding agreement with a similarorganization, the Conservatoire de l’Abeille Noire d’Ouessant. Boththese brands have longstanding links to bees. In 2011, LouisVuitton also signed a three-year sponsorship agreement withthe CNRS (France’s National Center for Scientific Research) for a project entitled “City bees - Country bees,” the goal ofwhich is to understand why bees fair better today in urban areasthan rural ones. A study released in 2012 addressed biodiversityat Louis Vuitton’s Cergy 1 and Cergy 3 sites (flora, birds,butterflies).

1.3. Limitation of damage to ecosystem balance, natural habitats, protected animal and plant species




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such a way as to reinforce the inclusion of environmental concernsin management processes, facilitate the development of newsteering tools, and take into account the changes and enhancementsresulting from Group companies’ innovative practices.

1.4.2. Evaluation and certification programs

In accordance with the LVMH Environment Charter, eachcompany is responsible for designing and implementing its ownenvironment management system, in particular for defininggoals, and more precisely for drafting its own environmentalpolicy. Each company has access to an LVMH self-assessmentguide and can, if it wishes, apply for ISO 14001 or EMAScertification for its system.

All of the Cognac, Champagne and Vodka Houses have nowobtained ISO 14001 certification. Following the certification ofits manufacturing center in Chartres, its headquarters inLevallois and its Paris boutiques, Guerlain France also obtainedcertification for its Orphin manufacturing site in June 2012,thus enabling the certification of all Guerlain France activities.Parfums Christian Dior was also able to have the entirety of itsmanufacturing and logistics facilities certified. Louis Vuittoncontinued the certification process for its workshops and beganinvolving its entire downstream supply chain as well.

LVMH’s Watches and Jewelry business group is a member ofthe “Responsible Jewellery Council” (RJC), an organizationbringing together more than 260 member companies committedto promoting ethical behavior, human rights and social andenvironmental practices throughout the industry, from mine topoint of sale. The RJC has developed a certification systemdesigned mainly to ensure that the diamonds and gold used inmanufacturing do not come from conflict zones. The KimberlyProcess is applied to diamonds. Kimberly certification requiresthe input of independent, accredited auditors. This certificationhas been obtained by Bulgari, TAG Heuer, Chaumet, Hublot,Louis Vuitton, Zenith and Fred.

1.4.3. Measures to ensure compliance with applicable laws and regulations

Group companies are audited on a regular basis, either by thirdparties, insurers or internal auditors, which enables them to keeptheir compliance monitoring plan up-to-date. In 2012, 24% ofthe 247 manufacturing, logistics and administrative sites wereaudited, for a total of 56 external audits and 104 internalaudits, with some sites being audited several times during theyear. These audits correspond to an inspection of one or more sitesof the same company based on all relevant environmental issues- waste, water, energy, and environmental management - andare documented in a written report including recommendations.This figure does not include the numerous compliance controlsthat may be performed on a specific environmental regulationtopic, e.g. a waste sorting inspection, performed periodicallyby the Group companies on their sites. Since 2003, a review ofenvironmental regulatory compliance is also performed by the

insurance companies, which now includes an environmentalinspection during their fire safety visits to Group company sites.A total of 30 sites were evaluated in 2012.

1.4.4. Expenses incurred to anticipate the effects of operations on the environment

Amounts were recognized under the relevant environmentalexpense headings in accordance with the recommendations ofthe CNC (French National Accounting Council). Operatingexpenses and capital expenditure were recognized for each of the following headings:

- air and climate protection;- waste water management;- waste management;- protection and purification of the ground, underground

water and surface water;- noise and vibration reduction;- biodiversity and landscape protection;- radiation protection;- research and development;- other environmental protection measures.

Environmental protection expenses in 2012 break down as follows:

- operating expenses: 9.7 million euros;- capital expenditure: 6.4 million euros.

1.4.5. Provisions and guarantees given forenvironmental risks, and compensation paidduring the year pursuant to a court decision

The amount of provisions for environmental risks is 12.9 millioneuros as of December 31, 2012. This amount corresponds tothe financial guarantees required by law for Seveso upper-tierestablishments.

1.4.6. Objectives assigned by the Group to its subsidiaries abroad

The Group requires each subsidiary, regardless of its geographiclocation, to apply the Group’s environmental policy as set forthin the Charter, which stipulates that each subsidiary defines itsown environmental objectives and communicates the annualindicators included in this section.

1.4.7. Consumer safety

LVMH’s policy concerning the sensitive issue of animal testingto evaluate the safety of finished products is clearly defined: itsaim is to guarantee the safety of consumers who use theGroup’s products while taking into account respect for animallife. It is for this reason that, since 1989, none of the Perfumesand Cosmetics companies have conducted tests on animals forthe products they put on the market, thus well in advance ofthe official ban on animal testing imposed by European Union




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legislation in 2004. The development of alternatives to animaltesting represents a genuine scientific challenge and LVMHwill continue to be as active as possible in its efforts to rise tothis challenge.

Furthermore, the European Union regulatory framework forcosmetics changed with the adoption on November 30, 2009of Regulation (EC) No 1223/2009 of the European Parliamentand of the Council on cosmetic products. This text, all of whoseprovisions will enter into application in July 2013, is intended toreplace 76/768/EEC. The main objective of the Commission’slegislation is to further raise the already high level of safety forcosmetic products:

- by reinforcing the manufacturer’s responsibility through moreexplicit minimum requirements in the area of product safetyassessment;

- by reinforcing market surveillance through the obligation tonotify the competent authorities of serious undesirable effects.

The LVMH group has implemented procedures and initiativesensure it is ready when the new regulation enters into force inJuly 2013. These initiatives are becoming more essential thanever, especially since cosmetics regulations are giving rise to anincreasing amount of legislation worldwide.

All European regulations currently in force, some of which arerelatively recent, have been integrated into LVMH’s processes:

- the GHS (Globally Harmonized System) which aims toharmonize the classification and labeling of chemicals;

- the Regulation on Registration, Evaluation, Authorizationand Restriction of Chemicals (REACH), which streamlinesand improves the EU’s pre-existing legislative framework onchemicals. The main aims of REACH are to ensure a highlevel of protection of human health and of the environmentagainst the risks that can be posed by chemicals, to promotealternative testing methods and the free circulation of substanceson the internal market, and to enhance competitiveness andinnovation.

The Group remains particularly vigilant to ensure continuingcompliance with regulatory requirements, while monitoring theopinions of scientific committees, and the recommendations of industry associations. Moreover, LVMH products must abideby a set of strict internal guidelines imposed by the Group as criteria for their development. LVMH also requires that itssuppliers adhere to these same guidelines.

Honoring its commitments in this area for the last severalyears, the LVMH group has accompanied this policy with an

approach that aims to anticipate developments in internationalregulations. This anticipatory perspective is made possiblethanks to the efforts of our experts, who regularly take part inthe workgroups of national and European authorities and arevery active in professional organizations. Ongoing monitoringof changes in regulatory frameworks and the development of scientific knowledge by the Group’s experts has led LVMHto prohibit the use of some substances and make efforts toreformulate some of its products.

These extremely high standards allow us to guarantee thesafety of our cosmetic products, not only when the products are released into the market, but also throughout their wholecommercialization period. A client relation network set up bythe Group handles the analysis of all claims received fromconsumers and ensures the cosmetovigilance of our products.Any claim, whether relating to a simple intolerance or a severeallergic reaction, is given due consideration by a specializedteam and evaluated by a professional. Visits to a dermatologistmay be offered to consumers. Furthermore, the analysis of these claims and the review of cosmetovigilance cases promptsus to explore new areas of research and improve the quality of our products.

In 2012, Moët Hennessy strengthened its commitment toresponsible consumption. Its efforts in this area are directed at employees, consumers, guests and visitors.

An internal awareness campaign entitled Responsible Drinkingat Moët Hennessy and directed at the company’s 6,500 employeeswas developed worldwide. It involved in-house training, an Intranet site promoting responsible drinking, an e-learningmodule and a questionnaire to help each employee confidentiallyand anonymously measure his or her alcohol consumption.

For the benefit of consumers, Moët Hennessy not only adheresscrupulously to local regulations, it also self-regulates, especiallyin terms of information and communication, by implementinga Code of Good Practices for Marketing and Communications,which provides guidelines for online communication, websitefilters to keep out underage viewers, etc. Each year, teams aredeployed worldwide to teach hundreds of people how to properlyenjoy the company’s products for their esthetic, cultural,gastronomic and historical value.

All wine bottles sold in the EU (except in France, for regulatoryreasons) are labeled www.wineinmoderation.eu, and all spiritsare labeled www.responsibledrinking.eu. Lastly, Moët Hennessyactively supports numerous responsible drinking programs aroundthe world, such as Wine in Moderation, ICAP initiatives, etc.




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2. INDEPENDENT VERIFIER'S ATTESTATION AND ASSURANCE REPORT ON ENVIRONMENTAL INFORMATION

To the Chief Executive Officer,

Pursuant to your request and in our capacity as independent verifier of LVMH Moët Hennessy – Louis Vuitton we hereby report to you on the consolidated environmental information presented in the Management Report issued for the year ended December,31, 2012 in accordance with the requirements of Article L. 225-102-1 of the French Commercial Code (Code de commerce).

Management’s Responsibility

The Board of Directors is responsible for the preparation of the Management Report including the consolidated social, environmentaland societal information (the “Information”) in accordance with the requirements of Article R. 225-105-1 of the French CommercialCode (Code de commerce), presented as required by the entity’s internal reporting standards (the “Guidelines”) and available at LVMHEnvironmental Department via the following email: [email protected].

Our Independence and Quality Control

Our independence is defined by regulatory requirements, the Code of Ethics of our profession (Code de déontologie) and Article L. 822-11of the French Commercial Code (Code de commerce). In addition, we maintain a comprehensive system of quality control includingdocumented policies and procedures to ensure compliance with ethical requirements, professional standards and applicable legal andregulatory requirements.

Independent verifier’s responsibility

It is our role, on the basis of our work:

• To attest whether the required Information is presented in the Management Report or, if not presented, whether an appropriateexplanation is given in accordance with the third paragraph of Article R. 225-105 of the French Commercial Code (Code decommerce) and Decree no. 2012-557 dated 24 April 2012 (Attestation of presentation);

• To provide reasonable assurance on whether the Information selected by the Group(1) (the “Selected Information”) and publishedin the section “LVMH and the Environment” of the Management Report is fairly presented, in all material respects, in accordancewith the Guidelines (reasonable assurance);

• To provide limited assurance on whether the other Information is fairly presented, in all material respects, in accordance with theGuidelines (limited assurance).

2.1. Attestation of presentation

Our engagement was performed in accordance with professional standards applicable in France:

• We compared the Information presented in the Management Report with the list as provided for in Article R. 225-105-1 of theFrench Commercial Code (Code de commerce);

• We verified that the Information covers the consolidated perimeter, namely the entity and its subsidiaries within the meaning ofArticle L. 233-1 and the controlled entities within the meaning of Article L. 233-3 of the French Commercial Code (Code decommerce), within the limits specified in the methodology note presented at the beginning of the “LVMH and the environment”section of the Management Report;

• In the event of the omission of certain consolidated Information, we verified that an appropriate explanation was given in accordancewith Decree no. 2012-557 dated 24 April 2012.

On the basis of our work, we attest that the required Information is presented in the Management Report.




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2.2. Assurance report

Nature and scope of the work

We conducted our engagement in accordance with ISAE 3000 (International Standard on Assurance Engagements) and Frenchprofessional guidance.

We performed the following procedures to obtain:

• Reasonable assurance that the Selected Informationpresented in the “LVMH and the environment” section of the Management Reportis fairly presented, in all material respects, in accordance with the Guidelines;

• Limited assurance that nothing has come to our attention that causes us to believe that the other Information presented in the“LVMH and the environment” section of the Management Report is not fairly presented, in all material respects, in accordance withthe Guidelines.

Our work consisted in the following:

• We assessed the appropriateness of the Guidelines as regards their relevance, completeness, neutrality, clarity and reliability, takinginto consideration, where applicable, the good practices in the sector.

• We verified that the Group had set up a process for the collection, compilation, processing and control of the Information to ensureits completeness and consistency. We examined the internal control and risk management procedures relating to the preparationof the Information. We conducted interviews with those responsible for environmental reporting.

• We selected the consolidated Information to be tested(2) and determined the nature and scope of the tests, taking into considerationtheir importance with respect to the environmental consequences related to the Group’s business and characteristics.

- Concerning the quantitative consolidated information that we deemed to be the most important:

- at the level of the consolidating entity and the controlled entities, we implemented analytical procedures and, based on sampling,verified the calculations and the consolidation of this information;

- at the level of the sites that we selected(3) based on their business, their contribution to the consolidated indicators, their locationand a risk analysis:

- we conducted interviews to verify that the procedures were correctly applied;- we performed tests of detail based on sampling, consisting in verifying the calculations made and reconciling the data with

the supporting documents.

The sample thus selected represents on average 64% of the quantitative environmental information tested.

- Concerning the qualitative consolidated information that we deemed to be the most important, we conducted interviews andreviewed the related documentary sources in order to corroborate this information and assess its fairness.

• As regards the other consolidated information published, we assessed its fairness and consistency in relation to our knowledge ofthe company and, where applicable, through interviews or the consultation of documentary sources.

• As regards the Selected Information, the degree of accuracy of measurement and the performance of work of the same nature as -but more detailed than - that performed on the other Information, in particular as concerns the number of tests, enable us toexpress reasonable assurance.

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Comments on the Guidelines

We wish to make the following comments on the Guidelines:

• The implementation of internal control procedures on the Information reporting process made over the last fiscal years is globallyefficient, but remains heterogeneous within the Houses. Such process should be systematically implemented and reinforced forHouses where discrepancies were identified.

• Regarding the indicator “Percentage waste recovery”, efforts engaged should be followed and further reinforced.

• Considering the variability of the COD in waste water, the measurement frequency of COD concentration in most contributingHouses should be increased to ensure a satisfying precision level.

Conclusion

Reasonable assurance

In our opinion, the Selected Information is fairly presented, in all material respects, in accordance with the Guidelines.

Limited assurance

Based on our work described in this report, nothing has come to our attention that causes us to believe that the other Information isnot fairly presented, in all material respects, in accordance with the Guidelines.

Paris-La Défense, February 15, 2013

The Independent Verifier

ERNST & YOUNG et Associés

Environment and Sustainable Development Department

Éric Mugnier




(1) Information verified with reasonable assurance: percentage of sites audited for environmental purposes (%); total water consumption for process needs (m3); total COD after treatment(metric tons/year); total waste produced (metric tons); total hazardous waste produced (metric tons); percentage waste recovery (%); total energy consumption (MWh); total CO2 emissions(metric tons of CO2 equivalent); total packaging used for consumer goods placed on the market (metric tons).

(2) Overall environmental policy, prevention, reduction or compensation measures for air, water and soil discharges that seriously harm the environment, measures to prevent, recycle andeliminate wastes, water consumption and water supply based on local constraints, consumption of raw materials and measures taken to improve the efficiency of their use, energyconsumption, measures taken to improve energy efficiency and renewable energy use, GHG emissions measures taken to develop biodiversity.

(3) Bodegas Chandon SA Agrelo, Bulgari Firenze – Accessori, DFS (Macao City Of Dreams, Macao Four Seasons, Scotts Walk), Domaine Chandon Australia, Fendi Bagno a Ripoli (via lungol’ema and via vacciano), Glenmorangie (Alba, Ardbeg, Tain), Guerlain Orphin, Hennessy, Holding 22 Montaigne, Kenzo Mode, Les Echos, Loewe, Louis Vuitton Malletier (Barbera, Cergy 2,Fiesso), MHCS, Parfums Christian Dior SJDB, Sephora Americas Energie USA, Sephora France Energie.

This is a free translation into English of the Independent Verifier’s report issued in French and is provided solely for the convenience of English speakingusers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

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2|4_VA_V5 26/03/13 20:29 Page98


REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS

1. CORPORATE GOVERNANCE 1001.1. Board of Directors 1001.2. Membership and missions 1001.3. Executive Management 1011.4. Performance Audit Committee 1011.5. Nominations and Compensation Committee 1021.6. Advisory Board 1021.7. Participation in Shareholders’ Meetings 1021.8. Information that might have an impact on a takeover bid or exchange offer 1021.9. Compensation policy for company officers 103

2. IMPLEMENTATION OF RISK MANAGEMENT AND INTERNALCONTROL PROCEDURES 104

2.1. Scope, organizational and formalization principles 1042.2. Main risk management principles 1052.3. General internal control principles 1062.4. Risk management and internal control stakeholders 1092.5. Risk management and internal control procedures related

to financial and accounting information 110

3. STATUTORY AUDITORS’ REPORT, PREPARED BY THE CHAIRMAN OF THE BOARD OF DIRECTORS 112

99

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• At its meeting of January 31, 2013, the Board of Directorsvoted to submit a proposal to the Shareholders’ Meeting ofApril 18, 2013 to renew the appointments of Mrs. BernadetteChirac and Messrs. Bernard Arnault, Nicholas Clive Worms,Charles de Croisset, Francesco Trapani and Hubert Védrine as Directors.

• The Board of Directors, subject to the decisions of theShareholders’ Meeting of April 18, 2013, will thus consist ofseventeen members: Mrs. Delphine Arnault, Mrs. BernadetteChirac and Mrs. Marie-Josée Kravis, and Messrs. BernardArnault, Antoine Arnault, Nicolas Bazire, Antonio Belloni,Nicholas Clive Worms, Charles de Croisset, Diego Della Valle,Albert Frère, Pierre Godé, Gilles Hennessy, Yves-Thibault de Silguy, Francesco Trapani and Hubert Védrine, and LordPowell of Bayswater. Eight of whom: Mrs. Bernadette Chiracand Mrs. Marie-Josée Kravis, as well as Messrs. Nicholas CliveWorms, Charles de Croisset, Diego Della Valle, Albert Frère,Yves-Thibault de Silguy and Hubert Védrine are considered as

independent and as holding no interests in the Company. Personalinformation relating to the Directors is included in the section“Other information – Governance” of the Reference Document.

During its meeting of January 31, 2013 the Board of Directorsreviewed the status of each Director currently in office as wellas each proposed appointee, in particular with respect to theindependence criteria set forth in the AFEP/MEDEF Code ofGovernance of Listed Companies, and considered that:

(i) Mrs. Bernadette Chirac and Mrs. Marie-Josée Kravis, andMessrs. Charles de Croisset, Diego Della Valle, Yves-Thibaultde Silguy and Hubert Védrine satisfy all criteria;

(ii) Messrs. Nicholas Clive Worms and Albert Frère must bedeemed independent even though they have served on the Boardof Directors for more than 12 years. In the matter of these twoindividuals, the Board has departed from the recommendations of the AFEP/MEDEF code of corporate governance relating tothe number of years of service on the Board, considering that

1.2. Membership and missions

The Board of Directors is the strategic body of the Companywhich is primarily responsible for enhancing the Company’svalue and protecting its corporate interests. Its main missionsinvolve the adoption of overall strategic orientations of theCompany and the Group and ensuring these are implemented,the verification of the truthfulness and reliability of informationconcerning the Company and the Group and the overallprotection of the Company’s assets.

The Board of Directors of LVMH Moët Hennessy – LouisVuitton acts as guarantor of the rights of each of its shareholdersand ensures that shareholders fulfill all of their duties.

The Company refers to AFEP/MEDEF Code of CorporateGovernance for Listed Companies for guidance. This document may be viewed on the AFEP/MEDEF web site: www.code-afep-medef.com.

A Charter has been adopted by the Board of Directors whichoutlines rules governing its membership, duties, procedures,and responsibilities.

Two Committees, the Performance Audit Committee and theNominations and Compensation Committee, whose membership,role and missions are defined by internal rules, have been

established by the Board.

The Charter of the Board of Directors and the internal rulesgoverning the two committees are communicated to allcandidates for appointment as Director and to all permanentrepresentatives of a legal entity before assuming their duties.These documents are presented in the “Other Information –Corporate Governance” section of the Reference Document.

Pursuant to the provisions of the Board of Directors’ Charter,all Directors must bring to the attention of the Chairman ofthe Board any instance, even potential, of a conflict of interestthat may exist between their duties and responsibilities to theCompany and their private interests and/or other duties andresponsibilities. They must also provide the Chairman withdetails of any fraud conviction, any official public incriminationand/or sanctions, any disqualifications from acting as a memberof an administrative or management body imposed by a court along with any bankruptcy, receivership or liquidationproceedings to which they have been a party. No informationhas been communicated with respect to this obligation.

The Company’s Bylaws require each Director to hold, directlyand personally, at least 500 of its shares.

1. CORPORATE GOVERNANCE

1.1. Board of Directors


Corporate governance

Drawn up in accordance with the provisions of Article L. 225-37of the French Commercial Code, this report was approved by the Board of Directors at its meeting on January 31, 2013.

Its purpose is to give an account of the membership of the Board of Directors of the Company, the preparation and

organization of its work, the compensation policy applied tosenior executives and company officers, as well as the riskmanagement and internal control procedures established by the Board and in particular the procedures relating to the preparation and processing of accounting and financialinformation.


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The main tasks of the Performance Audit Committee are themonitoring of the process of preparing financial information,the effectiveness of internal control and risk managementprocedures, as well as the statutory audit of the individualcompany and consolidated financial statements by the externalAuditors. The Committee oversees the procedure for theselection of external Auditors and ensures their independence.

The Committee currently consists of three members, two ofwhom are independent, appointed by the Board of Directors.The current members of the Performance Audit Committee areMessrs. Yves-Thibault de Silguy (Chairman), Nicholas CliveWorms and Gilles Hennessy.

Mr. Yves-Thibault de Silguy was named as a member andChairman of the Performance Audit Committee by the Boardof Directors at its meeting of April 5, 2012.

The Performance Audit Committee met four times in 2012.All of these meetings were attended by all of the members ofthe Committee, with the exception of one meeting where oneof the members of the Committee was unable to participate.

Attendees at these meetings also included the External Auditors,the Chief Financial Officer, the Director of Management Control,the Director of Internal Audit, the Director of Accounting, theDirector of Tax, the Director of Legal Affairs, and dependingon the issues discussed, the Financing and Treasury Director,the Director of Risk and Insurance Management and theDirector of Information Systems.

In addition to reviewing the annual and half-yearly parentcompany and consolidated financial statements, together withthe detailed analysis of changes in the Group’s activities and scopeof consolidation, the Committee’s work mainly addressed the

1.4. Performance Audit Committee

The Board of Directors decided not to dissociate the roles ofChairman and Chief Executive Officer. It did not limit thepowers vested in the Chief Executive Officer.

In response to the proposal of the Chairman and Chief ExecutiveOfficer, the Board of Directors appointed a Group ManagingDirector, Mr. Antonio Belloni, who was granted the samepowers as the Chief Executive Officer.



1.3. Executive Management

this fact is not likely to color their judgment, given theirexperience and status as well as their current personal andprofessional circumstances.

• Over the course of the 2012 fiscal year, the Board of Directorsmet four times as convened by its Chairman. The averageattendance rate of Directors at these meetings was 91.3%.

The Board approved the annual and half-yearly consolidatedand parent company financial statements and expressed itsopinions on subjects including the Group’s major strategicguidelines and decisions, its budget, the compensation of company officers, the establishment of bonus share andperformance share plans, the implementation of the sharerepurchase program, the authorization to give guarantees tothird parties and to approve various agreements betweenrelated companies, and the renewal of the authorization to issuebonds. It also conducted an evaluation of its capacity to meetthe expectations of shareholders, on the basis of responsesreceived to a questionnaire sent to each of the Directors,reviewing its membership, its organization, and its procedures.The Board has also set up a random-draw system to ensure astaggered appointments process for Directors. It named newmembers to both the Performance Audit Committee and the Nominations and Compensation Committee and amendedthe internal rules of the latter with a view to specifying its role with respect to the compensation of the Group’s seniorexecutives as well as the guidelines relating to the supplementarypension plan for members of the Executive Committee. Lastly,the Board was informed of the measures the Company hasadopted as regards equal professional opportunity and pay.

• During its meeting of January 31, 2013, the Board of Directorsreviewed its composition, organization and modus operandi. The Board came to the conclusion that its composition isbalanced with regard to its percentage of external Directors,considering the breakdown of share capital, and the diversity andcomplementarity of the skills and experience of its members.

The Directors believe that:

- the Directors are satisfied with the frequency of Board meetingsand the quality of the information provided on such topics as strategic guidelines, current business activity, financialstatements, budget and the three-year plan;

- attendance by Directors at Board meetings has improved,with the rate rising from 81% in 2011 to 91.3% in 2012;

- the fact that at least one-third of the members of the Board ofDirectors are not French nationals ensures a wide range of visions and various sensitivities essential to a Group with aworldwide dimension;

- the Directors consider that the Board is fulfilling its role withrespect to its objectives of increasing the Company’s value andprotecting its interests;

- the Directors have no observations on the Board’s Charter,the rules for allocating Directors’ fees or the minimum numberof shares that each Director must hold; this is also the caseregarding the composition of the two Committees and thequality of their work.

In addition, the Board of Directors reviewed the Group’s policyto protect against the impact of future economic and financialdevelopments.


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Information that might have an impact on a takeover bid orexchange offer, as required by Article L. 225-100-3 of theFrench Commercial Code, is published in the “Management

Report of the Board of Directors – Parent company: LVMH MoëtHennessy – Louis Vuitton” section of the Reference Document.

1.8. Information that might have an impact on a takeover bid or exchange offer

The terms and conditions of participation by shareholdersin Shareholders’ Meetings, and in particular the conditions for the attribution of dual voting rights to registered shares,

are defined in Article 23 of the Bylaws (see the “Other information– Governance” section of the Reference Document).

1.7. Participation in Shareholders’ Meetings

Advisory Board members are invited to meetings of the Boardof Directors and are consulted for decision-making purposes,although their absence cannot undermine the validity of theBoard of Directors’ deliberations.

They are appointed by the Shareholders’ Meeting on the proposalof the Board of Directors and are chosen from among theshareholders on the basis of their competences.

The Advisory Board currently has three members: Messrs.Paolo Bulgari, Patrick Houël and Felix G. Rohatyn.

1.6. Advisory Board

The main responsibilities of the Nominations and CompensationCommittee are to issue:

- proposals on compensation, benefits in kind, bonus sharesand share subscription or purchase options for the Chairmanof the Board of Directors, the Chief Executive Officer and theGroup Managing Director (s) of the Company, as well as onthe allocation of Directors’ fees paid by the Company;

- opinions on candidates for the positions of Director, AdvisoryBoard member, Group Executive Committee member ormember of Executive Management of the Company’s mainsubsidiaries.

It currently consists of three members, all independent, appointedby the Board of Directors. The current members of theNominations and Compensation Committee are Messrs. AlbertFrère (Chairman), Charles de Croisset and Yves-Thibault de Silguy.

Mr. Yves-Thibault de Silguy was named as a member of theNominations and Compensation Committee by the Board of Directors at its meeting of April 5, 2012, when Mr. AlbertFrère was also appointed as this Committee’s Chairman.

The Nominations and Compensation Committee met threetimes during the 2012 fiscal year, once with all of its membersin attendance and twice with two-thirds of its members inattendance. It (i) issued proposals on the fixed and variable

remuneration of the Chairman and Chief Executive Officer andthe Group Managing Director, as well as on the allocation of performance shares to the latter and (ii) gave its opinion on compensation, performance shares and bonus shares, andbenefits in kind granted by the Company and its subsidiariesto certain Directors. The committee also issued an opinion on the nominations to be put to a vote at the Shareholders’Meeting. The Committee received more detailed information,as requested, on compensation and incentive plans for theGroup’s senior executives.

In addition, the Committee issued an opinion on the status ofall members with regard, in particular, to the independencecriteria set forth within the AFEP/MEDEF Code.

Prior to the Board of Directors’ meeting of January 31, 2013,the Committee issued recommendations, most notably on (i)the variable portion of compensation to be received for 2012 bythe Chairman and Chief Executive Officer, the Group ManagingDirector, and other Directors receiving compensation from theCompany or any of its subsidiaries, as well as on (ii) the fixedcompensation to be received by these same individuals for 2013.The Committee issued an opinion on the renewal of theDirectors’ appointments to be put to a vote at the Shareholders’Meeting and on the institution of a bonus share allocation plan in favor of a Group senior executive.

1.5. Nominations and Compensation Committee

following issues: the accounting treatment for the acquisition ofBulgari and its initial consolidation, monitoring the investmentin Hermès, the valuation of brands and goodwill, changes inaccounting standards that could affect LVMH, the organization and

role of the Internal Audit team as well as the work completedto date and the team’s key findings, the overall development ofthe Group’s business, foreign exchange hedging, the tax positionand the Group’s policy relating to insurance coverage.




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Directors’ fees paid to the members of the Board of Directors

The Shareholders’ Meeting sets the total amount of Directors’fees to be paid to the members of the Board of Directors.

This amount is divided among the members of the Board ofDirectors and members of the Advisory Board, in accordancewith the rule defined by the Board of Directors, based on theproposal of the Directors’ Nominations and CompensationCommittee, namely:

(i) two units for each Director or member of the Advisory Board;

(ii) one additional unit for serving as a Committee member;

(iii) two additional units for serving as both a Committeemember and a Committee Chairman;

(iv) two additional units for serving as either Chairman orVice-Chairman of the Company’s Board of Directors;

with the understanding that the amount corresponding to one unit is obtained by dividing the overall amount allocatedto be paid as Directors’ fees by the total number of units to bedistributed.

A portion of Directors’ fees to be paid to its members iscontingent upon their attendance at meetings of the Board of Directors and, where applicable, at those of the Committeesto which they belong. A reduction in the amount to be paid isapplied to two-thirds of the units described under (i) above,proportional to the number of Board Meetings the Director inquestion does not attend. In addition, for Committee members,a reduction in the amount to be paid is applied to the additionalfees mentioned under (ii) and (iii) above, proportional to thenumber of meetings by Committee to which the Director in question participates which he or she does not attend.

In respect of the 2012 fiscal year, LVMH paid a total grossamount of 1,068,750 euros in Directors’ fees to the membersof its Board of Directors.

The Nominations and Compensation Committee is kept informedof the amount of Directors’ fees paid to senior executive officersby the Group’s subsidiaries in which they perform the role of company officers.

Other compensation

Compensation of senior executive officers is determined withreference to principles listed in the AFEP/MEDEF CorporateGovernance Code for Listed Companies.

Compensation and benefits awarded to senior executive officers aremainly determined on the basis of the degree of responsibilityascribed to their missions, their individual performance, as wellas the Group’s performance and the achievement of targets.This determination also takes into account compensation paidby similar companies with respect to their size, industrysegment and the extent of their international operations.

A portion of the compensation paid to senior executive officersof the Company is based on the attainment of both financial

and qualitative targets. Quantitative and qualitative objectivescarry an equal weighting for the purpose of determining thebonus of the Chairman and Chief Executive Officer; forthe Group Managing Director, they carry the weighting of 2/3and 1/3, respectively. The financial criteria are growth inrevenue, operating profit and cash flow, with each of these itemsrepresenting one-third of the total determination. The variableportion is capped at 180% of the fixed portion for the Chairmanand Chief Executive Officer and at 120% of the fixed portionfor the Group Managing Director.

The breakdown of compensation and benefits awarded to theChairman and Chief Executive Officer, and the ManagingDirector, is presented in the “Management Report of the Board of Directors – Parent company: LVMH Moët Hennessy – LouisVuitton” section of the Reference Document.

Pursuant to the provisions of Article L. 225-42-1 of the FrenchCommercial Code, at its meeting of February 4, 2010, the Boardof Directors approved the non-compete clause included in Mr. Antonio Belloni’s employment contract - suspendedduring the term of his mandate as Group Managing Director;this covenant not to compete for a twelve-month periodprovides for the payment of a monthly compensation equal to the monthly remuneration on the termination date of hisfunctions, which would be supplemented by one twelfth of thelast bonus received.

Notwithstanding this clause, no other senior executive officerof the Company currently benefits from provisions grantingthem a specific compensation payment should they leave theCompany or derogations from the rules governing the exerciseof options or the definitive allocation of bonus shares subject to performance conditions.

Senior executive officers or employees are eligible for stockoption or bonus share plans instituted by the Company. Theinformation relating to the allocation terms and conditions ofthese plans is presented in the “Management Report of the Board ofDirectors – Parent company: LVMH Moët Hennessy – LouisVuitton” section of the Reference Document.

The members of the Group’s Executive Committee who areemployees or senior executive officers of French subsidiaries,and who have been members of the Committee for at least sixyears, are entitled to a supplementary pension provided thatthey liquidate any pensions acquired under external pensionplans immediately upon terminating their duties in theGroup. This is not required however if they leave the Group at the latter’s request after the age of 55 and resume no otherprofessional activity until their external pension plans are liquidated. This supplementary retirement benefit isdetermined based on a reference remuneration amount equal tothe average of the three highest amounts of annual remunerationreceived during the course of their career with the Group,capped at 35 times the annual social security ceiling. The annual supplemental retirement benefit is equal to thedifference between 60% of the reference remuneration amount(i.e. 777,672 euros as of January 1, 2013) and all pension

1.9. Compensation policy for company officers




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LVMH is comprised of five main business groups: Wines andSpirits, Fashion and Leather Goods, Perfumes and Cosmetics,Watches and Jewelry, and Selective Retailing. Other activitiescomprise the media division managed by Les Echos group, the yacht builder Royal Van Lent, real estate activities andholding companies. The business groups are composed ofcompanies of varying sizes owning prestigious brands, whichare the parent companies of subsidiaries operating worldwide.

This organizational structure ensures that the different brandsof the Group maintain their independence, while facilitatingcohesion between the companies with similar businesses.Decentralization and the responsibilities of senior executivesare among the fundamental principles underlying the Group’sorganization.

The risk management and internal control policy applied acrossthe Group is based on the following organizational principles:

- the parent company, LVMH SA, is responsible for its own riskmanagement and internal control systems, and acts as leaderand coordinator for all Group companies;

- the President of a brand is responsible for the risk managementand internal control of all the subsidiaries that contribute to developing the brand worldwide;

- each subsidiary’s President is similarly responsible for theirown operations.

The internal control and risk management mechanism, whichhas been formally in place since 2003 to comply with the LSF(French Financial Security Act), has adopted a similar structure;it is both:

- decentralized at business group and brand level: the guidanceand management of the mechanism is the responsibility of theExecutive Management of the operational and legal entities;

- unified around a shared methodology and a single referenceguide, both of which are coordinated centrally by the LVMHSA holding company and rolled out to all Group companies.

The main brands and business groups acknowledge theirresponsibility in relation to these systems each year by signingletters of representation covering risk management and internalcontrol procedures. These letters signed by the Chairman andby the Chief Financial Officer of each subsidiary and parentcompany are analyzed, followed up upon, and consolidated at each superior level of the Group’s organizational structure(Region, House, Business group) and then forwarded to theFinance Department and to the Audit and Internal ControlDepartment. They are also made available to the StatutoryAuditors.

These letters of representation attesting to the implementationof risk management and internal control procedures aresupplemented by the signing of annual letters of representationcertifying the entity’s financial reporting, including a paragraphdevoted to internal control. The representation concerninginternal control and the assessment of financial risks is thusextended to all of the transactions comprised within LVMHgroup’s financial consolidation.

In 2011, a new yearly cycle starting July 1 and ending onJune 30 the following year was adopted for the internal controland risk management process, so that it would be aligned moreeffectively with the budgeting and strategic planning cycle.The representation letters on financial reporting of December 31are maintained at that date and constitute a major step in theprocess, as outlined above.

This change in the timing of the internal control and riskmanagement cycle has been approved by our Statutory Auditors.

The Group’s internal control and risk management proceduresinvolve 127 self-assessment questionnaires, covering more than50% of its management entities, thus nearly 83% of Grouprevenue. This total includes both production and servicescompanies, the regional holding companies as well as 11 centralfinancial functions: Finance and Treasury, Tax, Consolidation,Financial Statements Closing, Interest and Exchange RateMonitoring, Group Information Systems, Central Holding

2.1. Scope, organizational and formalization principles

This section of the report draws upon the ReferenceFramework issued by the AMF on July 22, 2010 relating toprocesses for monitoring the effectiveness of risk managementand internal control systems and takes into account changes in laws and regulations introduced since 2007, in particularthe Law of July 3, 2008 and the Order of December 8, 2008.

In line with the measures implemented since 2008 following the publication of the first internal control reference guide, theGroup reviewed in 2010 the extent to which its monitoringprocesses are consistent with this new framework and has decidedto make use of the new suggested structure, for the drafting of this portion of the Chairman’s report.

2. IMPLEMENTATION OF RISK MANAGEMENT AND INTERNAL CONTROL PROCEDURES

payments made by the general social security regime and theadditional ARRCO and AGIRC regimes. Increase inprovisions in 2012 for these supplemental retirement benefitsare included in the amount shown for post-employmentbenefits under Note 31 of the consolidated financial statements.

An exceptional remuneration may be awarded by the Board ofDirectors to certain Directors with respect to any specificmission with which they have been entrusted. The amount of this remuneration shall be determined by the Board ofDirectors and reported to the Company’s Statutory Auditors.



Implementation of risk management and internal control procedures

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2.2.1. Definition and objectives

According to the definition provided by the AMF’s ReferenceFramework, risk represents the possibility of an event occurringthat could affect the Company’s personnel, assets, environment,objectives or reputation.

Risk management is understood to apply in this very broadsense, not solely to the financial realm, but also to the support of the longevity and excellence of our brands. It is a powerfulmanagement tool requiring the involvement of all Groupsenior executives, in accordance with the principle of delegationand organization presented above. The objectives of riskmanagement are to:

- protect the value, assets and reputation of the Group and its brands;

- enhance the security of decision-making and operationalprocesses by way of a comprehensive perspective on the Group’spotential threats and opportunities;

- promote consistency between the actions and the values of the brands;

- ensure that all employees embrace a shared vision of the mainrisks and challenges faced by our business activities.

2.2.2. Organization and components of the risk management system

Risks relating to our brands and business activities are managedat the level of each of our business groups and Houses. As partof the budget cycle and in connection with the preparation ofthe three-year plan, major risks affecting strategic, operationaland financial objectives are systematically identified andevaluated, and a formal account of the conclusions reached,included in the corresponding sections of the reports issued.

Risk mitigation (in frequency and severity) is achieved throughpreventive actions (industrial risks), internal control (risksassociated with processes), or through the implementation of business continuity plans or operational action plans.Depending on the types of risk to which a particular brand or entity is exposed, the latter may decide, in collaboration withthe Group, to transfer residual risk to the insurance market or instead to assume this risk.

Specific monitoring procedures apply to some of the risksassociated with the Group’s businesses (damage to image or

reputation, counterfeit goods and parallel markets, industrialand environmental risks, foreign currency and interest raterisk… ); these risks are discussed in §2 “Operational risk factorsand insurance policy” of the “Management Report of the Board ofDirectors – LVMH group” included in the Reference Document.

Finally, as a complement to these processes, and in order toinstitute a single approach for all brands, the Group is pursuinga project launched in 2010 that seeks to create a formalframework for risk management and internal control calledERICA, which is discussed in §2.2.3 below.

2.2.3. Establishment of formal procedures for the ERICA system

After a first pilot study carried out in 2009, an approach to the formalization of procedures for the management of majorrisks was introduced in 2010 by the Wines and Spirits businessgroup and Parfums Christian Dior.

This project, named ERICA, provides structure and formalguidelines for risk management within the Group, by offering:

- a framework: each business group or major business unit includedin the project determines its own roles and responsibilitieswith regard to a defined approach, as well as the eventualcriticality;

- a process for the identification, analysis and handling of risksbacked by a single Group-wide reference guide andmethodology;

- action plan coordination and implementation with the aim of setting up or reinforcing coverage mechanisms;

- a follow-up on the effectiveness of existing control systemswith regular reviews of the level of exposure to identified risks.

This project was implemented at all significant Group entitiesin 2011, adopting an intentionally pragmatic and gradualapproach, beginning with an in-depth focus on several majorrisks: to date, the Management Committees of each businessgroup and of the regional holding companies have selected sixmajor risks among the 42 identified by LVMH, with the aim ofdeploying actions plans for all of these risks by June 30, 2013.

Discussion forums have been organized by the Internal Controlteam for the main risk categories selected by most of theparticipants. These forums bring together risk managers,operational staff and internal control managers and have thushelped facilitate the sharing of best practices across the Group.

2.2. Main risk management principles

Company Information Systems, Financial Communication,Insurance, Management Control, and Mergers and Acquisitions.

Lastly, in line with European directives and the Order ofDecember 2008, after an initial pilot process in 2009, theGroup initiated in 2010 a process of improving and integratingrisk management and internal control systems, an approachknown by the acronym ERICA, “Enterprise Risk and InternalControl Assessment”, which involves:

- a letter of representation that covers all strategic, operationaland regulatory risks (see above);

- the availability, since April 2010, of an application that centralizesall risk and internal control data and provides a frameworkfor a structured articulation of these two fields (see §2.2.4 below);

- an approach to the formalization of procedures for themanagement of major risks, introduced in 2010 and widelyapplied in 2011 and 2012 (see §2.2.3 below).




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2.3.1. Definition and objectives

The Group uses an internal reference guide which is consistentwith COSO principles (Committee of Sponsoring Organizationsof the Treadway Commission) together with the new ReferenceFramework of the AMF.

Therefore, at the behest of the Board of Directors, the PerformanceAudit Committee, Executive Management and other seniormanagers of the parent companies and their subsidiaries and asspecified in this reference guide, internal control implies a setof resources, behaviors, procedures and actions adapted to theindividual characteristics of each Group company that:

- contributes to control over its activities, the efficiency of itsoperations and the efficient use of its resources;

- must enable the entity to appropriately assess significantoperational, financial and compliance risks.

More specifically, this system aims to provide reasonableassurance with respect to the achievement of the followingobjectives:

- compliance with applicable laws and regulations;

- the implementation of instructions and directions given by theExecutive Management of the Group and the Management ofoperational units (the Houses or brands and their subsidiaries);

- the proper functioning of entity’s internal processes, especiallythose relating to the protection of its assets and the value of its capital;

- the reliability of financial and accounting information.

The internal control system thus comprises a range of controlprocedures and activities over and above those directlyconnected to the financial and accounting system; as it aims to ensure the control and continuity of all existing and newactivities, the system must enable the management of the Housesand subsidiaries to focus fully on the strategy, development andgrowth of the Group.

Limits of internal control

No matter how well designed and applied, the internal controlsystem cannot provide an absolute guarantee that the Group’sobjectives will be achieved. All internal control systems havetheir limits, most notably because of the uncertainty of theoutside world, individual judgment or malfunctions as a resultof human or other errors.

The structure of the Group, which comprises a large number ofsubsidiaries with widely varying missions and purposes, someof which are relatively small in size, is a specific risk factor.

2.3.2. Internal control components

The Group’s internal control system includes five closelyinterrelated components:

- a general control environment, based on clearly defined andappropriate roles and responsibilities;

- a risk management system;

- appropriate control activities, procedures and documentation;

- an information and communication system that enablesresponsibilities to be exercised efficiently and effectively;

- a continual monitoring of the system.

All of these elements are centrally managed and coordinated, butthey are also reviewed each year by the larger entities within theGroup, through the established self-assessment procedure in place.

2.3.3. The general control environment

The internal control mechanism, which applies to all of LVMH’soperations, aims primarily to create appropriate conditions fora general internal control environment tailored to the Group’sspecificities. It also aims to anticipate and control the risk oferrors and fraud, without however guaranteeing their completeelimination.

2.3. General internal control principles

2.2.4. Coordination of risk management with internal control

Risk management and internal control systems jointly exertthe necessary oversight over the Group’s businesses.

The risk management system aims to identify and analyze theprincipal risks that could affect the Group. Risks that exceedthe acceptable levels are evaluated and, if deemed necessary, areaddressed through specific action plans. These plans may callfor the implementation of controls, a transfer of the financialconsequences (through insurance or an equivalent mechanism)or an adaptation of the entity’s organization. The controls to be implemented are part of the internal control system, whichalso serves to guarantee their effectiveness.

For its part, the internal control system relies on the risk

management system to identify the main risks and principlesthat need to be controlled.

This coordination between these two systems has been reflectedin both:

- the new application features added to the ERICA evaluationplatform;

- and the reference guide of major risks, with a presentation for each major risk of the coverage measures in the internalcontrol reference guide.

This coordination is also reflected in the “Risk factors” chapterof the “Management Report of the Board of Directors – LVMHgroup”: for each type of risk discussed, this report presentsthe evaluation approach and the control systems implementedand monitored by the Group or the brands involved.




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The Group has always expressed its determination with regard tothese fundamentals, which are the management’s commitmentto integrity and ethical behavior, the principle of honesty inrelations with customers, suppliers, employees and other businesspartners, clear organizational structures, responsibilities andauthorities defined and formalized according to the principle of thesegregation of duties, regular monitoring of staff performance,and a commitment to skills management and the professionaldevelopment of Group employees.

These ethical and good governance principles are included inthe LVMH Code of Conduct, which has been distributed sinceMay 2009 to all Group employees. This Code of Conduct servesas the common foundation and source of inspiration in this areafor all of our brands or business lines. In particular, in the Houses,the Group recommends and oversees the implementation of codesof conduct, supplier charters, formalized procedures for declaringand monitoring conflicts of interest, and the implementation ofdelegation matrices that outline the responsibilities and powersof each employee.

In 2009, an Intranet website (“LVMH Mind”) was launched to better communicate internally the Group’s commitment toresponsible corporate citizenship. On this website, specificallydevoted to social and environmental responsibility, employeescan find the LVMH Code of Conduct, but also the EnvironmentalCharter first adopted in 2001 and the Supplier Charterintroduced in 2008, which ensure compliance across the entiresupply chain with strict guidelines.

Skills management is a significant aspect of internal control.LVMH pays special attention to matching employees’ profileswith corresponding responsibilities, formalizing annualperformance reviews at individual and organizational level,ensuring the development of skills through training programscustom-designed for each level of seniority and encouraginginternal mobility. Personnel reports are produced monthly by the Group’s Human Resources Department, presentingchanges in staff and related analyses as well as vacancies andinternal movements. A dedicated Intranet site, “LVMH Talents”,which is for the use of Group Human Resources.

In 2011, strengthening the Group’s business continuity plans(BCPs) was a focus of particular attention. Progress made in2012 was assessed by way of a questionnaire disseminated to allof the Group’s significant entities. Sustained efforts will be requiredto further develop and improve these procedures and ensure thatthey continue to meet the Group’s requirements.

Furthermore, sessions for the sharing of best practices wereorganized in 2012 on a range of issues: delegations of authority,payment processes (approval of payments, segregation of duties,signatures and banking delegations), and the system for managingand controlling staff arrivals and departures. Discussions were alsoorganized with a view to developing an anti-corruption program.

2.3.4. Risk management

The risk management system is described in §2.2 Main riskmanagement principles.

2.3.5. Control activities, procedures and documentation

Internal control practices and procedures are implemented bythe companies’ internal control managers under the responsibilityof their Management Committees.

Through its Finance Intranet, the Group disseminates all ofthe regularly updated procedures contributing to accountingand financial information applicable to all the consolidatedcompanies, covering: accounting and financial procedures andprincipally the accounting policies and standards, consolidation,taxation, investments, financial reporting (including budgetaryprocedures and strategic plans), cash flow and financing(including cash pooling, foreign exchange and interest ratehedging). The procedures available on the Finance Intranet alsodetail the format, content and frequency of financial reports.

The Finance Intranet is also used for the dissemination ofInternal Control principles and best practices:

- a top-level guide, “The Essentials of Internal Control”,describes the bases of the general environment and the salientfeatures of the main processes: Sales, Retail Sales, Purchases,Inventory, Financial Statements Closing and InformationSystems (general IT controls);

- in addition to this manual, the LVMH internal controlreference guide covering a wide range of business processeshas also been made available. This reference guide details, foreach risk arising from a given process, the key controlactivities expected. This reference guide is regularly updatedto take into account developments in information systemsand procedures. Originally established in accordance withCOSO principles, the reference guide covers most of themeasures relating to the preparation of accounting andfinancial information that are also included in the ReferenceFramework of the AMF;

- best practices and implementation tools are available onlinevia this Intranet site, covering the issues emphasized by theGroup: conflicts of interest, delegations of authority, businesscontinuity plans, IT disaster recovery plans, policies andguidelines for information system security, exception reports,the segregation of duties and resulting conflicts relating tosensitive transactions, and the control of media expenses.

The Group and its internal control managers in the Housesensure the implementation of controls that are essential toachieving the key process internal control objectives, wherenecessary. The managers are asked to make a special effort inrelation to the documentation of key activities in the form of aprocedure, so as to ensure consistent quality over time, regardlessof the person implementing them.

The activities relating to the control and remediation of internalcontrol weaknesses are reflected, documented and tracked aspart of the management process that guides all of the Group’score entities (cf. §2.3.7).

The Group’s Guidelines may also be found on the FinanceIntranet, together with specially designed tools for theevaluation, prevention and coverage of risks. These materialsmay be accessed by all personnel involved in the application ofthe Group’s risk management procedures.




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2.3.6. Information and communication systems

The strategic plans in terms of information and communicationsystems are coordinated by the Information Systems Department,which ensures the standardization of the ERP (SAP) in operationas well as business continuity. Aspects of internal control(segregation of duties and access rights) are integrated whenemploying new information systems and these are regularlyreviewed.

The information and telecommunications systems and theirassociated risks (physical, technical, internal and externalsecurity, etc.) are also subject to special procedures: a BusinessContinuity Plan methodology tool kit has been distributedwithin the Group in order to define, for each significant entity,the broad outline of such a plan as well as those of an ITDisaster Recovery Plan. A Business Continuity Plan and a Disaster Recovery Plan have been developed at the level ofthe parent company LVMH SA and both plans are tested on anannual basis.

All significant entities have appointed a head of IT Security(RSI), who reports directly to the Director of InformationSystems. The activities of the RSIs are coordinated by theGroup RSI. Together they constitute a vigilance network to monitor the development of risks affecting informationsystems, by implementing adequate defenses depending on thelikelihood of a given type of risk and its potential impact.

An overall approach, through intrusion testing, evaluatinginternal and external sources of potential attack and alsoinvolving client-side testing, is applied on a permanent basis.A unified approach to the identification and management ofinformation security risks was adopted in 2012 by a significantentity in the Selective Retailing business group and will soonbe extended to all of the Group’s significant entities.

2.3.7. Continuous monitoring of the internal control systems

There are several levels of monitoring, the main ones being:

Ongoing monitoring of the processes

Monitoring is organized by the operational departments inorder to anticipate or detect incidents as soon as possible.Exception reports are used to determine whether correctiveactions are required based on a departure from normal operatingconditions, as a complement to preventive measures, such asthe segregation of duties.

Periodic monitoring of the mechanism

Periodic monitoring is performed by management and by the internal and external Auditors:

- by management or operational staff under the responsibilityof the internal control managers. The final deliverable of thissupervision is the letter of representation on risk managementand internal control, signed by the Chairman and CFO or by

each member of the Management Committee of each significantentity, confirming their acceptance of responsibility forinternal control in connection with the relaying of informationon areas of weakness and the remedies pursued (see §2.1);

- by LVMH Internal Audit and by external Auditors, whoprovide management of the entities and the ExecutiveManagement of the Group with the results of their reviewwork and their recommendations.

The Management of each significant entity carries out anannual self-assessment process.

Self-assessment is based on the LVMH internal controlreference guide. This reference guide covers 12 key processes:Sales, Retail Sales, Purchases, Licenses, Travel and Movements,Inventory, Production, Cash Management, Fixed Assets, HumanResources, Information Systems and Financial StatementsClosing. Specific processes have been developed to reflect theparticular needs of certain activities (eaux-de-vie and VineyardLand for Wines and Spirits, End-of-Season Operations forFashion and Leather Goods, Concessions for Duty-Freebusinesses).

In addition, at the level of the parent company LVMH SA andthe Group, the eleven key processes listed in §2.1 are analyzedto determine the related risks, action plans are subsequentlydefined and followed-up, so as to remediate any weaknesses.

The self-assessment approach applied at each of the significantentities identified in 2012 (as indicated in §2.1) involves asingle list of 83 key controls drawn up by the Group’s InternalControl team and extracted from the internal control frameworkdescribed above. Each entity follows the same methodology,which has been in use since 2006:

- a review of shortcomings and a follow-up by the entity’s seniormanagers of the measures implemented to remediate theseweaknesses;

- the formal documentation of this review and assessmentprocess as well as the resulting action plans in the internalcontrol data modeling and guidance tool, which has alsobeen adopted by other CAC 40 companies;

- the signing of the letter of representation by the Managementof each entity.

The letters of representation are consolidated and “cascaded”,from the subsidiaries to the parent companies, and from theparent companies to the Group.

Work and assessments performed by senior executives

These internal control formalization procedures are carried outon an internal basis. This approach maximizes the involvementof operational managers, capitalizing on their knowledge and facilitating the process of continuous improvement ofinternal control over time within the Group. The Group’sexternal Auditors are kept informed on the progress of thisapproach, as is the Performance Audit Committee, by means of regular reports.




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In addition to the contribution of all Group employees to the success of these systems, the following participants fulfillspecific roles with respect to internal control:

At Group level

The Board of Directors

As part of the responsibilities described above, the Board ofDirectors contributes to the general control environmentthrough its underlying professional principles: the savoir-faireand responsibility of its members, the clarity and transparencyof its decisions, and the efficiency and effectiveness of itscontrols. The Company refers to the AFEP/MEDEF Code ofCorporate Governance for Listed Companies, for guidance.

The Board of Directors is kept informed on a regular basis ofthe specific nature of risk management and internal controlsystems and procedures, and ensures that major risks, whichare disclosed in the “Risk factors” section of its ManagementReport, are properly taken into account.

Also at regular intervals, the Board and its Performance AuditCommittee receive information on the results of the operationof these systems, any weaknesses noted and the action plansdecided with a view to their resolution.

The Executive Committee

The Executive Committee, comprised of executive, operationaland functional directors, defines strategic objectives on thebasis of the orientations decided by the Board of Directors,coordinates their implementation, ensures that the organizationadapts to changes in the business environment, and oversees boththe definition and the accomplishment of the responsibilitiesand delegations of authority of Executive Management.

The Performance Audit Committee

As part of its responsibilities described above, the PerformanceAudit Committee controls the existence and application ofinternal control procedures. It also examines the results of thework of Internal Audit and approves annual and midterminternal auditing orientation in terms of resources andgeographic, business and risk coverage. The Committee alsoreceives information on the management of major risks.

The Legal Department

The Group’s Legal Department is responsible for monitoringthe proper application of laws and regulations in force in each ofthe countries where LVMH group has operations. It also fulfilsa central legal review function and provides advice on legalmatters as required by each of LVMH group’s business groups.

The Risk Management and Insurance Department

Apart from the operational managers, who are responsible for the risks inherent to their businesses, the Risk Managementand Insurance Department ensures that Group companies have

access to tools and methodologies for the identification andevaluation of risks, promotes effective loss prevention practices,and advises on risk coverage and financing strategies.

The Risk Management and Insurance Department collaborateswith the Internal Audit team on the definition and implementationof evaluation methods and processes for handling certain majoror large-scale risks.

The Audit and Internal Control Department

As of December 31, 2012, the Audit and Internal ControlDepartment had a staff of some fifteen professionals, includingtwo individuals specifically responsible for the coordination of internal control. Although this team’s supervision is centralized,its members operate out of two offices in Paris and Hong Kongand are active throughout the Group.

Between thirty and forty audit assignments are carried out eachyear. As planned, nearly 70 entities were covered in 2012,divided equally between regions and business groups. Specialattention was paid to Bulgari, which was audited for the first time since joining the Group, and to the activities of theholding companies.

Follow-ups on recommendations made in the context of pastassignments are reinforced through systematic on-site visits tocompanies with the most significant issues.

The Internal Audit team applies a multi-year audit plan,which is revised each year. The multi-year audit plan allowsthe degree to which the internal control system has beenunderstood and assimilated to be monitored and reinforcedwhere necessary, and ensures the appropriate application of theprocedures that are in place. The audit plan is prepared on thebasis of an analysis of potential risks, either existing or emerging,by type of business (such as size, contribution to profits,geographical location, quality of local management, etc.) andon the basis of meetings held with the operational managersconcerned. Internal Audit intervenes both in operational and financial matters. A review of the self-assessment processand its results is performed systematically for the significantentities involved.

The plan can be modified in response to changes in the politicaland economic environment or internal strategy.

Internal Audit reports on its work to management of the entityconcerned and to Executive Management of the Group by wayof an Executive Summary and a detailed report explaining its recommendations and setting out managers’ commitment to apply them within a reasonable period of time. InternalAudit sends copies of the reports that it issues to the externalAuditors and meets with them periodically to discuss currentinternal control issues.

The main features of the annual and multi-year audit plan,together with the main conclusions of the year under reviewand the follow-up to the main recommendations of previousassignments, are presented to the Performance AuditCommittee and to the business groups concerned.

2.4. Risk management and internal control stakeholders




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2.5.1. Organization

Risk management and internal controls of accounting andfinancial information are organized based on the cooperationand control of the following departments, which are all part ofthe Finance Team: Accounting and Consolidation, ManagementControl, Information Systems, Corporate Finance and Treasury,Tax and Financial Communication.

Accounting and Consolidation is responsible for preparingand producing the individual company accounts of the holdingcompanies and the consolidated financial statements, in particularthe financial statements and financial documents published as of June 30 (the interim report) and as of December 31 (theReference Document).

To this end, Accounting and Consolidation defines anddisseminates the Group’s accounting policies, monitors andenforces their application and organizes any related trainingprograms that may be deemed necessary. Accounting and Consolidation also ensures that an appropriate financialreporting information system is maintained, while alsocoordinating the work of the Group’s Statutory Auditors.

Management Control is responsible for coordinating thebudget process and its revisions during the year as well as the five-year strategic plan. It produces the monthly operatingreport and all reviews required by Executive Management (seebelow § 2.5.4 Management reporting); it also tracks capitalexpenditures and cash flow, as well as producing statistics andspecific operational indicators.

By virtue of its area of competence and the high standards ofthe reports it produces, Management Control is an importantand inevitable participant in the internal control and financialrisk management system.

Information Systems designs and implements theinformation systems needed by the Group’s central functions.It disseminates the Group’s technical standards, which areindispensable given the decentralized structure of the Group’sequipment, applications, networks, etc., and identifies anypotential synergies between businesses, while respecting brandindependence. It develops and maintains a telecommunicationsand IT server system shared by all entities across the Group.

It drives policies for system and data security and helps thebrands prepare emergency contingency plans. In cooperationwith the subsidiaries, Information Systems supervises thecreation of three-year plans for all information systems acrossthe Group, by business group and by entity.

Corporate Finance and Treasury is responsible for applyingthe Group’s financial policy, efficiently managing the balancesheet and financial debt, improving the financial structure and implementing a prudent policy for managing solvability,liquidity and counterparty risks. Within this department,International Treasury focuses particularly on pooling theGroup’s surplus cash and forecasts the financing requirementsof Group companies on the basis of quarterly updates preparedby these companies, while meeting the medium term liquidityand financing requirements of subsidiaries. It is also responsiblefor applying a centralized foreign exchange risk managementstrategy.

The Markets department, which is also in this department, isdelegated the responsibility of implementing the policy ofhedging market risks generated directly or indirectly by Groupcompanies. In that respect, it is responsible for applying acentralized interest rate and counterparty risk managementstrategy, designed to limit the negative impact of interest ratefluctuations and credit risk on operations and investments.

To this end, a management policy and strict procedures have beenestablished to measure, manage and consolidate these marketrisks. Within this team, the separation of Front office and Back office activities, combined with an independent controlteam reporting to the Accounting Director allow for a greatersegregation of duties. This organization relies on an integratedcomputerized system allowing real-time controls on hedgingtransactions. The hedging mechanism is periodically presented to the Performance Audit Committee. Hedging decisions aretaken by means of a clearly established process that includesregular presentations to the Group’s Executive Committee anddetailed documentation.

The Tax team, which coordinates the preparation of tax returns and ensures compliance with applicable tax laws andregulations, provides advice to the different business groupsand companies and defines tax planning strategy based on

2.5. Risk management and internal control procedures related to financial and accounting information

Moreover, since 2003, Internal Audit has coordinated the Group’scompliance with LSF (French Financial Security Act) internalcontrol measures, and has devoted a specific team to internalcontrols. This team monitors and anticipates regulatory changesso that the measures can be adapted.

Group Internal Control coordinates a network of internalcontrollers responsible for ensuring compliance with theGroup’s internal control procedures and for preparing internalcontrols, tailored to their businesses. These internal controlmanagers are responsible for the various projects related to theinternal control and risk management system and promote the dissemination and application of guidelines.

At subsidiary level

Management Committees

The Management Committee within each subsidiary isresponsible for implementing the procedures necessary to ensurean effective internal control mechanism for its scope of operations.The fact that operational managers are personally accountablefor internal controls, in each company and in each of the keybusiness processes, is a cornerstone of the internal control system.

The Management Committees of brands or entities are responsiblefor the implementation of action plans for the management of the major risks they identify and evaluate in the course ofinternal control self-assessment, for their scope of operations.




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the Group’s operational requirements. It organizes appropriatetraining courses in response to major changes in tax law andcoordinates the uniform reporting system for tax data.

The Financial Communication department is responsible forcoordinating all information issued to the financial communityto enable it to acquire a clear, transparent and preciseunderstanding of the Group’s performance and prospects. Italso provides Executive Management with the perspectives of the financial community on the Group’s strategy and itspositioning within its competitive environment. It defines thekey messages to be communicated in close collaboration withExecutive Management and the business groups. It harmonizesand coordinates the distribution of corporate messages throughvarious channels (publications such as the annual and half-yearlyreports, financial presentations, meetings with shareholdersand analysts, the website, etc.)

Each of these departments coordinates the financial aspects of the Group’s internal control in its own area of activity via the finance departments of business groups, the maincompanies and their subsidiaries, which are in charge of similarfunctions in their respective entities. In this way, each of thecentral departments runs its control mechanism through itsfunctional chain of command (controller, head of accounting,consolidation manager, Treasurer, etc.).

The finance departments of the main companies of the Groupand the Departments of the parent company, LVMH, describedabove periodically organize joint finance committees. Run andcoordinated by the Central Departments, these committeesdeal particularly with applicable standards and procedures,financial performance and any corrective action needed, togetherwith internal controls applied to accounting and managementdata.

2.5.2. Accounting and management policies

Subsidiaries adopt the accounting and management policiesconsidered as appropriate for the individual company andconsolidated financial statements. A consistent set of accountingstandards is applied throughout, together with consistentformats and tools to submit data to be consolidated. Accountingand management reporting is also carried out through thesame system, thus ensuring the consistency of internal andpublished data.

2.5.3. Consolidation process

The consolidation process is laid out in a detailed set ofinstructions and has a specially adapted data submission systemdesigned to facilitate complete and accurate data processing,based on a consistent methodology and within suitabletimeframes. The Chairman and CFO of each company undertaketo ensure the quality and completeness of financial information

sent to the Group - including off-balance sheet items - in asigned letter of representation which gives added weight to thequality of their financial information.

There are sub-consolidations at business unit and businessgroup level, which also act as primary control filters and helpensure consistency.

At Group level, the teams in charge of consolidation are specializedby type of business and are in permanent contact with thebusiness groups and companies concerned, thereby enablingthem to better understand and validate the reported financialdata and anticipate the treatment of complex transactions.

The quality of financial information, and its compliance withstandards, are also guaranteed through ongoing exchanges with the Statutory Auditors whenever circumstances are complexand open to interpretation.

2.5.4. Management reporting

Each year, all of the Group’s consolidated entities produce astrategic plan, a complete budget and annual forecasts. Detailedinstructions are sent to the companies for each process.

These key steps represent opportunities to perform detailedanalyses of actual data compared with budget and prior yeardata, and to foster ongoing communication between companiesand the Group - an essential feature of the financial internalcontrol mechanism.

A team of controllers at Group level, specialized by business, isin permanent contact with the business groups and companiesconcerned, thus ensuring better knowledge of performance andmanagement decisions as well as appropriate controls.

The half-yearly and annual financial statements are closed outat special results presentation meetings, in the presence of the Group’s financial representatives and the companiesconcerned, during which the Statutory Auditors present theirconclusions with regard to the quality of financial and accountinginformation and the internal control environment of the differentcompanies of the Group, on the basis of the work that theyperformed during their review and audit assignments.

Conclusions

The LVMH group is pursuing its policy of constantly improvingits internal controls, which it has carried out since 2003, by bolstering the self-appraisal system and its adoption by the main stakeholders.

In response to changes in regulatory requirements, the Grouphas been rolling out the ERICA project since 2010: an approachintegrating risk management internal control, which has beenextended to reach all significant entities since 2011.




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Statutory Auditors’ report on the report of the Chairman of the Board of Directors

3. STATUTORY AUDITORS’ REPORT, PREPARED IN ACCORDANCE WITH ARTICLE L. 225-235 OF THE FRENCH COMMERCIAL CODE (CODE DE COMMERCE), ON THE REPORT PREPARED BY THE CHAIRMAN OF THE BOARD OF DIRECTORS

To the Shareholders,

In our capacity as Statutory Auditors of LVMH Moët Hennessy – Louis Vuitton and in accordance with article L. 225-235 of theFrench Commercial Code (Code de commerce), we hereby report on the report prepared by the Chairman of your Company in accordancewith Article L. 225-37 of the French Commercial Code for the year ended December 31, 2012.

It is the Chairman’s responsibility to prepare and submit for the Board of Directors’ approval a report on internal control and riskmanagement procedures implemented by the company and to provide the other information required by article L. 225-37 of theFrench Commercial Code relating to matters such as corporate governance.

Our role is to:

- report on any matters as to the information contained in the Chairman’s report in respect of the internal control and riskmanagement procedures relating to the preparation and processing of the accounting and financial information,

- confirm that the report also includes the other information required by Article L. 225-37 of the French Commercial Code. It shouldbe noted that our role is not to verify the fairness of this other information.

We conducted our work in accordance with professional standards applicable in France.

Information on internal control and risk management procedures relating to the preparation and processing of accounting and financial information

The professional standards require that we perform the necessary procedures to assess the fairness of the information provided in the Chairman’s report in respect of the internal control and risk management procedures relating to the preparation and processingof the accounting and financial information. These procedures consist mainly in:

- obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing ofthe accounting and financial information on which the information presented in the Chairman’s report is based and of the existingdocumentation;

- obtaining an understanding of the work involved in the preparation of this information and of the existing documentation;

- determining if any material weaknesses in the internal control procedures relating to the preparation and processing of the accountingand financial information that we would have noted in the course of our work are properly disclosed in the Chairman’s report.

On the basis of our work, we have no matters to report on the information relating to the company’s internal control and riskmanagement procedures relating to the preparation and processing of the accounting and financial information contained in thereport prepared by the Chairman of the Board of Directors in accordance with article L. 225-37 of the French Commercial Code.

Other information

We confirm that the report prepared by the Chairman of the Board of Directors also contains the other information required byarticle L. 225-37 of the French Commercial Code.

Neuilly-sur-Seine and Paris-La Défense, February 15, 2013

The Statutory Auditors

DELOITTE & ASSOCIES ERNST & YOUNG et Autres

Thierry Benoit Olivier Breillot Gilles Cohen

This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speakingusers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

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FINANCIAL STATEMENTSConsolidated financial statements

CONSOLIDATED INCOME STATEMENT 114CONSOLIDATED STATEMENT OF COMPREHENSIVE GAINS AND LOSSES 114CONSOLIDATED BALANCE SHEET 115CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 116CONSOLIDATED CASH FLOW STATEMENT 117NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 119CONSOLIDATED COMPANIES 174STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 179


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CONSOLIDATED INCOME STATEMENT

(EUR millions, except for earnings per share) Notes 2012 2011 2010

Revenue 23-24 28,103 23,659 20,320Cost of sales (9,917) (8,092) (7,184)

Gross margin 18,186 15,567 13,136

Marketing and selling expenses (10,101) (8,360) (7,098)General and administrative expenses (2,164) (1,944) (1,717)

Profit from recurring operations 23-24 5,921 5,263 4,321

Other operating income and expenses 25 (182) (109) (152)

Operating profit 5,739 5,154 4,169

Cost of net financial debt (140) (151) (151)Other financial income and expenses 126 (91) 763

Net financial income (expense) 26 (14) (242) 612

Income taxes 27 (1,820) (1,453) (1,469)Income (loss) from investments in associates 7 4 6 7

Net profit before minority interests 3,909 3,465 3,319

Minority interests 17 (485) (400) (287)

Net profit, Group share 3,424 3,065 3,032

Basic Group share of net earnings per share (EUR) 28 6.86 6.27 6.36Number of shares on which the calculation is based 499,133,643 488,769,286 476,870,920

Diluted Group share of net earnings per share (EUR) 28 6.82 6.23 6.32Number of shares on which the calculation is based 502,229,952 492,207,492 479,739,697

CONSOLIDATED STATEMENT OF COMPREHENSIVE GAINS AND LOSSES

(EUR millions) 2012 2011 2010

Net profit before minority interests 3,909 3,465 3,319Translation adjustments (99) 190 701Tax impact (18) 47 89

(117) 237 790Change in value of available for sale financial assets (27) 1,634 294Amounts transferred to income statement (14) (38) 38Tax impact (6) (116) (35)

(47) 1,480 297Change in value of hedges of future foreign currency cash flows 182 95 (20)Amounts transferred to income statement 13 (168) (30)Tax impact (50) 21 14

145 (52) (36)Change in value of vineyard land 85 25 206Tax impact (28) (11) (71)

57 14 135Gains and losses recognized in equity 38 1,679 1,186

Comprehensive income 3,947 5,144 4,505Minority interests (482) (433) (375)

Comprehensive income, Group share 3,465 4,711 4,130

FINANCIAL STATEMENTS


Consolidated financial statements

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CONSOLIDATED BALANCE SHEET

ASSETS Notes 2012 2011 2010(EUR millions)

Brands and other intangible assets 3 11,510 11,482 9,104Goodwill 4 7,806 6,957 5,027Property, plant and equipment 6 8,769 8,017 6,733Investments in associates 7 163 170 223Non-current available for sale financial assets 8 6,004 5,982 3,891Other non-current assets 9 524 478 319Deferred tax 27 881 716 668

Non-current assets 35,657 33,802 25,965

Inventories and work in progress 10 8,080 7,510 5,991Trade accounts receivable 11 1,985 1,878 1,565Income taxes 201 121 96Other current assets 12 1,811 1,455 1,255Cash and cash equivalents 14 2,196 2,303 2,292

Current assets 14,273 13,267 11,199

Total assets 49,930 47,069 37,164

LIABILITIES AND EQUITY Notes 2012 2011 2010(EUR millions)

Share capital 15.1 152 152 147Share premium account 15.1 3,848 3,801 1,782Treasury shares and LVMH-share settled derivatives 15.2 (414) (485) (607)Cumulative translation adjustment 15.4 342 431 230Revaluation reserves 2,819 2,689 1,244Other reserves 14,393 12,798 11,370Net profit, Group share 3,424 3,065 3,032

Equity, Group share 24,564 22,451 17,198Minority interests 17 1,102 1,061 1,006

Total equity 25,666 23,512 18,204

Long term borrowings 18 3,836 4,132 3,432Provisions 19 1,530 1,400 1,167Deferred tax 27 3,960 3,925 3,354Other non-current liabilities 20 5,456 4,506 3,947

Non-current liabilities 14,782 13,963 11,900

Short term borrowings 18 2,976 3,134 1,834Trade accounts payable 3,134 2,952 2,298Income taxes 442 443 446Provisions 19 335 349 339Other current liabilities 21 2,595 2,716 2,143

Current liabilities 9,482 9,594 7,060

Total liabilities and equity 49,930 47,069 37,164




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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(EUR millions) Number Share Share Treasury Cumulative Revaluation reserves Net profit Total equity of shares capital premium shares and translation and other account LVMH-share adjustment Available Hedges Vineyard reserves Group Minority Total settled for sale of future land share interests derivatives financial foreign assets currency cash flows

Notes 15.1 15.2 15.4 17 As of December 31, 2009 490,405,654 147 1,763 (929) (495) 213 63 595 12,439 13,796 989 14,785Gains and losses recognized in equity 725 297 (32) 108 1,098 88 1,186Net profit 3,032 3,032 287 3,319Comprehensive income - - - 725 297 (32) 108 3,032 4,130 375 4,505Stock option plan and similar expenses 41 41 3 44(Acquisition)/disposal of treasury shares and LVMH-share settled derivatives 221 (43) 178 - 178Exercise of LVMH share subscription options 2,012,478 120 120 - 120Retirement of LVMH shares (1,775,900) (101) 101 - - -Capital increase in subsidiaries - 1 1Interim and final dividends paid (953) (953) (158) (1,111)Changes in control of consolidated entities - (3) (3)Acquisition and disposal of minority interests’ shares (83) (83) (104) (187)Purchase commitments for minority interests’ shares (31) (31) (97) (128)As of December 31, 2010 490,642,232 147 1,782 (607) 230 510 31 703 14,402 17,198 1,006 18,204

Gains and losses recognized in equity 201 1,480 (46) 11 1,646 33 1,679Net profit 3,065 3,065 400 3,465Comprehensive income - - - 201 1,480 (46) 11 3,065 4,711 433 5,144Stock option plan and similar expenses 49 49 3 52(Acquisition)/disposal of treasury shares and LVMH-share settled derivatives 15 (8) 7 - 7Exercise of LVMH share subscription options 1,395,835 94 94 - 94Retirement of LVMH shares (2,259,454) (107) 107 - - -Acquisition of a controlling interest in Bulgari 18,037,011 5 2,032 201 2,238 772 3,010Capital increase in subsidiaries - 4 4Interim and final dividends paid (1,069) (1,069) (187) (1,256)Changes in control of consolidated entities, excluding Bulgari (5) (5) 20 15Acquisition and disposal of minority interests’ shares (681) (681) (785) (1,466)Purchase commitments for minority interests’ shares (91) (91) (205) (296)As of December 31, 2011 507,815,624 152 3,801 (485) 431 1,990 (15) 714 15,863 22,451 1,061 23,512

Gains and losses recognized in equity (89) (47) 133 44 41 (3) 38Net profit 3,424 3,424 485 3,909Comprehensive income - - - (89) (47) 133 44 3,424 3,465 482 3,947Stock option plan and similar expenses 50 50 3 53(Acquisition)/disposal of treasury shares and LVMH-share settled derivatives 24 (12) 12 - 12Exercise of LVMH share subscription options 1,344,975 94 94 - 94Retirement of LVMH shares (997,250) (47) 47 - - -Capital increase in subsidiaries - 8 8Interim and final dividends paid (1,448) (1,448) (317) (1,765)Changes in control of consolidated entities (11) (11) (11) (22)Acquisition and disposal of minority interests’ shares (39) (39) (26) (65)Purchase commitments for minority interests’ shares (10) (10) (98) (108)As of December 31, 2012 508,163,349 152 3,848 (414) 342 1,943 118 758 17,817 24,564 1,102 25,666




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CONSOLIDATED CASH FLOW STATEMENT

(EUR millions) Notes 2012 2011 2010

I. OPERATING ACTIVITIES AND OPERATING INVESTMENTS Operating profit 5,739 5,154 4,169Net increase in depreciation, amortization and provisions 1,299 999 788Other computed expenses (62) (45) (126)Dividends received 188 61 20Other adjustments (51) (32) (3)

Cash from operations before changes in working capital 7,113 6,137 4,848Cost of net financial debt: interest paid (154) (152) (149)Income taxes paid (1,970) (1,544) (897)

Net cash from operating activities before changes in working capital 4,989 4,441 3,802Total change in working capital 14.1 (813) (534) 247

Net cash from operating activities 4,176 3,907 4,049

Operating investments 14.2 (1,702) (1,730) (976)

Net cash from operating activities and operating investments (free cash flow) 2,474 2,177 3,073

II. FINANCIAL INVESTMENTS Purchase of non-current available for sale financial assets 8 (131) (518) (1,724)Proceeds from sale of non-current available for sale financial assets 8 36 17 70Impact of purchase and sale of consolidated investments 2.4 (45) (785)(a) (61)

Net cash from (used in) financial investments (140) (1,286) (1,715)

III. TRANSACTIONS RELATING TO EQUITY Capital increases of LVMH SA 15 94 94(a) 120Capital increases of subsidiaries subscribed by minority interests 17 8 3 1Acquisition and disposals of treasury shares and LVMH-share settled derivatives 15.2 5 2 155Interim and final dividends paid by LVMH SA 15.3 (1,447) (1,069) (953)Interim and final dividends paid to minority interests in consolidated subsidiaries 17 (314) (189) (158)Purchase and proceeds from sale of minority interests 2.4 (206) (1,413) (185)

Net cash from (used in) transactions relating to equity (1,860) (2,572) (1,020)

IV. FINANCING ACTIVITIES Proceeds from borrowings 1,068 2,659 564Repayment of borrowings (1,526) (1,005) (1,290)Purchase and proceeds from sale of current available for sale financial assets 13 (67) 6 (32)

Net cash from (used in) financing activities (525) 1,660 (758)

V. EFFECT OF EXCHANGE RATE CHANGES (42) 60 188

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (I+II+III+IV+V) (93) 39 (232)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14 2,081 2,042 2,274CASH AND CASH EQUIVALENTS AT END OF PERIOD 14 1,988 2,081 2,042Transactions included in the table above, generating no change in cash: - acquisition of assets by means of finance leases 5 3 6

(a) Not including the impact of the amount attributable to the acquisition of Bulgari remunerated by the capital increase of LVMH SA as of June 30, 2011, which did not generate any cash flows.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES 1202. CHANGES IN THE PERCENTAGE OF INTEREST IN CONSOLIDATED ENTITIES 1263. BRANDS, TRADE NAMES AND OTHER INTANGIBLE ASSETS 1294. GOODWILL 1315. IMPAIRMENT TESTING OF INTANGIBLE ASSETS

WITH INDEFINITE USEFUL LIVES 1326. PROPERTY, PLANT AND EQUIPMENT 1347. INVESTMENTS IN ASSOCIATES 1358. NON-CURRENT AVAILABLE FOR SALE FINANCIAL ASSETS 1369. OTHER NON-CURRENT ASSETS 13710. INVENTORIES AND WORK IN PROGRESS 13711. TRADE ACCOUNTS RECEIVABLE 13812. OTHER CURRENT ASSETS 13913. CURRENT AVAILABLE FOR SALE FINANCIAL ASSETS 13914. CASH AND CASH EQUIVALENTS 14015. EQUITY 14116. STOCK OPTION AND SIMILAR PLANS 14417. MINORITY INTERESTS 14718. BORROWINGS 14819. PROVISIONS 15120. OTHER NON-CURRENT LIABILITIES 15221. OTHER CURRENT LIABILITIES 15222. FINANCIAL INSTRUMENTS AND MARKET RISK MANAGEMENT 15323. SEGMENT INFORMATION 15824. REVENUE AND EXPENSES BY NATURE 16125. OTHER OPERATING INCOME AND EXPENSES 16226. NET FINANCIAL INCOME/(EXPENSE) 16327. INCOME TAXES 16428. EARNINGS PER SHARE 16629. PROVISIONS FOR PENSIONS, REIMBURSEMENT OF MEDICAL

COSTS AND SIMILAR COMMITMENTS 16730. OFF BALANCE SHEET COMMITMENTS 17031. RELATED PARTY TRANSACTIONS 17232. SUBSEQUENT EVENTS 173

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1.1. General framework and environment

The consolidated financial statements for the year endedDecember 31, 2012 were established in accordance withinternational accounting standards and interpretations(IAS/IFRS) adopted by the European Union and applicable on December 31, 2012. These standards and interpretations have been applied consistently to the fiscal years presented. The 2012 consolidated financial statements were approved forpublication by the Board of Directors on January 31, 2013.

1.2. Changes in the accounting frameworkapplicable to LVMH in 2012

Standards, amendments and interpretations for whichapplication is mandatory in 2012

The amendment to IFRS 7 on required disclosures in the eventof a change in valuation method of financial assets, applicableas of January 1, 2012, did not have a significant impact on theGroup’s consolidated financial statements.

Standards, amendments and interpretations for whichapplication is mandatory after 2012

The following standards, amendments and interpretationsapplicable to LVMH, whose mandatory application date isJanuary 1, 2013 or 2014, relate to:

- amendment to IAS 1 on the presentation of gains and lossesrecognized in equity;

- IFRS 13, which defines the measurement principles of fairvalue and related disclosures, in case fair value applies. Theapplication of this text will not have a significant impact on the Group’s consolidated financial statements, since theaccounting policies applied by LVMH comply overall withthe IFRS 13 standard;

- IFRS 10, IFRS 11 and IFRS 12 on consolidation, redefiningthe concept of the control of entities, eliminating thepossibility to use proportional consolidation to consolidatejointly controlled entities which will be accounted foruniquely using the equity method, and introducing additionaldisclosure requirements in the notes to the consolidatedfinancial statements.

The application of these standards will not have a materialimpact on the Group’s consolidated financial statements, dueto the low number of jointly controlled entities which areproportionately consolidated. Specifically, the consolidationmethod of distribution subsidiaries jointly owned with theDiageo group will not be impacted. See Notes 1.5 and 1.23.

- amendments to IAS 19 on employee benefit commitmentswhich require full and immediate recognition of the effect ofactuarial differences taken directly to equity and thecalculation of the expected return on plan assets on the basisof the discount rate used to value the underlying obligationrather than on the basis of market expectations for returns.

The LVMH group applies the partial recognition in theincome statement for actuarial gains and losses (see Note1.21). In light of the change of the standards, the Group willretroactively recognize an additional provision in the amountof 84 million euros as well as the associated deferred taxassets in 2013. The provision, which corresponds to thebalance of actuarial gains and losses not yet recognized as ofJanuary 1, 2011, the date of the transition to IAS 19R, willbe recognized as an adjustment to equity. The impact on theincome statement in subsequent years will not be significant.

Other changes in standards and interpretations

The Group has reviewed the draft interpretation published by IFRIC in May 2012, which seeks to require the recognitionin profit or loss of changes in purchase commitments for minority interests’ shares. See Note 1.10 for a description of the accounting method used for these commitments as ofDecember 31, 2012.

1.3. First-time adoption of IFRS

The first accounts prepared by the Group in accordance withIFRS were the financial statements for the year endedDecember 31, 2005, with a transition date of January 1, 2004.IFRS 1 allowed for exceptions to the retrospective applicationof IFRS at the transition date. The procedures implemented bythe Group with respect to these exceptions are listed below:

- business combinations: the exemption from retrospectiveapplication was not applied. The recognition of the merger ofMoët Hennessy and Louis Vuitton in 1987 and all subsequentacquisitions were restated in accordance with IFRS 3; IAS 36Impairment of Assets and IAS 38 Intangible Assets wereapplied retrospectively as of this date;

- employee benefits: actuarial gains and losses previouslydeferred under French GAAP at the date of transition wererecognized;

- foreign currency translation of the financial statements ofsubsidiaries outside the euro zone: translation reservesrelating to the consolidation of subsidiaries that prepare their accounts in foreign currency were reset to zero as ofJanuary 1, 2004 and offset against “Other reserves”.

1.4. Use of estimates

For the purpose of preparing the consolidated financial statements,measurement of certain balance sheet and income statementitems requires the use of hypotheses, estimates or other formsof judgment. This is particularly true of the valuation ofintangible assets, purchase commitments for minority interestsand of the determination of the amount of provisions forcontingencies and losses or for impairment of inventories and,if applicable, deferred tax assets. Such hypotheses, estimates or other forms of judgment which are undertaken on the basisof the information available, or situations prevalent at the date

1. ACCOUNTING POLICIES



Notes to the consolidated financial statements

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of preparation of the accounts, may prove different from thesubsequent actual events.

1.5. Methods of consolidation

The subsidiaries in which the Group holds a direct or indirectde facto or de jure controlling interest are fully consolidated.

Jointly controlled companies are consolidated on a proportionatebasis.

For distribution subsidiaries operating in accordance with thecontractual distribution arrangements with the Diageo group,only the portion of assets and liabilities and results ofoperations relating to the LVMH group’s activities is includedin the consolidated financial statements (see Note 1.23).

Companies where the Group has significant influence but nocontrolling interest are accounted for using the equity method.

1.6. Foreign currency translation of the financialstatements of entities outside the euro zone

The consolidated financial statements are stated in euros; thefinancial statements of entities stated in a different functionalcurrency are translated into euros:

- at the period-end exchange rates for balance sheet items;

- at the average rates for the period for income statement items.

Translation adjustments arising from the application of these ratesare recorded in equity under “Cumulative translation adjustment”.

1.7. Foreign currency transactions and hedging of exchange rate risks

Transactions of consolidated companies denominated in acurrency other than their functional currencies are translated to their functional currencies at the exchange rates prevailingat the transaction dates.

Accounts receivable, accounts payable and debts denominatedin currencies other than the entities’ functional currencies are translated at the applicable exchange rates at the balancesheet date. Unrealized gains and losses resulting from thistranslation are recognized:

- within cost of sales in the case of commercial transactions;

- within net financial income/expense in the case of financialtransactions.

Foreign exchange gains and losses arising from the translationor elimination of inter-company transactions or receivables andpayables denominated in currencies other than the entity’sfunctional currency are recorded in the income statementunless they relate to long term inter-company financingtransactions which can be considered as transactions relating toequity. In the latter case, translation adjustments are recordedin equity under “Cumulative translation adjustment”.

Derivatives which are designated as hedges of commercialtransactions denominated in a currency other than the functional

currency of the entity are recognized in the balance sheet attheir market value at the balance sheet date and any change in the market value of such derivatives is recognized:

- within cost of sales for the effective portion of hedges ofreceivables and payables recognized in the balance sheet at the end of the period;

- within equity (as a revaluation reserve) for the effectiveportion of hedges of future cash flows (this part is transferredto cost of sales at the time of recognition of the hedged assetsand liabilities);

- within net financial income/expense for the ineffectiveportion of hedges; changes in the value of discount andpremium associated with forward contracts, as well as the timevalue component of options, are systematically considered as ineffective portions.

When derivatives are designated as hedges of subsidiaries’equity outside the euro zone (net investment hedge), anychange in fair value of the derivatives is recognized within equityunder “Cumulative translation adjustment” for the effectiveportion and within net financial income/expense for theineffective portion.

Market value changes of derivatives not designated as hedgesare recorded within net financial income/expense.

See also Note 1.19 regarding the definition of the concepts of effective and ineffective portions.

1.8. Brands, trade names and other intangible assets

Only acquired brands and trade names that are well known andindividually identifiable are recorded as assets at their valuescalculated on their dates of acquisition.

Brands and goodwill are chiefly valued using the method of theforecast discounted cash flows, or of comparable transactions(i.e. using the revenue and net profit coefficients employed forrecent transactions involving similar brands), or of stock marketmultiples observed for related businesses. Other complementarymethods may also be employed: the royalty method, involvingequating a brand’s value with the present value of the royaltiesrequired to be paid for its use; the margin differential method,applicable when a measurable difference can be identified betweenthe amount of revenue generated by a branded product incomparison with a similar unbranded product; and finally theequivalent brand reconstitution method involving, in particular,estimation of the amount of advertising required to generate a similar brand.

Costs incurred in creating a new brand or developing an existingbrand are expensed.

Brands, trade names and other intangible assets with finiteuseful lives are amortized over their estimated useful lives. Theclassification of a brand or trade name as an asset of definite orindefinite useful life is generally based on the following criteria:

- the brand or trade name’s positioning in its market expressed interms of volume of activity, international presence and notoriety;

- its expected long term profitability;




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- its degree of exposure to changes in the economic environment;- any major event within its business segment liable to

compromise its future development;- its age.

Amortizable lives of brands and trade names with definite usefullives range from 15 to 40 years, depending on their estimatedperiod of utilization.

Any impairment expense of brands and trade names and, in some cases, amortization expense, are recognized within“Other operating income and expenses”.

Impairment tests are carried out for brands, trade names and otherintangible assets using the methodology described in Note 1.12.

Research expenditure is not capitalized. New productdevelopment expenditure is not capitalized unless the finaldecision to launch the product has been taken.

Intangible assets other than brands and trade names areamortized over the following periods:

- leasehold rights, key money: based on market conditions,generally over the lease period;

- development expenditure: three years at most;- software: one to five years.

1.9. Changes in the percentage of interest in consolidated entities

When the Group takes de jure or de facto control of a business, its assets, liabilities and contingent liabilities are estimated attheir fair value as of the date when control is obtained and thedifference between the cost of taking control and the Group’sshare of the fair value of those assets, liabilities and contingentliabilities is recognized as goodwill.

The cost of taking control is the price paid by the Group in the context of an acquisition, or an estimate of this price if thetransaction is carried out without any payment of cash,excluding acquisition costs which are disclosed under “Otheroperating income and expenses”.

As from January 1, 2010, for transactions occurring after thatdate, in accordance with IAS 27 (Revised), the differencebetween the carrying amount of minority interests purchasedafter control is obtained and the price paid for their acquisitionis deducted from equity.

Goodwill is accounted for in the functional currency of theacquired entity.

Goodwill is not amortized but is subject to annual impairmenttesting using the methodology described in Note 1.12. Anyimpairment expense recognized is included within “Otheroperating income and expenses”.

1.10. Purchase commitments for minority interests

The Group has granted put options to minority shareholders of certain fully consolidated subsidiaries.

Pending specific guidance from IFRSs regarding this issue, theGroup recognizes these commitments as follows:

- the value of the commitment at the balance sheet dateappears in “Other non-current liabilities”;

- the corresponding minority interests are reclassified andincluded in “Other non-current liabilities”;

- for commitments granted prior to January 1, 2010, thedifference between the amount of the commitments andreclassified minority interests is maintained as an asset on the balance sheet under goodwill, as well as subsequentchanges in this difference. For commitments granted as fromJanuary 1, 2010, the difference between the amount of thecommitments and minority interests is recorded in equity,under “Other reserves”.

This accounting policy has no effect on the presentation ofminority interests within the income statement.

1.11. Property, plant and equipment

With the exception of vineyard land, the gross value ofproperty, plant and equipment is stated at acquisition cost.Any borrowing costs incurred prior to the placed-in-servicedate or during the construction period of assets are capitalized.

Vineyard land is recognized at the market value at the balancesheet date. This valuation is based on official published data for recent transactions in the same region, or on independentappraisals. Any difference compared to historical cost isrecognized within equity in “Revaluation reserves”. If marketvalue falls below acquisition cost the resulting impairment ischarged to the income statement.

Vines for champagnes, cognacs and other wines produced by the Group, are considered as biological assets as defined in IAS 41 Agriculture. As their valuation at market value differslittle from that recognized at historical cost, no revaluation isundertaken for these assets.

Investment property is measured at cost.

Assets acquired under finance leases are capitalized on the basisof the lower of their market value and the present value offuture lease payments.

The depreciable amount of property, plant and equipmentcomprises the acquisition cost of their components less residualvalue, which corresponds to the estimated disposal price of the asset at the end of its useful life.

Property, plant and equipment is depreciated on a straight-linebasis over its estimated useful life; the estimated useful livesare as follows:

- buildings including investment property 20 to 50 years- machinery and equipment 3 to 25 years- leasehold improvements 3 to 10 years- producing vineyards 18 to 25 years

Expenses for maintenance and repairs are charged to the incomestatement as incurred.




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1.12. Impairment testing of fixed assets

Intangible and tangible fixed assets are subject to impairmenttesting whenever there is any indication that an asset may beimpaired, and in any event at least annually in the case ofintangible assets with indefinite useful lives (mainly brands,trade names and goodwill). When the carrying amount of assets with indefinite useful lives is greater than the higher oftheir value in use or market value, the resulting impairmentloss is recognized within “Other operating income andexpenses”, allocated in priority to any existing goodwill.

Value in use is based on the present value of the cash flowsexpected to be generated by these assets. Market value isestimated by comparison with recent similar transactions or on the basis of valuations performed by independent experts in the perspective of a disposal transaction.

Cash flows are forecast for each business segment defined as oneor several brands or trade names under the responsibility of a dedicated management team. Smaller scale cash generatingunits, e.g. a group of stores, may be distinguished within aparticular business segment.

The forecast data required for the cash flow methods is basedon budgets and business plans prepared by management of therelated business segments. Detailed forecasts cover a five-yearperiod, a period which may be extended in the case of certainbrands undergoing strategic repositioning, or which have aproduction cycle exceeding five years. An estimated final valueis added to the value resulting from discounted forecast cashflows which corresponds to the capitalization in perpetuity ofcash flows most often arising from the last year of the plan.When several forecast scenarios are developed, the probabilityof occurrence of each scenario is assessed. Forecast cash flows arediscounted on the basis of the rate of return to be expected byan investor in the applicable business and include assessment of the risk factor associated with each business.

1.13. Available for sale financial assets

Financial assets are classified as current or non-current based on their nature.

Non-current available for sale financial assets comprise strategicand non-strategic investments whose estimated period andform of ownership justify such classification.

Current available for sale financial assets include temporaryinvestments in shares, shares of SICAVs, FCPs and othermutual funds, excluding investments made as part of the dailycash management, which are accounted for as “Cash and cashequivalents” (see Note 1.16).

Available for sale financial assets are measured at their listedvalue at balance sheet date in the case of quoted investments,and at their net realizable value at that date in the case ofunquoted investments.

Positive or negative changes in value are taken to equity within“Revaluation reserves”. If an impairment loss is judged to be definitive, an impairment is recognized and charged to net

financial income/expense; the impairment is only reversedthrough the income statement at the time of sale of theunderlying available for sale financial assets.

1.14. Inventories and work in progress

Inventories other than wine produced by the Group are recordedat the lower of cost (excluding interest expense) and net realizablevalue; cost comprises manufacturing cost (finished goods) orpurchase price, plus incidental costs (raw materials, merchandise).

Wine produced by the Group, especially champagne, ismeasured at the applicable harvest market value, as if theharvested grapes had been purchased from third parties. Untilthe date of the harvest, the value of grapes is calculated pro ratatemporis on the basis of the estimated yield and market value.

Inventories are valued using the weighted average cost or FIFOmethods.

Due to the length of the aging process required for champagneand spirits (cognac, whisky), the holding period for theseinventories generally exceeds one year. However, in accordancewith industry practices, these inventories are classified as currentassets.

Provisions for impairment of inventories are chiefly recognizedfor businesses other than Wines and Spirits. They are generallyrequired because of product obsolescence (end of season orcollection, date of expiry, etc.) or lack of sales prospects.

1.15. Trade accounts receivable, loans and other receivables

Trade accounts receivable are recorded at their face value. Aprovision for impairment is recorded if their net realizablevalue, based on the probability of their collection, is less thantheir carrying amount.

The amount of long term loans and receivables (i.e. thosefalling due in more than one year) is subject to discounting,the effects of which are recognized under net financialincome/expense using the effective interest rate method.

1.16. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and highlyliquid monetary investments subject to an insignificant risk ofchanges in value overtime.

Monetary investments are measured at their market value andat the exchange rate prevailing at the balance sheet date, withany changes in value recognized as part of net financialincome/expense.

1.17. Provisions

A provision is recognized whenever an obligation existstowards a third party resulting in a probable disbursement forthe Group, the amount of which may be reliably estimated.




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When execution of its obligation is expected to be deferred bymore than one year, the provision amount is discounted, theeffects of which are recognized in net financial income/expenseusing the effective interest rate method.

1.18. Borrowings

Borrowings are measured at amortized cost, i.e. nominal value net of premium and issue expenses, which are chargedprogressively to net financial income/expense using the effectiveinterest method.

In the case of hedging against fluctuations in the capitalamount of borrowings resulting from changes in interest rates,both the hedged amount of borrowings and the related hedgesare measured at their market value at the balance sheet date, with any changes in those values recognized within netfinancial income/expense. Market value of hedged borrowingsis determined using similar methods as those described hereafterin Note 1.19.

In the case of hedging against fluctuations in future interestpayments, the related borrowings remain measured at theiramortized cost whilst any changes in value of the effective hedgeportions are taken to equity as part of revaluation reserves.

Changes in value of non-hedging derivatives, and of theineffective portions of hedges, are recognized within net financialincome/expense.

Financial debt bearing embedded derivatives is measured at fairvalue; changes in fair value are recognized within net financialincome/expense.

Net financial debt comprises short and long term borrowings, themarket value at the balance sheet date of interest rate derivatives,less the amount at the balance sheet date of current available forsale financial assets, cash and cash equivalents, in addition tothe market value at the balance sheet date of foreign exchangederivatives related to any of the aforementioned items.

See also Note 1.19 regarding the definition of the concepts of effective and ineffective portions.

1.19. Derivatives

The Group enters into derivative transactions as part of itsstrategy for hedging foreign exchange and interest rate risks.

IAS 39 subordinates the use of hedge accounting todemonstration and documentation of the effectiveness ofhedging relationships when hedges are implemented andsubsequently throughout their existence. A hedge is consideredto be effective if the ratio of changes in the value of thederivative to changes in the value of the hedged underlyingremains within a range of 80 to 125%.

Derivatives are recognized in the balance sheet at their fair valueat the balance sheet date. Changes in their value are accountedfor as described in Note 1.7 in the case of foreign exchange hedges,and as described in Note 1.18 in the case of interest rate hedges.

Market value is based on market data and on commonly usedvaluation models, and may be confirmed in the case of complex

instruments by reference to values quoted by independentfinancial institutions.

Derivatives with maturities in excess of twelve months aredisclosed as non-current assets and liabilities.

1.20. Treasury shares and LVMH-share settled derivatives

LVMH shares and options to purchase LVMH shares that areheld by the Group are measured at their acquisition cost andrecognized as a deduction from consolidated equity, irrespectiveof the purpose for which they are held.

The cost of disposals of shares is determined by allocationcategory (see Note 15.2) using the FIFO method with theexception of shares held under stock option plans for which the calculation is performed for each plan using the weightedaverage cost method. Gains and losses on disposal, net ofincome taxes, are taken directly to equity.

1.21. Pensions, reimbursements of medical costsand other employee commitments

When retirement indemnity plans, pensions, reimbursementsof medical costs and other commitments entail the payment bythe Group of contributions to third party organizations whichassume the exclusive responsibility for paying the retirementindemnities, pensions or medical expense reimbursements,these contributions are expensed in the period in which theyfall due with no liability recorded on the balance sheet.

When retirement indemnity plans, pensions, reimbursementsof medical costs and other commitments are to be borne by the Group, a provision is recorded in the balance sheet in the amount of the corresponding actuarial commitment for theGroup, and any changes in this provision are expensed withinprofit from recurring operations over the period, includingeffects of discounting.

If this commitment is either partially or wholly funded bypayments made by the Group to external financial organizations,these payments are deducted from the actuarial commitmentrecorded in the balance sheet.

The actuarial commitment is calculated based on assessments thatare specifically designed for the country and the Group companyconcerned. In particular, these assessments include assumptionsregarding salary increases, inflation, life expectancy, staff turnover.

Cumulative actuarial gains or losses are amortized if, at theyear-end, they exceed 10% of the higher of the total commitmentor the market value of the funded plan assets. These gains orlosses are amortized from the period following their recognitionover the average residual active life of the relevant employees.

1.22. Current and deferred tax

Deferred tax is recognized in respect of temporary differencesarising between the value of assets and liabilities for purposesof consolidation and the value resulting from application of taxregulations.




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Deferred tax is measured on the basis of the income tax ratesenacted at the balance sheet date; the effect of changes in ratesis recognized during the periods in which changes are enacted.

Future tax savings from tax losses carried forward are recordedas deferred tax assets on the balance sheet and impaired if theyare deemed not recoverable; only amounts for which future useis deemed probable are recognized.

Deferred tax assets and liabilities are not discounted.

Taxes payable in respect of the distribution of retained earningsof subsidiaries are provided for if distribution is deemed probable.

1.23. Revenue recognition

Definition of revenue

Revenue mainly comprises retail sale within the Group’s storenetwork and sales through agents and distributors. Sales madein stores owned by third parties are treated as retail transactionsif the risks and rewards of ownership of the inventories areretained by the Group.

Direct sales to customers are made through retail stores forFashion and Leather Goods and Selective Retailing, as well ascertain Watches and Jewelry and Perfumes and Cosmeticsbrands. These sales are recognized at the time of purchase byretail customers.

Wholesale sales concern Wines and Spirits, as well as certainPerfumes and Cosmetics and Watches and Jewelry brands. TheGroup recognizes revenue when title transfers to third partycustomers, generally upon shipment.

Revenue includes shipment and transportation costs re-billedto customers only when these costs are included in products’selling prices as a lump sum.

Revenue is presented net of all forms of discount. In particular,payments made in order to have products referenced or, inaccordance with agreements, to participate in advertisingcampaigns with the distributors, are deducted from relatedrevenue.

Provisions for product returns

Perfumes and Cosmetics and, to a lesser extent, Fashion andLeather Goods and Watches and Jewelry companies may acceptthe return of unsold or outdated products from their customersand distributors.

Where this practice is applied, revenue and the correspondingtrade receivables are reduced by the estimated amount of suchreturns, and a corresponding entry is made to inventories. Theestimated rate of returns is based on statistics of historical returns.

Businesses undertaken in partnership with Diageo

A significant proportion of revenue for the Group’s Wines andSpirits businesses is generated within the framework ofdistribution agreements with Diageo generally taking the formof shared entities which sell and deliver both groups’ products to customers. On the basis of the distribution agreements,which provide specific rules for allocating these entities’ income

statement items and assets and liabilities between LVMH and Diageo, LVMH only recognizes the portion of the incomestatement and balance sheet attributable to its own brands.

1.24. Advertising and promotion expenses

Advertising and promotion expenses include the costs ofproducing advertising media, purchasing media space,manufacturing samples and publishing catalogs, and in general,the cost of all activities designed to promote the Group’sbrands and products.

Advertising and promotion expenses are recorded upon receiptor production of goods or upon completion of services rendered.

1.25. Stock option and similar plans

Share purchase and subscription option plans give rise torecognition of an expense based on the amortization of theexpected benefit granted to beneficiaries calculated accordingto the Black & Scholes method on the basis of the closing shareprice on the day before the Board Meeting at which the plan isinstituted.

For bonus share plans, the expected benefit is calculated on thebasis of the closing share price on the day before the BoardMeeting at which the plan is instituted, less the amount ofdividends expected to accrue during the vesting period.

For all plans, the amortization expense is apportioned on astraight-line basis in the income statement over the vesting period,with a corresponding impact on reserves in the balance sheet.

For cash-settled compensation plans index-linked to the changein LVMH share price, the gain over the vesting period isestimated at each balance sheet date based on the LVMH shareprice at that date, and is charged to the income statement on a pro rata basis over the vesting period, with a correspondingbalance sheet impact on provisions. Between that date and thesettlement date, the change in the expected benefit resultingfrom the change in the LVMH share price is recorded in theincome statement.

1.26. Definitions of Profit from recurring operationsand Other operating income and expenses

The Group’s main business is the management and developmentof its brands and trade names. Profit from recurring operationsis derived from these activities, whether they are recurring or non-recurring, core or incidental transactions.

Other operating income and expenses comprises incomestatement items which, due to their nature, amount or frequency,may not be considered as inherent to the Group’s recurringoperations. This caption reflects in particular the impact of changes in the scope of consolidation and the impairment ofbrands and goodwill, as well as any significant amount of gainsor losses arising on the disposal of fixed assets, restructuringcosts, costs in respect of disputes, or any other non-recurringincome or expense which may otherwise distort the comparabilityof profit from recurring operations from one period to the next.




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2.1. Fiscal year 2012


In May 2012, LVMH acquired the entire share capital of Les Tanneries Roux (France), a supplier of high quality leather.In June 2012, LVMH acquired a 100% ownership interest inArnys (France), a ready-to-wear and made-to-measure menswearlabel. These two acquisitions were consolidated with effectfrom June 2012.


In October 2012, LVMH acquired the 20% stake in the sharecapital of Benefit that it did not own; the price paid generatedthe recognition of a final goodwill in the amount of133 million euros, previously recorded under Goodwill arisingon purchase commitments for minority interests.


2.2.1. Fashion and Leather Goods

By means of a voluntary cash offer closed in December 2011,LVMH acquired 51% of Heng Long International Ltd. (“HengLong”) for an amount of 47 million euros (82 million Singaporedollars), the founding family retaining 49% of the share capitalof Heng Long by means of a reinvestment in the acquisitionstructure. Following this operation, Heng Long was delistedfrom the Singapore stock exchange in December 2011. Theshare capital held by the founding family is subject to purchasecommitments that can be exercised in several tranches, mainlyas from December 2016.

Heng Long is renowned for its expertise in the tanning andfinishing of crocodilian leather. Heng Long has been fully

consolidated with effect from December 31, 2011. Goodwillarising on this acquisition amounts to 23 million euros andminority interests were valued in the amount of their share inthe acquiree’s restated net assets. The difference between thevalue of the purchase commitment for the 49% of the sharecapital held by the founding family and minority interests,amounting to 24 million euros, was deducted from equity.

2.2.2. Watches and Jewelry

Bulgari

On March 5, 2011, LVMH concluded a memorandum ofunderstanding with the Bulgari family, under the terms of which,the Bulgari family undertook to contribute to LVMH itsmajority ownership stake in the share capital of Bulgari SpA,on the basis of a value per share of 12.25 euros for Bulgari sharesand a parity of 0.108 LVMH shares for one Bulgari share, thusimplicitly valuing LVMH shares at 113 euros per share.

On June 30, 2011, pursuant to this memorandum ofunderstanding, the Board of Directors of LVMH MoëtHennessy – Louis Vuitton SA approved the contribution of 55%(48% on a fully-diluted basis) of the share capital of BulgariSpA and, as consideration for this contribution, issued 18 millionnew shares, representing 3.5% of the share capital after thiscapital increase.

As of June 30, 2011, the acquisition date of the controllinginterest, the ownership stake held by LVMH amounted to 76.1%of the share capital (66% on a fully-diluted basis) of Bulgari,i.e. 230.1 million shares, resulting on the one hand from the abovementioned contribution transaction, and on the otherhand from prior acquisitions on the stock market: 57.9 millionshares were acquired during the first quarter of 2011 and5.9 million shares were already owned as of December 31, 2010.

2. CHANGES IN THE PERCENTAGE OF INTEREST IN CONSOLIDATED ENTITIES

1.27. Earnings per share

Earnings per share are calculated based on the weighted averagenumber of shares outstanding during the period, excludingtreasury shares.

Diluted earnings per share are calculated based on the weightedaverage number of shares before dilution and adding the

weighted average number of shares that would result from the exercise of all existing subscription options during theperiod or any other diluting instrument. It is assumed for the purposes of this calculation that the funds received fromthe exercise of options, supplemented by the expense to berecognized for stock option and similar plans (see Note 1.25),would be employed to re-purchase LVMH shares at a pricecorresponding to their average trading price over the period.




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Total value Number of shares Value per share (EUR millions) (millions) (EUR)

Shares acquired through the public tender offer 1,338 109.2 Shares acquired through the squeeze-out procedure 82 6.7 Shares acquired on the stock market 33 2.7

Shares acquired after June 30, 2011 1,453 118.6 12.25

Goodwill, in the amount of 1,523 million euros, correspondsto Bulgari’s expertise, particularly in watches and jewelry, inaddition to synergies with the group’s Watches and Jewelrynetwork. The value of the Bulgari brand was estimated at2,100 million euros.

Since Bulgari SpA was listed on the Milan (Italy) stock exchange,in accordance with applicable stock market regulations, LVMHlaunched a public tender offer (“OPA”) for all of the Bulgari

shares held by minority shareholders at the price of 12.25 eurosper share following the contribution transaction. OnSeptember 28, 2011, at the completion of procedure, LVMHheld a 98.09% stake in Bulgari, authorizing the Group tolaunch a squeeze-out procedure (“OPRO”) for the purchase ofthe remaining outstanding shares. As of December 31, 2011,LVMH held a 100% stake in the company.

Shares acquired after June 30, 2011 break down as follows:

The carrying amount on the initial consolidation of Bulgari, based on the shares owned on June 30, 2011, breaks down as follows:

Carrying amount at acquisition Number of Value date of controlling interest shares per share (EUR millions) (millions) (EUR) Historical cost price of shares 739 63.8 11.58Remeasurement at acquisition date of controlling interest 42(a)

Value of shares acquired prior to acquisition of controlling interest 781 63.8

Contribution value of shares contributed by family shareholders 2,038 166.3 12.25Remeasurement at acquisition date of controlling interest 200(b)

Value of shares contributed at acquisition of controlling interest 2,238 166.3

Value of shares held as of June 30, 2011 3,019 230.1

In accordance with IFRS:(a) Bulgari shares acquired by LVMH prior to the acquisition of the controlling interest were revalued at 12.25 euros per share, the share price agreed between the parties for the acquisition

of the controlling interest, generating a gain of 42 million euros, which was recognized under Other operating income and expenses (see Note 25).(b) The Bulgari shares contributed by the family shareholders were revalued according to the exchange ratio and the quotation of the LVMH share on the Paris stock exchange as of the

acquisition date of the controlling interest, June 30, 2011. The impact of the revaluation, 200 million euros, was recognized under consolidated reserves.

Bulgari was consolidated under the full consolidation method from June 30, 2011, according to the percentage of interest owned,determined on a fully diluted basis, 66%. The table presented below summarizes the definitive allocation, as of June 30, 2012, ofthe purchase price paid by LVMH at the date on which a controlling interest was acquired:

(EUR millions) Purchase price allocation

Brands, other intangible assets and tangible assets, net 2,367Other non-current assets 64Non-current provisions (69)Current assets 906Current liabilities (345)Net financial debt (24)Deferred tax (631)

Revalued net assets 2,268Minority interests (34%) (772)

Revalued net assets, Group share (66%) 1,496Goodwill 1,523

Carrying amount of shares held as of June 30, 2011 3,019




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In accordance with the memorandum of understanding, sharesacquired through the public tender offer included 36.8 millionshares issued in connection with the early exercise of conversionoptions by holders of convertible bonds issued in 2009 and9.5 million shares issued as a result of the early exercise ofsubscription options granted prior to the acquisition of thecontrolling interest by LVMH in favor of senior executives andemployees of Bulgari.

Shares acquired after June 30, 2011 represented a disbursementof 1,453 million euros. The difference between this amountand minority interests’ attributable portion of net assets of772 million euros, which represents 681 million euros, wasdeducted from consolidated reserves.

Transaction fees relating to the Bulgari acquisition wererecognized in Other operating income and expenses; theyrepresented an amount of 16 million euros (see Note 25).

The impact of the acquisition of Bulgari on Group cash flowswas a cash outflow of 2,025 million euros, net of 89 millioneuros of cash acquired and of 60 million euros of cash obtainedfrom the exercise of share subscription options. A portion ofthis amount (705 million euros) represented acquisitions of shareson the market in the first half of the year, with 1,453 millioneuros corresponding to acquisitions of shares in the second halfof the year via the public tender offer. The balance representsacquisition-related costs.

Bulgari’s consolidated revenue for the second half of 2011amounted to 713 million euros, with operating profit of85 million euros and net profit of 71 million euros. Bulgari’sconsolidated revenue for 2011 amounted to 1,272 million euroswith operating profit of 109 million euros, after deductingnon-recurring expenses amounting to 16 million euros relatingto the alliance with LVMH.

ArteCad

In November 2011, the Group acquired 100% of the sharecapital of the Swiss company ArteCad SA, for consideration of 60 million Swiss francs (49 million euros), 14 million ofwhich will be paid in 2015. ArteCad is one of the leading Swissmanufacturers of watch dials. ArteCad was fully consolidatedwith effect from December 31, 2011. The final goodwillarising on this acquisition amounts to 48 million Swiss francs(40 million euros).

2.2.3. Selective Retailing

The stake held by LVMH in the share capital of the companyowning the Ile de Beauté stores, one of the leading perfumeand cosmetics retail chains in Russia, was increased from 45%to 65% in June 2011, for an amount of 40 million euros.LVMH’s partner benefits from an option to sell the remaining

35% stake to LVMH, which may be exercised in tranches from2013 to 2016. This investment, which was previously accountedfor under equity method, was fully consolidated with effectfrom June 1, 2011.

The price paid was allocated to the Ile de Beauté trade name,for an amount of 12 million euros. The final goodwill amountsto 128 million euros, in recognition of Sephora’s prospects forexpansion in the Russian market. Minority interests were valuedin the amount of their share in the acquiree’s restated netassets, with the difference between the value of the purchasecommitment for the 35% of share capital that was not acquiredand non-controlling interests, in the amount of 66 million euros,deducted from consolidated reserves.


Wines and Spirits

In December 2010, LVMH sold the Montaudon ChampagneHouse, which was acquired in 2008. The rights held undergrape supply contracts previously held by Montaudon as wellas certain industrial assets were retained by LVMH.


The activity operated by La Brosse et Dupont was sold inSeptember 2010.

Selective Retailing

In July 2010, the Group acquired 70% of the share capital ofSack’s for a consideration of 75 million euros and entered into a purchase commitment for the remaining 30%, exercisablefrom fiscal year 2015. Sack’s is Brazil’s leading online retailer of perfumes and cosmetics and is also a top player in the beautyretail sector in this country. Sack’s was fully consolidated witheffect from August 2010. Goodwill, determined on the basis ofthe portion of the net assets acquired by the Group, amountedto 75 million euros. The difference between the value of thepurchase commitment for the 30% of the share capital that wasnot acquired and minority interests, amounting to 30 millioneuros, was deducted from equity.

Other activities

In November 2010, the Group increased its percentage interestin La Samaritaine’s real estate property from 57% to 99%, for consideration of 176 million euros. Acquisition costs,corresponding primarily to registration fees, amounted to9 million euros. The difference between the acquisition price,including acquisition costs, and the carrying amount of minorityinterests, corresponding to an amount of 81 million euros, wasdeducted from Group equity.




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3. BRANDS, TRADE NAMES AND OTHER INTANGIBLE ASSETS

(EUR millions) 2012 2011 2010

Gross Amortization Net Net Net and impairment

Brands 9,318 (499) 8,819 8,850 6,717Trade names 3,389 (1,380) 2,009 2,044 1,977License rights 95 (73) 22 25 26Leasehold rights 468 (220) 248 182 111Software, web sites 759 (559) 200 172 141Other 472 (260) 212 209 132

Total 14,501 (2,991) 11,510 11,482 9,104

Of which: assets held under finance leases 14 (14) - - -

In 2012, the impact on the Group’s cash position of changes in the percentage of interest in consolidated entities mainlyincluded the effects of the acquisition of the 20% stake in Benefitnot previously owned by the Group, as well as the acquisitionof 100% stakes in Tanneries Roux and Arnys.

In 2011, the main impacts of changes in the percentage interestin consolidated entities broke down as follows:- 2,025 million euros for the acquisition of Bulgari;- 44 million euros for the acquisition of 51% of Heng Long;

- 49 million euros for the acquisition of ArteCad;- 40 million euros, for the acquisition of a 20% stake in Ile de Beauté.

In 2010, the main impacts of changes in the percentage interestin consolidated entities broke down as follows:- 185 million euros for the acquisition of minority interests in

the Samaritaine;- 75 million euros for the acquisition of 70% of Sack’s;- 20 million euros for the disposal of La Brosse et Dupont;- 13 million euros for the disposal of Montaudon.




2.4. Impact on cash and cash equivalents of changes in the percentage of interest in consolidated entities

(EUR millions) 2012 2011 2010

Purchase price of consolidated investments and of minority interests’ shares (250) (2,375) (269)Positive cash balance/(net overdraft) of companies acquired (1) 174 (10)Proceeds from sale of consolidated investments - 8 38(Positive cash balance)/net overdraft of companies sold - (5) (5)

Impact of changes in the percentage of interest in consolidated entities on cash and cash equivalents (251) (2,198) (246)

Of which: purchase and sale of consolidated investments (45) (785) (61) purchase and proceeds from sale of minority interests (206) (1,413) (185)

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3.1. Movements in the fiscal year

Movements during the year ended December 31, 2012 in the net amounts of brands, trade names and other intangible assets wereas follows:

Gross value Brands Trade names Software, Leasehold Other intangible Total(EUR millions) web sites rights assets

As of December 31, 2011 9,310 3,450 687 383 523 14,353

Acquisitions - - 81 72 85 238Disposals and retirements - - (34) (9) (6) (49)Changes in the scope of consolidation - - 1 20 3 24Translation adjustment 8 (61) (5) (1) (7) (66)Reclassifications - - 29 3 (31) 1

As of December 31, 2012 9,318 3,389 759 468 567 14,501

Accumulated amortization Brands Trade names Software, Leasehold Other intangible Totaland impairment (EUR millions) web sites rights assets

As of December 31, 2011 (460) (1,406) (515) (201) (289) (2,871)

Amortization expense (40) (1) (85) (21) (54) (201)Impairment expense - - - - - -Disposals and retirements - - 33 5 7 45Changes in the scope of consolidation - - (1) (2) (2) (5)Translation adjustment 1 27 5 (2) 5 36Reclassifications - - 4 1 - 5

As of December 31, 2012 (499) (1,380) (559) (220) (333) (2,991)

Net carrying amount as of December 31, 2012 8,819 2,009 200 248 234 11,510

The gross value of amortized brands and trademarks was 848 million euros as of December 31, 2012.

3.2. Movements in prior fiscal years

Net carrying amount Brands Trade names Software, Leasehold Other intangible Total(EUR millions) web sites rights assets

As of December 31, 2009 6,489 1,853 112 92 151 8,697

Acquisitions 1 - 46 33 56 136Disposals and retirements - - - (3) (10) (13)Changes in the scope of consolidation (2) - (1) - 5 2Amortization expense (34) - (60) (17) (24) (135)Impairment expense - - - - - -Translation adjustment 263 124 4 2 4 397Reclassification - - 40 4 (24) 20

As of December 31, 2010 6,717 1,977 141 111 158 9,104

Acquisitions - - 60 43 143 246Disposals and retirements - - - - (1) (1)Changes in the scope of consolidation 2,106 12 21 37 18 2,194Amortization expense (32) (1) (80) (18) (51) (182)Impairment expense - - - - - -Translation adjustment 59 56 2 2 1 120Reclassification - - 28 7 (34) 1

As of December 31, 2011 8,850 2,044 172 182 234 11,482




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4. GOODWILL

(EUR millions) 2012 2011 2010

Gross Impairment Net Net Net

Goodwill arising on consolidated investments 6,451 (1,181) 5,270 5,142 3,409Goodwill arising on purchase commitments for minority interests 2,539 (3) 2,536 1,815 1,618

Total 8,990 (1,184) 7,806 6,957 5,027

The brands and trade names recognized in the table above arethose that the Group has acquired. The principal acquiredbrands and trade names as of December 31, 2012 are:

- Wines and Spirits: Veuve Clicquot, Krug, Château d’Yquem,Château Cheval Blanc, Belvedere, Glenmorangie, NewtonVineyards and Numanthia Termes;

- Fashion and Leather Goods: Louis Vuitton, Fendi, DonnaKaran New York, Céline, Loewe, Givenchy, Kenzo, ThomasPink, Berluti and Pucci;

- Perfumes and Cosmetics: Parfums Christian Dior, Guerlain,Parfums Givenchy, Make Up For Ever, Benefit Cosmetics,Fresh and Acqua di Parma;

- Watches and Jewelry: Bulgari, TAG Heuer, Zenith, Hublot,Chaumet and Fred;

- Selective Retailing: DFS Galleria, Sephora and Le Bon Marché,Ile de Beauté and Ole Henriksen;

- Other activities: the publications of the media group LesEchos-Investir and the Royal Van Lent-Feadship brand.

These brands and trade names are recognized in the balance sheetat their value determined as of the date of their acquisition bythe Group, which may be much less than their value in use ortheir net selling price as of the closing date for the consolidatedfinancial statements of the Group. This is notably the case for the brands Louis Vuitton, Veuve Clicquot, and Parfums ChristianDior, or the trade name Sephora, with the understanding thatthis list must not be considered as exhaustive.

Brands developed by the Group, notably Hennessy, Moët &Chandon, Dom Pérignon, Mercier and Ruinart champagnes, aswell as De Beers Diamond Jewellers developed as a joint-venturewith the De Beers group, are not capitalized in the balance sheet.

Brands and trade names developed by the Group, in additionto Louis Vuitton, Veuve Clicquot, Parfums Christian Dior and Sephora, represented 23% of total brands and trade names capitalized in the balance sheet and 59% of the Group’sconsolidated revenue in 2012.

Please refer also to Note 5 for the impairment testing ofbrands, trade names and other intangible assets with indefiniteuseful lives.

The impact of changes in the scope of consolidation in 2011 corresponded to the valuation of the Bulgari brand in the amount of2,100 million euros.

3.3. Brands and trade names

The breakdown of brands and trade names by business group is as follows:

(EUR millions) 2012 2011 2010

Gross Amortization Net Net Net and impairment

Wines and Spirits 1,033 (60) 973 980 985Fashion and Leather Goods 3,900 (368) 3,532 3,555 3,556Perfumes and Cosmetics 619 (23) 596 597 596Watches and Jewelry 3,534 (6) 3,528 3,518 1,380Selective Retailing 3,347 (1,333) 2,014 2,049 1,976Other activities 274 (89) 185 195 201

Brands and trade names 12,707 (1,879) 10,828 10,894 8,694




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Plans generally cover a five-year period, but may be prolongedup to ten years in case of brands for which production cycleexceeds five years or brands undergoing strategic repositioning.The compound annual growth rate for revenue and theimprovement in profit margins over plan periods are comparableto the growth achieved in the past four exercises, except for brandsundergoing strategic repositioning, for which the improvements

projected were greater than historical performance due to theexpected effects of the repositioning measures implemented.

As the rise in risk premiums in 2012 was offset by lower interestrates, discount rates are similar to those used in 2011. Annualgrowth rates applied for the period not covered by the plans arebased on market estimates for the business groups concerned.

(as %) 2012 2011 2010

Discount rate Compound Growth Post-tax Growth Post-tax Growth annual growth rate for discount rate for discount rate for

Post-tax Pre-tax rate for the period rate the period rate the period revenue during after after after the plan period the plan the plan the plan Business group

Wines and Spirits 7.5 to 11.2 11.1 to 16.8 6.0 to 18.0 2.0 7.5 to 11.2 2.0 7.5 to 11.6 2.0Fashion and Leather Goods 8.0 to 13.1 11.9 to 19.6 7.0 to 22.0 2.0 8.0 to 13.3 2.0 8.7 to 12.8 2.0Perfumes and Cosmetics 8.0 to 8.4 11.9 to 12.6 8.0 to 18.0 2.0 8.0 to 8.4 2.0 8.0 2.0Watches and Jewelry 9.2 to 9.6 13.7 to 14.4 8.0 to 18.0 2.0 8.5 to 10.3 2.0 9.5 to 10.8 2.0Selective Retailing 8.4 to 9.6 12.5 to 14.4 8.0 to 13.0 2.0 8.4 to 9.6 2.0 7.5 to 8.6 2.0Other 6.5 to 8.2 9.7 to 12.3 2.0 to 4.0 2.0 6.5 to 8.2 2.0 7.5 to 10 2.0

Brands, trade names, and other intangible assets with indefiniteuseful lives as well as the goodwill arising on acquisition havebeen subject to annual impairment testing. No significantimpairment expense has been recognized in respect of theseitems during the course of fiscal year 2012. As described

in Note 1.12, these assets are generally valued on the basis of the present value of forecast cash flows determined in thecontext of multi-year business plans drawn up over the courseof each fiscal year. The main assumptions retained in 2012, forthe determination of these forecast cash flows are as follows:

5. IMPAIRMENT TESTING OF INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES

Changes in the scope of consolidation in 2011 were mainlyattributable to the acquisition of Bulgari for 1,522 million euros, Ile de Beauté for 128 million euros, ArteCad for 38 millioneuros and Heng Long for 24 million euros.

Changes in the scope of consolidation in fiscal year 2010 were

mainly attributable to the acquisition of a 70% equity stake inSack’s in the amount of 76 million euros, net of the effect resultingfrom the disposal of La Brosse et Dupont of 46 million euros.

Please refer also to Note 20 for goodwill arising on purchasecommitments for minority interests.

Changes in net goodwill during the fiscal years presented break down as follows:

(EUR millions) 2012 2011 2010


As of January 1 8,132 (1,175) 6,957 5,027 4,270

Changes in the scope of consolidation(a) 42 1 43 1,743 21Changes in purchase commitments for minority interests 836 - 836 203 702Changes in impairment - (24) (24) (40) (54)Translation adjustment (20) 14 (6) 24 88

As of December 31 8,990 (1,184) 7,806 6,957 5,027

(a) See Note 2.




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(EUR millions) Amount of Amount of impairment if:

intangible assets

Increase of Decrease of Decrease of 2%

concerned as of 0.5% in post-tax 0.5% in growth in compound

12/31/2012

discount rate rate for the period annual growth after the plan rate for revenue

Wines and Spirits 300 21 14 10Watches and Jewelry 211 27 13 48Other business groups 463 18 10 9

Total 974 66 37 67

As of December 31, 2012, for the business segments listed above,a change of 0.5 points in the post-tax discount rate or in thegrowth rate for the period not covered by the plans, compared torates used as of December 31, 2012, or a reduction of 2 pointsin the compound annual growth rate for revenue over theperiod covered by the plans would not result in the recognitionof any impairment losses for these intangible assets. The Groupconsiders that changes in excess of the limits mentioned abovewould entail assumptions at a level not deemed relevant, in viewof the current economic environment and medium to long-termgrowth prospects for the business segments concerned.

With respect to the other business segments, seven have disclosedintangible assets with a carrying amount close to their value inuse. The carrying amount for each of these intangible assets asof December 31, 2012 as well as the impairment loss that wouldresult from a change of 0.5 points in the post-tax discount rateor in the growth rate for the period not covered by the plans, orfrom a reduction of 2 points in the compound annual growthrate for revenue compared to rates used as of December 31,2012, are indicated below:

As of December 31, 2012, the intangible assets with indefinite useful lives that are the most significant in terms of their net carryingamounts and the criteria used for their impairment testing are as follows:

(EUR millions) Brands and Goodwill Total Post-tax Growth rate for Period covered trade names discount rate the period after by the forecast (as %) the plans cash flows (as %)

Louis Vuitton 2,058 494 2,552 8.0 2.0 5 yearsFendi 713 405 1,118 9.6 2.0 5 yearsBulgari 2,100 1,523 3,623 9.2 2.0 10 yearsTAG Heuer 1,027 196 1,223 9.2 2.0 5 yearsDFS Galleria 1,734 15 1,749 9.6 2.0 5 yearsSephora 279 615 894 8.4 2.0 5 years




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6. PROPERTY, PLANT AND EQUIPMENT

(EUR millions) 2012 2011 2010

Gross Depreciation Net Net Net and impairment

Land 1,250 (68) 1,182 941 916Vineyard land and producing vineyards 2,051 (80) 1,971 1,867 1,828Buildings 2,615 (1,301) 1,314 1,399 988Investment property 580 (71) 509 536 297Leaseholds improvements, machinery and equipment 5,933 (3,809) 2,124 1,895 1,704Assets in progress 716 - 716 511 289Other tangible fixed assets 1,538 (585) 953 868 711

Total 14,683 (5,914) 8,769 8,017 6,733

Of which: assets held under finance leases 241 (131) 110 113 115historical cost of vineyard land and producing vineyards 655 (80) 575 552 538

6.1. Movements in the fiscal year

Movements in property, plant and equipment during 2012 break down as follows:

Gross value Vineyard Land and Investment Leaseholds improvements, Assets in Other Total (EUR millions) land and buildings property machinery and equipment progress tangible producing fixed assets vineyards Stores Production, Other logistics

As of December 31, 2011 1,965 3,369 603 3,381 1,514 679 511 1,445 13,467

Acquisitions 14 133 74 466 106 92 608 120 1,613Change in the market value of vineyard land 86 - - - - - - - 86Disposals and retirements (25) (60) - (211) (32) (49) (2) (37) (416)Changes in the scope of consolidation - 11 - 11 - 3 - 19 44Translation adjustment (5) (59) (2) (49) (2) (13) (6) (7) (143)Other movements, including transfers 16 471 (95) (144) 43 138 (395) (2) 32

As of December 31, 2012 2,051 3,865 580 3,454 1,629 850 716 1,538 14,683

Depreciation Vineyard Land and Investment Leaseholds improvements, Assets in Other Total and impairment land and buildings property machinery and equipment progress tangible(EUR millions) producing fixed assets vineyards Stores Production, Other logistics

As of December 31, 2011 (98) (1,029) (67) (2,185) (1,003) (491) - (577) (5,450)

Depreciation expense (6) (143) (5) (371) (111) (92) - (90) (818)Impairment expense - (75) - - (1) - - - (76)Disposals and retirements 24 45 - 207 31 48 - 33 388Changes in the scope of consolidation - (5) - (7) - (3) - (13) (28)Translation adjustment - 27 1 33 1 7 - 4 73Other movements, including transfers - (189) - 184 11 (67) - 58 (3)

As of December 31, 2012 (80) (1,369) (71) (2,139) (1,072) (598) - (585) (5,914)

Net carrying amount as of December 31, 2012 1,971 2,496 509 1,315 557 252 716 953 8,769




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7. INVESTMENTS IN ASSOCIATES

(EUR millions) 2012 2011 2010


Share of net assets of associates as of January 1 170 - 170 223 213Share of net profit (loss) for the period 4 - 4 6 7Dividends paid (9) - (9) (12) (5)Changes in the scope of consolidation 1 - 1 (57) -Translation adjustment (4) - (4) 3 8Other movements, including transfers 1 - 1 7 -

Share of net assets of associates as of December 31 163 - 163 170 223

Purchases of property, plant and equipment in 2010 and 2011reflected investments by Louis Vuitton, Sephora and DFS intheir retail networks, those of Parfums Christian Dior, the

Champagne Houses and Glenmorangie in their productionequipment, in addition to the effects of real estate investmentsdedicated to administrative, commercial or rental purposes.

6.2. Movements in prior fiscal years

Net carrying amount Vineyard Land and Investment Leaseholds improvements, Assets in Other Total (EUR millions) land and buildings property machinery and equipment progress tangible producing fixed assets vineyards Stores Production, Other logistics

As of December 31, 2009 1,611 1,749 286 1,023 448 176 199 648 6,140

Acquisitions 5 115 3 246 75 37 258 109 848Disposals and retirements (2) (2) (1) (4) (4) (1) (4) (9) (27)Depreciation expense (6) (63) (5) (336) (95) (66) - (79) (650)Impairment expense - - - - - - - - -Change in the market value of vineyard land 206 - - - - - - - 206Changes in the scope of consolidation 1 (10) - - (1) - - (3) (13)Translation adjustment 10 95 8 71 8 8 6 21 227Other, including transfers 3 20 6 86 23 10 (170) 24 2

As of December 31, 2010 1,828 1,904 297 1,086 454 164 289 711 6,733

Acquisitions 18 303 237 336 92 66 413 159 1,624Disposals and retirements - (12) - (4) (2) (1) (12) (2) (33)Depreciation expense (7) (76) (5) (360) (99) (65) - (90) (702)Impairment expense - (1) - - - 2 - 1 2Change in the market value of vineyard land 25 - - - - - - - 25Changes in the scope of consolidation - 147 - 20 22 2 5 22 218Translation adjustment 1 57 8 35 2 3 9 4 119Other, including transfers 2 18 (1) 85 40 17 (193) 63 31

As of December 31, 2011 1,867 2,340 536 1,198 509 188 511 868 8,017

Purchases of property, plant and equipment reflect investmentsby Louis Vuitton, Sephora and DFS in their retail networks,those of the Champagne Houses in their production equipment,

of Parfums Christian Dior in new display counters, in additionto the effects of real estate investments dedicated to commercialor rental purposes.




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As of December 31, 2012, non-current available for sale assetsmainly include an investment in Hermès International SCA(“Hermès”) with a gross and net amount of 5,409 million euros(5,438 million euros as of December 31, 2011, 3,345 million eurosas of December 31, 2010). The stake in the share capital of Hermèsincreased from 22.4% to 22.6% in 2012, resulting from theacquisition of shares on the market. Given the legal form ofHermès, a “Société en Commandite par Actions”, the investmentstake held by LVMH is not accounted for under the equity method.

As of December 31, 2012, the stake in Hermès, correspondingto 23.9 million shares, represented, on the basis of the Hermèsshare price at that date on Paris stock exchange, an amount of 5.4 billion euros, for a total amount of 3.5 billion euros oninitial recognition (2.5 billion euros in cash after deducting thegain recognized in 2010, upon the settlement of equity linkedswaps covering 12.8 million shares).

As of December 31, 2012, the Hermès share price, applied for thepurpose of valuing this investment, was 226.30 euros (230.35as of December 31, 2011, 156.75 as of December 31, 2010).

The increased ownership interest in Hermès during the fiscalyear 2010 resulted from the following transactions:

- in October 2010, the reclassification of the 4.5 million securitiesrecognized previously as “Other non-current assets” due to theobjective and the form of their ownership to “Non-currentavailable for sale financial assets”, amounting to 775 millioneuros (419 million euros based on the Hermès share price as of December 31, 2009),

- the settlement in October 2010 of equity linked swaps inrelation to 12.8 million Hermès shares (hereafter referred toas “ELS”). The ELS contracts were agreed as cash-settledwhen concluded in 2008 and the terms of these agreementswere then amended in October 2010, by way of riders to theoriginal agreements, to allow for settlement in shares,

- finally, purchases of 3.3 million Hermès shares on the market,for a total price of 496 million euros.

Impairment of non-current available for sale financial assets isdetermined in accordance with the accounting policies describedin Note 1.13.

8. NON-CURRENT AVAILABLE FOR SALE FINANCIAL ASSETS

(EUR millions) 2012 2011 2010


Total 6,161 (157) 6,004 5,982 3,891

Non-current available for sale financial assets changed as follows during the fiscal years presented:

(EUR millions) 2012 2011 2010

Total Of which Hermès

As of January 1 5,982 5,438 3,891 540

Acquisitions 125 77 496 2,756Disposals at net realized value (36) - (17) (70)Changes in market value (38) (106) 1,613 (114)Changes in impairment (4) - (6) (12)Changes in the scope of consolidation - - 6 -Translation adjustment (5) - 6 19Reclassifications from “Other non-current assets” to “Non-current available for sale financial assets” - - - 775Other reclassifications (20) - (7) (3)

As of December 31 6,004 5,409 5,982 3,891

As of December 31, 2012, investments in associates consistedprimarily of:

- a 40% equity stake in Mongoual SA, a real estate companywhich owns an office building in Paris (France), which is thehead office of LVMH Moët Hennessy – Louis Vuitton SA;

- a 45% equity stake in PT. Sona Topas Tourism Industry Tbk(STTI), an Indonesian retail company, which notably holdsduty-free sales licenses in airports.

The impact of changes in the scope of consolidation in 2011were attributable to accounting for the above-mentionedinvestment in STII and the change in accounting treatment of Ile de Beauté, which was previously accounted for under the equity method and has been fully consolidated sinceJune 2011 (see Note 2).




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Non-current available for sale financial assets held by the Group as of December 31, 2012 include the following:

(EUR millions) Percentage Net value Revaluation Dividends Equity Net profit of interest reserve received

Hermès International SCA (France)(a) 22.6% 5,409 1,905 167 2,313(c) (d) 594(c) (d)

Hengdeli Holdings Ltd (China)(a) 6.3% 75 54 2 599(c) (d) 91(c) (d)

Tod’s SpA (Italy)(a) 3.5% 102 55 3 683(c) (d) 135(c) (d)

L Real Estate SCA (Luxembourg)(b) 32.2% 107 21 - 331(e) 62(e)

L Capital 2 FCPR (France)(b) 18.5% 42 - - 275(c) (e) (6)(c) (e)

Sociedad Textil Lonia SA (Spain)(b) 25.0% 32 23 - 126(c) (d) 35(c) (d)

Other investments 237 32 2

Total 6,004 2,090 174

(a) Market value of securities as of the close of trading on December 31, 2012.(b) Valuation at estimated net realizable value.(c) Figures provided reflect company information prior to December 31, 2012, as fiscal year-end accounting data for 2012 was not available at the date of preparation of the financial statements.(d) Consolidated data.(e) Company data.

9. OTHER NON-CURRENT ASSETS

(EUR millions) 2012 2011 2010

Warranty deposits 210 185 130Derivatives 176 143 62Loans and receivables 115 125 110Other 23 25 17

Total 524 478 319

10. INVENTORIES AND WORK IN PROGRESS

(EUR millions) 2012 2011 2010


Wines and eaux-de-vie in the process of aging 3,504 (26) 3,478 3,377 3,208Other raw materials and work in progress 1,366 (304) 1,062 951 546

4,870 (330) 4,540 4,328 3,754

Goods purchased for resale 1,297 (126) 1,171 988 793Finished products 2,890 (521) 2,369 2,194 1,444

4,187 (647) 3,540 3,182 2,237

Total 9,057 (977) 8,080 7,510 5,991




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The net change in inventories for the periods presented breaks down as follows:

(EUR millions) 2012 2011 2010


As of January 1 8,487 (977) 7,510 5,991 5,644

Change in gross inventories(a) 827 - 827 770 126Fair value adjustment for the harvest of the period (26) - (26) 14 (3)Changes in impairment - (192) (192) (68) 16Changes in the scope of consolidation 37 (5) 32 694 (39)Translation adjustment (85) 7 (78) 135 254Other, including reclassifications (183) 190 7 (26) (7)

As of December 31 9,057 (977) 8,080 7,510 5,991

(a) Including the impact of product returns. See Note 1.23.

Changes in the scope of consolidation in 2011 primarily reflected the consolidation of Bulgari and Ile de Beauté.

The effects on Wines and Spirits’ cost of sales of marking harvests to market are as follows:

(EUR millions) 2012 2011 2010

Fair value adjustment for the harvest of the period 12 50 36Adjustment for inventory consumed (38) (36) (39)

Net effect on cost of sales of the period (26) 14 (3)

11. TRADE ACCOUNTS RECEIVABLE

(EUR millions) 2012 2011 2010

Trade accounts receivable, nominal amount 2,227 2,107 1,769Provision for impairment (63) (64) (57)Provision for product returns (179) (165) (147)

Net amount 1,985 1,878 1,565

The change in trade accounts receivable for the periods presented breaks down as follows:

(EUR millions) 2012 2011 2010


As of January 1 2,107 (229) 1,878 1,565 1,455

Change in gross receivables 147 - 147 80 23Changes in provision for impairment - 1 1 4 7Changes in provision for product return - (5) (5) (14) (15)Changes in the scope of consolidation 9 (11) (2) 183 (24)Translation adjustment (45) 1 (44) 55 106Reclassifications 9 1 10 5 13

As of December 31 2,227 (242) 1,985 1,878 1,565




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As of December 31, 2012, the breakdown of the nominal amount of trade receivables and of provisions for impairment by age wasas follows:

(EUR millions) Nominal amount Impairment Net amount of receivables of receivables

Not due: - less than 3 months 1,863 (12) 1,851 - more than 3 months 74 (3) 71

1,937 (15) 1,922Overdue: - less than 3 months 187 (5) 182 - more than 3 months 103 (43) 60

290 (48) 242

Total 2,227 (63) 2,164

For each of the fiscal years presented, no single customer represented revenue exceeding 10% of the Group’s consolidated revenue.

There is no difference between the present value of trade accounts receivable and their carrying amount.

12. OTHER CURRENT ASSETS

(EUR millions) 2012 2011 2010

Current available for sale financial assets 177 145 219Derivatives 425 147 209Tax accounts receivable, excluding income taxes 393 468 271Advances and payments on account to vendors 195 163 142Prepaid expenses 284 249 191Other receivables 337 283 223

Total 1,811 1,455 1,255

There is no difference between the present value of other current assets and their carrying amount.

Please also refer to Note 13 Current available for sale financial assets and Note 22 Financial instruments and market risk management.

13. CURRENT AVAILABLE FOR SALE FINANCIAL ASSETS

(EUR millions) 2012 2011 2010

Unlisted securities, shares in non-money market SICAVs and funds 13 14 32Listed securities 164 131 187

Total 177 145 219

Of which: historical cost of current available for sale financial assets 176 161 280

Approximately 63% of the Group’s sales is generated through itsown stores (63% in 2011, 61% in 2010). The receivable auxiliarybalance is comprised primarily of receivables from wholesalersor agents, who are limited in number and with whom the Group

maintains ongoing relationships for the most part. Creditinsurance is taken out whenever the likelihood that receivablesmay not be recoverable is justified on reasonable grounds.




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Net value of current available for sale financial assets changed as follows during the fiscal years presented:

(EUR millions) 2012 2011 2010

As of January 1 145 219 218

Acquisitions - 256 55Disposals at market value (4) (285) (106)Changes in market value 11 21 74Changes in impairment - (1) (26)Changes in the scope of consolidation(a) - (72) -Translation adjustment - - 4Reclassifications (as)/from “Non-current available for sale financial assets”(b) 25 7 -

As of December 31 177 145 219

(a) Impact related to the acquisition of Bulgari. See Note 2.(b) See Note 8.

See also Note 1.13 for the method used to determine impairment losses on current available for sale financial assets.

14. CASH AND CASH EQUIVALENTS

(EUR millions) 2012 2011 2010

Fixed term deposits (less than 3 months) 480 421 545SICAV and FCP money market funds 112 216 141Ordinary bank accounts 1,604 1,666 1,606

Cash and cash equivalents per balance sheet 2,196 2,303 2,292

The reconciliation between cash and cash equivalents as shown in the balance sheet and net cash and cash equivalents appearing inthe cash flow statement is as follows:

(EUR millions) 2012 2011 2010

Cash and cash equivalents 2,196 2,303 2,292Bank overdrafts (208) (222) (250)

Net cash and cash equivalents per cash flow statement 1,988 2,081 2,042

14.1. Change in working capital

The change in working capital breaks down as follows for the periods presented:


Change in inventories and work in progress 10 (829) (768) (126)Change in trade accounts receivable 11 (147) (65) (13)Change in trade accounts payable 173 331 295Change in other receivables and payables (10) (32) 91

Change in working capital(a) (813) (534) 247

(a) Increase/(Decrease) in cash and cash equivalents.




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Changes in the share capital and share premium account, in value and in terms of number of shares, break down as follows:

(EUR millions) 2012 2011 2010

Number Amount Amount Amount

Share Share premium Total capital account

As of January 1 507,815,624 152 3,801 3,953 1,929 1,910

Increase in share capital related to the contribution of Bulgari shares - - - - 2,037 -Exercise of share subscription options 1,344,975 - 94 94 94 120Retirement of shares (997,250) - (47) (47) (107) (101)

As of December 31 508,163,349 152 3,848 4,000 3,953 1,929

As of December 31, 2012, issued and fully paid-up sharestotaled 508,163,349 (507,815,624 shares as of December 31,2011 and 490,642,232 shares as of December 31, 2010), witha par value of 0.30 euros per share, including 224,699,349

shares with double voting rights (224,575,071 as of December 31,2011, 225,670,153 as of December 31, 2010). Double votingrights are granted to registered shares held for more than threeyears.

14.2. Operating investments

Operating investments comprise the following elements for the periods presented:


Purchase of intangible fixed assets 3 (238) (244) (136)Purchase of tangible fixed assets 6 (1,613) (1,624) (848)Changes in accounts payable related to fixed asset purchases 141 119 (18)

Net cash used in purchases of fixed assets(a) (1,710) (1,749) (1,002)Net cash from fixed assets disposals(a) 44 31 33Guarantee deposits paid and other cash flows related to operating investments (36) (12) (7)

Operating investments (1,702) (1,730) (976)

(a) Increase/(Decrease) in cash and cash equivalents.

15. EQUITY

15.1. Share capital and share premium account




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LVMH shares

(EUR millions) Number Amount Effect on cash

As of December 31, 2011 9,536,678 482

Share purchases, including through the exercise of call options 2,050,314 250 (246)Exercise of share purchase options (136,100) (11) 5Bonus shares definitively allocated (313,809) (18) -Retirement of shares (997,250) (47) -Proceeds from disposal at net realized value (1,972,314) (246) 246Gain/(loss) on disposal - 4 -

As of December 31, 2012 8,167,519 414 5

LVMH share-based calls

(EUR millions) Number Amount Effect on cash

As of December 31, 2011 100,000 3

Calls exercised (100,000) (3) -

As of December 31, 2012 - - -




15.2. Treasury shares and derivatives settled in LVMH shares

The portfolio of treasury shares and derivatives settled in LVMH shares is allocated as follows:

(EUR millions) 2012 2011 2010

Number Amount Amount Amount

Share subscription option plans 5,722,880 270 319 429Share purchase option plans 105,320 7 22 41Bonus share plans 1,273,136 75 64 42Other plans 969,183 49 64 70

Shares held for stock option and similar plans(a) 8,070,519 401 469 582

Liquidity contract 97,000 13 13 13

LVMH treasury shares 8,167,519 414 482 595

LVMH share-based calls(b) - - 3 12

LVMH treasury shares and derivatives settled in LVMH shares 8,167,519 414 485 607

(a) See Note 16 regarding stock option and similar plans.(b) Number of shares which could be purchased if all of the calls outstanding at the balance sheet date were exercised and related premium paid on subscription.

“Other plans” correspond to future plans.

The market value of LVMH shares held under the liquidity contract as of December 31, 2012 amounts to 13 million euros.

The portfolio movements in 2012 were as follows:

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The Group firmly believes that the management of its financialstructure contributes, together with the development of thecompanies it owns and the management of its brand portfolio, to its objective of driving value creation for its shareholders.Furthermore, maintaining a suitable quality credit rating and providing security to the Group’s bondholders and bankcreditors are core objectives, ensuring good access to marketsand favorable conditions.

The Group manages its financial structure so as to ensureconsiderable flexibility, allowing it both to seize opportunitiesand enjoy significant access to markets offering favorable conditions.

To this end, the Group monitors a certain number of financialratios and aggregate measures of financial risk, including:- net financial debt (see Note 18) to equity;- cash from operations before changes in working capital to net

financial debt;

- net cash from operations before changes in working capital;- net cash from operating activities and operating investments

(free cash flow);- long term resources to fixed assets;- proportion of long term debt in net financial debt.

Long term resources are understood to correspond to the sumof equity and non-current liabilities.

Where applicable, these indicators are adjusted to reflect theGroup’s off-balance sheet financial commitments.

With respect to these indicators, the Group seeks to maintainlevels allowing for significant financial flexibility, at a reasonablecost.

The Group also promotes financial flexibility by maintainingnumerous and varied banking relationships, through thefrequent recourse to several negotiable debt markets (both short

(EUR millions, except for data per share in EUR) 2012 2011 2010

Interim dividend for the current fiscal year (2012: 1.10 euros; 2011: 0.80 euros; 2010: 0.70 euros) 559 406 343Impact of treasury shares (9) (8) (8)

550 398 335Final dividend for the previous fiscal year (2011: 1.80 euros; 2010: 1.40 euros; 2009: 1.30 euros) 914 685 636Impact of treasury shares (16) (14) (18)

898 671 618

Total gross amount disbursed during the fiscal year(a) 1,448 1,069 953

(a) Excludes the impact of tax regulations applicable to the beneficiary.

The final dividend for 2012, as proposed to the Shareholders’ Meeting of April 18, 2013 is 1.80 euros per share, representing a totalamount of 915 million euros, excluding the amount to be deducted in relation to treasury shares held at date of payment.

15.4. Cumulative translation adjustment

The change in the translation adjustment recognized under equity, Group share net of hedging effects of net assets denominated in foreign currency, break down as follows by currency:

(EUR millions) 2012 Change 2011 2010

US dollar (99) (42) (57) (148)Swiss franc 446 22 424 376Japanese yen 120 (92) 212 152Hong Kong dollar 60 (28) 88 43Pound sterling (40) 16 (56) (73)Other currencies 65 1 64 52Foreign currency net investment hedges (210) 34 (244) (172)

Total, Group share 342 (89) 431 230

15.5. Strategy relating to the Group’s financial structure




In accordance with French regulations, dividends are deductedfrom the profit for the year and reserves available fordistribution of the parent company, after deducting applicablewithholding tax and the value attributable to treasury shares.

As of December 31, 2012, the amount available for distributionwas 9,954 million euros; after taking into account the proposeddividend distribution in respect of the 2012 fiscal year, theamount available for distribution is 9,039 million euros.

15.3. Dividends paid by the parent company LVMH SA

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16.1. Share purchase option plans

The main characteristics of share purchase option plans and changes having occurred during the fiscal year are as follows:

Plan commencement date Number Exercise Vesting Number Number Number of of options price period of options of options options to be granted (EUR) of rights exercised expired exercised as of in 2012 in 2012 Dec. 31, 2012

January 22, 2002(a) 3,256,700 43.30 3 years (48,802) (118,900) -January 22, 2002(a) 27,400 45.70 ” (1,200) (350) -May 15, 2002(a) 8,560 54.83 ” - - -January 22, 2003 3,155,225 37.00 ” (85,148) (22,450) 81,820January 22, 2003 58,500 38.73 ” (950) (1,950) 23,500

Total (136,100) (143,650) 105,320

(a) Plans expired on January 21, 2012 and May 14, 2012, respectively.

Share purchase option and subscription plans

The Shareholders’ Meeting of April 5, 2012 renewed theauthorization given to the Board of Directors, for a period ofthirty-eight months expiring in June 2015, to grant sharesubscription or purchase options to Group company employeesor directors, on one or more occasions, in an amount not toexceed 3% of the Company’s share capital.

Each plan is valid for 10 years. The options may be exercisedafter a three-year period, for plans issued before 2004, or a four-year period, for plans issued from 2004.

For all plans, one option entitles the holder to purchase oneLVMH share.

Bonus share plans

The Shareholders’ Meeting of March 31, 2011 renewed theauthorization given to the Board of Directors, for a period of thirty-eight months expiring in May 2014, to grant bonusshares to Group company employees or directors, on one or moreoccasions, in an amount not to exceed 1% of the Company’sshare capital on the date of this authorization.

The allocation of bonus shares to beneficiaries who are Frenchresidents for tax purposes becomes definitive after a two-year

vesting period (or a three-year vesting period, in general, for planscreated from 2011 onwards), which is followed by a two-yearholding period during which the beneficiaries may not selltheir shares.

The allocation of bonus shares to beneficiaries who are not Frenchresidents for tax purposes becomes definitive after a vestingperiod of four years and may be freely transferred at that time.

Cash-settled share-based compensation plans index-linked to the change in the LVMH share price

In place of share option and bonus share plans, the Group has issued plans which are equivalent in terms of gains as forthe beneficiaries of share purchase option plans and bonus shareplans, but are settled in cash rather than shares. These planshave a four-year vesting period.

Performance conditions

Since 2009, certain share subscription option plans and bonusshare plans have been subject to performance conditions inproportions determined based on the hierarchical level and statusof the beneficiary, that determine whether the beneficiaries areentitled to receive the definitive allocation of these plans.

16. STOCK OPTION AND SIMILAR PLANS

and long term), by holding a large amount of cash and cashequivalents, and through the existence of sizable amounts in

undrawn confirmed credit lines, so as to largely exceed theoutstanding portion of its commercial paper program.




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The number of unexercised purchase options and the weighted average exercise price changed as follows during the fiscal yearspresented:

2012 2011 2010

Number Weighted Number Weighted Number Weighted average average average exercise price exercise price exercise price (EUR) (EUR) (EUR)

Share purchase options outstanding as of January 1 385,070 39.90 915,482 47.15 6,603,112 58.05

Options expired (143,650) 42.26 (311,550) 56.04 (1,078,800) 80.07Options exercised (136,100) 39.35 (218,862) 47.30 (4,608,830) 55.06

Share purchase options outstanding as of December 31 105,320 37.39 385,070 39.90 915,482 47.15

16.2. Share subscription option plans

The main characteristics of share subscription option plans and changes having occurred during the year are as follows:

Plan commencement date Number Exercise Vesting Number Number Number of of options price period of options of options options to be granted (EUR) of rights exercised expired exercised as of in 2012 in 2012 Dec. 31, 2012

January 21, 2004 2,720,425 55.70 4 years (211,069) (3,600) 735,666” 27,050 58.90 ” - - 10,100May 12, 2005 1,852,150 52.82 ” (207,746) (2,200) 220,257” 72,250 55.83 ” (30,750) - 18,600May 11, 2006 1,712,959 78.84 ” (203,838) (1,150) 872,490” 76,400 82.41 ” (32,425) - 6,875May 10, 2007 1,679,988 86.12 ” (245,643) (3,345) 909,206May 15, 2008 1,621,882 72.50 ” (357,504) (7,825) 1,182,184” 76,438 72.70 ” (41,000) (1,400) 32,738May 14, 2009 1,266,507 56.50 ” (15,000) (9,776) 1,211,367” 35,263 56.52 ” - (250) 27,413July 29, 2009 2,500 57.10 ” - - 2,500

Total (1,344,975) (29,546) 5,229,396

The number of subscription options not exercised and the weighted average exercise prices changed as follows over the course of the fiscal years presented:

2012 2011 2010

Number Weighted Number Weighted Number Weighted average average average exercise price exercise price exercise price (EUR) (EUR) (EUR)

Share subscription options outstanding as of January 1 6,603,917 69.07 8,084,215 68.79 10,214,500 66.99

Options expired (29,546) 65.36 (84,463) 71.23 (117,807) 72.09Options exercised (1,344,975) 69.96 (1,395,835) 67.31 (2,012,478) 59.62

Share subscription options outstanding as of December 31 5,229,396 68.86 6,603,917 69.07 8,084,215 68.79




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16.4. Cash-settled compensation plans index-linked to the change in LVMH share price

The plans in force as of December 31, by type and number of equivalent share-based plans, together with the provision recognizedin the balance sheet, break down as follows:

2012 2011 2010

Type of plan (in equivalent number of shares): Share purchase option plan 8,050 20,050 21,450Bonus share plan - 50,364 93,848

Provision as of December 31 (EUR millions) - 6 10

The bonus share plans launched in 2010 and 2012 and one of the plans instituted in 2011 are subject to performanceconditions to a variable extent depending on beneficiaries.Bonus shares may only be definitively granted if, in fiscal years 2012 and 2013 (2011 and 2012 for the plan launched in2011, 2010 and 2011 for the plan launched in 2010), eitherprofit from recurring operations, net cash from operatingactivities and operating investments, or the Group’s currentoperating margin shows a positive change compared to 2011

(2010 for the plan launched in 2011, 2009 for the plan launchedin 2010). The performance condition, which was met for fiscalyears 2010, 2011 and 2012, was considered to have been metfor fiscal year 2013, for the purpose of determining the expensefor 2012.

Owned shares were remitted in settlement of the bonus sharesvested during the periods presented.

16.3. Bonus share plans

The main characteristics of bonus share plans and changes having occurred during the year are as follows:

Plan commencement date Number of Of which: Vesting Expired Shares Non-vested shares performance periods allocations vested shares as allocated shares of rights in 2012 in 2012 of Dec. 31, initially 2012

May 14, 2009 311,209 - 2 (a) or 4 years(b) (8,588) (6,698) 126,672July 29, 2009 833 - ” - - 833April 15, 2010 469,436 274,367 ” (10,666) (307,111) 144,239March 31, 2011 442,052 257,724 3 (a) or 4 years(b) (12,918) - 427,716October 20, 2011 115,000 - 3 years - - 115,000April 5, 2012 416,609 416,609 3 (a) or 4 years(b) (3,763) - 412,846July 26, 2012 45,830 830 3 (a) or 4 years(b) - - 45,830

Total (35,935) (313,809) 1,273,136

(a) Beneficiaries with tax residence in France.(b) Beneficiaries with tax residence outside France.

The number of non-vested shares allocated changed as follows during the period:

(number of shares) 2012 2011 2010

Non-vested shares as of January 1 1,160,441 770,611 464,630

Allocations during the period 462,439 557,052 469,436Vested allocations during the period (313,809) (143,979) (149,590)Expired allocations during the period (35,935) (23,243) (13,865)

Non-vested shares as of December 31 1,273,136 1,160,441 770,611

Share subscription options granted under the plan dated May 14,2009 may only be exercised if, in fiscal years 2009 and 2010,(or, for senior executive officers, in three of the four fiscal yearsfrom 2009 to 2012) either profit from recurring operations, net

cash from (used in) operating activities and operating investments,or the Group’s current operating margin rate shows a positivechange compared to 2008. The performance condition was met for the fiscal years 2009 to 2012.




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17. MINORITY INTERESTS

(EUR millions) 2012 2011 2010

As of January 1 1,061 1,006 989

Minority interests’ share of net profit 485 400 287Dividends paid to minority interests (317) (187) (158)

Effects of changes in control of consolidated entities: - consolidation of Bulgari - 772 -- consolidation of Heng Long - 18 -- other movements (11) 2 (3)

Effects of acquisition and disposal of minority interests’ shares: - acquisition of minority interests in Bulgari - (771) -- acquisition of minority interests in La Samaritaine - - (104)- other movements (26) (14) -

Total effects of changes in the percentage of interests in consolidated entities (37) 7 (107)

Capital increases subscribed by minority interests 8 4 1Minority interests’ share in gains and losses recognized in equity (3) 33 88Minority interests’ share in stock option plan expenses 3 3 3Effects of changes in purchase commitments for minority interests (98) (205) (97)

As of December 31 1,102 1,061 1,006

The change in minority interests’ share in gains and losses recognized in equity breaks down as follows:

(EUR millions) Cumulative Hedges of Vineyard Total share translation future foreign land of minority adjustment currency interests cash flows

As of December 31, 2009 (108) 9 119 20Changes for the fiscal year period 65 (4) 27 88

As of December 31, 2010 (43) 5 146 108Changes for the fiscal year period 36 (6) 3 33

As of December 31, 2011 (7) (1) 149 141Changes for the fiscal year period (28) 12 13 (3)

As of December 31, 2012 (35) 11 162 138

In the calculation presented above, the accounting expense is determined for each plan separately on the basis of the Black & Scholes method, as described in Note 1.25.

The LVMH share price the day before the grant date of the 2012plan amounted to 126.90 euros for shares granted on April 5,2012 and to 120.55 euros for shares granted on July 26, 2012.

The volatility of LVMH’s shares is determined on the basis oftheir implicit volatility.

The average unit value of non-vested bonus shares granted in2012 was 114.06 euros for beneficiaries who are Frenchresidents for tax purposes and 109.47 euros for beneficiarieswith tax residence outside France.

16.5. Expense for the period

(EUR millions) 2012 2011 2010

Share subscription and purchase option plans, bonus share plans 53 52 44Cash-settled share-based compensation plans index-linked to the change in the LVMH share price 1 1 6

Expense for the period 54 53 50




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18.2. Analysis of gross borrowings

(EUR millions) 2012 2011 2010

Bonds and Euro Medium Term Notes (EMTNs) 3,337 3,390 2,776Finance and other long term leases 122 133 131Bank borrowings 377 609 525

Long term borrowings 3,836 4,132 3,432

Bonds and Euro Medium Term Notes (EMTNs) 696 759 815Finance and other long term leases 16 19 17Bank borrowings 524 248 179Commercial paper 1,212 1,603 272Other borrowings and credit facilities 245 193 224Bank overdrafts 208 222 250Accrued interest 75 90 77

Short term borrowings 2,976 3,134 1,834

Total borrowings 6,812 7,266 5,266

The market value of gross borrowings was 6,955 million euros as of December 31, 2012 (7,418 million euros as of December 31, 2011and 5,422 million euros as of December 31, 2010).

As of December 31, 2012, December 31, 2011 and December 31, 2010, no amount of financial debt was recognized in accordancewith the fair value option. See Note 1.18.

Net financial debt does not take into consideration purchasecommitments for minority interests included in “Othernon-current liabilities” (see Note 20).

In June 2012, LVMH carried out a five-year bond issue in theamount of 850 million US dollars, redeemable on maturity at par value in June 2017. The proceeds of the bond, issued

at 99.713% of par value with a coupon rate of 1.625%, wereswapped on issuance, thus converting the entire issue into afloating-rate euro-denominated financing arrangement.

In addition, the 760 million euro bond issued in 2005 andsupplemented in 2008 was redeemed in June 2012.

18. BORROWINGS

18.1. Net financial debt

(EUR millions) 2012 2011 2010

Long term borrowings 3,836 4,132 3,432Short term borrowings 2,976 3,134 1,834

Gross amount of borrowings 6,812 7,266 5,266

Interest rate risk derivatives (178) (159) (82)Other derivatives - 1 5

Gross borrowings after derivatives 6,634 7,108 5,189

Current available for sale financial assets (177) (145) (219)Cash and cash equivalents (2,196) (2,303) (2,292)

Net financial debt 4,261 4,660 2,678




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18.3. Bonds and EMTNs

Nominal amount Date of issuance Maturity Initial effective 2012 2011 2010(in local currency) interest rate(a) (EUR millions) (as %)

USD 850,000,000 2012 2017 1.75 653 - -EUR 500,000,000 2011 2018 4.08 521 524 -EUR 500,000,000 2011 2015 3.47 527 522 -EUR 1,000,000,000 2009 2014 4.52 1,036 1,033 1,021CHF 200,000,000 2008 2015 4.04 166 165 161CHF 200,000,000 2008 2011 3.69 - - 161EUR 760,000,000(b) 2005 and 2008 2012 3.76 - 759 755CHF 300,000,000 2007 2013 3.46 253 250 243EUR 600,000,000 2004 2011 4.74 - - 609

Public bond issues 3,156 3,253 2,950

EUR 250,000,000 2009 2015 4.59 267 263 257EUR 150,000,000 2009 2017 4.81 167 161 153Private placements in foreign currencies 443 472 231

Private placements (EMTNs) 877 896 641

Total bonds and EMTNs 4,033 4,149 3,591

(a) Before impact of interest rate hedges set up at the time of, or subsequent to, each issuance.(b) Accumulated amounts and weighted average initial effective interest rate for a 600 million euro bond issued in 2005 at an initial effective interest rate of 3.43%, which was supplemented

in 2008 by an amount of 160 million euros issued at an effective rate of 4.99%.

18.4. Finance and other long-term leases

The amount of the Group’s debt resulting from finance and other long-term lease agreements, which corresponds to the presentvalue of future payments, breaks down as follows, by maturity:

(EUR millions) 2012 2011 2010

Minimum Present Minimum Present Minimum Present future value of future value of future value of

payments payments payments payments payments payments

Less than one year 23 21 25 23 24 24One to five years 67 49 78 56 77 55More than five years 329 69 354 73 354 69

Total minimum future payments 419 457 455

Impact of discounting (280) (305) (307)

Total debt under finance and other long-term lease agreements 139 139 152 152 148 148

Assets financed or refinanced under finance or other long-term leases relate mainly to property assets or industrial machinery.




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On the basis of debt as of December 31, 2012:

- an instantaneous increase of 1 point in the yield curves of theGroup’s debt currencies would raise the cost of net financialdebt by 33 million euros after hedging, and would lower themarket value of gross fixed-rate borrowings by 45 millioneuros after hedging;

- an instantaneous decline of 1 point in these same yield curveswould lower the cost of net financial debt by 33 million eurosafter hedging, and would raise the market value of grossfixed-rate borrowings by 45 million euros after hedging.

These changes would have no impact on the amount of equityas of December 31, 2012, due to the absence of hedging offuture interest payments.




18.5. Analysis of gross borrowings by payment date and by type of interest rate

(EUR millions) Gross Effects Gross borrowings borrowings of derivatives after derivatives

Fixed Floating Total Fixed Floating Total Fixed Floating Total rate rate rate rate rate rate

Maturity: 2013 2,235 741 2,976 5 (9) (4) 2,240 732 2,972 2014 1,105 188 1,293 (1,000) 936 (64) 105 1,124 1,229 2015 1,050 29 1,079 (701) 635 (66) 349 664 1,013 2016 10 - 10 - (5) (5) 10 (5) 5 2017 829 7 836 (794) 760 (34) 35 767 802 2018 527 - 527 - (5) (5) 527 (5) 522 Thereafter 89 2 91 - - - 89 2 91

Total 5,845 967 6,812 (2,490) 2,312 (178) 3,355 3,279 6,634

See Note 22.4 regarding market value of interest rate risk derivatives.

The breakdown by quarter of the amount falling due in 2013 is as follows:

(EUR millions) Falling due in 2013

First quarter 1,802Second quarter 630Third quarter 98Fourth quarter 446

Total 2,976

18.6. Analysis of gross borrowings by currency after derivatives

(EUR millions) 2012 2011 2010

Euro 4,753 5,349 3,587US dollar 174 253 221Swiss franc 992 991 988Japanese yen 266 274 208Other currencies 449 241 185

Total 6,634 7,108 5,189

In general, the purpose of foreign currency borrowings is to hedge net foreign currency-denominated assets of consolidated companieslocated outside of the euro zone.

18.7. Sensitivity

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Provisions for contingencies and losses correspond to the estimateof the impact on assets and liabilities of risks, disputes, oractual or probable litigation arising from the Group’s activities;such activities are carried out worldwide, within what is oftenan imprecise regulatory framework that is different for each

country, changes over time, and applies to areas ranging fromproduct composition to the tax computation.

Provisions for pensions, medical costs and similar commitmentsare analyzed in Note 29.

18.8. Covenants

In connection with certain loan agreements, the Group has undertaken to comply with certain financial covenants. As of December 31,2012, no significant loan agreements are concerned by those covenants.

18.9. Undrawn confirmed credit lines

As of December 31, 2012, unused confirmed credit lines totaled 3.3 billion euros.

18.10. Guarantees and collateral

As of December 31, 2012, borrowings hedged by collateral were less than 200 million euros.

19. PROVISIONS

(EUR millions) 2012 2011 2010

Provisions for pensions, medical costs and similar commitments 293 283 261Provisions for contingencies and losses 1,219 1,096 886Provisions for reorganization 18 21 20

Non-current provisions 1,530 1,400 1,167

Provisions for pensions, medical costs and similar commitments 13 11 9Provisions for contingencies and losses 282 294 274Provisions for reorganization 40 44 56

Current provisions 335 349 339

Total 1,865 1,749 1,506

In 2012, the changes in provisions were as follows:

(EUR millions) Dec. 31, 2011 Increases Amounts Amounts Changes in Other items Dec. 31, 2012 used released the scope of (including consolidation translation adjustment)

Provisions for pensions, medical costs and similar commitments 294 69 (55) (3) 3 (2) 306Provisions for contingencies and losses 1,390 297 (146) (48) 1 7 1,501Provisions for reorganization 65 13 (23) (3) - 6 58

Total 1,749 379 (224) (54) 4 11 1,865

Of which: profit from recurring operations 208 (183) (39) net financial income (expense) - - - other 171 (41) (15)




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21. OTHER CURRENT LIABILITIES

(EUR millions) 2012 2011 2010

Derivatives 20 265 145Employees and social institutions 924 855 687Employee profit sharing(a) 95 86 72Taxes other than income taxes 361 385 317Advances and payments on account from customers 139 180 203Deferred payment for tangible and financial non-current assets 367 282 177Deferred income 116 111 76Other liabilities 573 552 466

Total 2,595 2,716 2,143

(a) French companies only, pursuant to legal provisions.

The present value of the other current liabilities is identical to their carrying amount.

Derivatives are analyzed in Note 22.

As of December 31, 2012, 2011 and 2010 purchase commitmentsfor minority interests mainly include the put option granted to Diageo plc for its 34% share in Moët Hennessy, withsix-months’ advance notice and for 80% of the fair value ofMoët Hennessy at the exercise date of the commitment. Withregard to this commitment’s valuation, the fair value wasdetermined by applying the share price multiples of comparablefirms to Moët Hennessy’s consolidated operating results.

Moët Hennessy SNC and Moët Hennessy International SAS(“Moët Hennessy”) hold the LVMH group’s investments in theWines and Spirits businesses, with the exception of the equity

investments in Château d’Yquem, Château Cheval Blanc andexcluding certain Champagne vineyards.

Purchase commitments for minority interests also includecommitments relating to minority shareholders in Ile de Beauté(35%), Heng Long (39%) and distribution subsidiaries invarious countries, mainly in the Middle East. Minority interestsin Benefit exercised their put option in 2012 (see Note 2 forfurther information).

The present value of the other non-current liabilities is identicalto their carrying amount.




20. OTHER NON-CURRENT LIABILITIES

(EUR millions) 2012 2011 2010

Purchase commitments for minority interests 5,022 4,195 3,686Derivatives 41 4 2Employee profit sharing(a) 93 88 88Other liabilities 300 219 171

Total 5,456 4,506 3,947

(a) French companies only, pursuant to legal provisions.

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22.2. Presentation of financial instruments in the balance sheet

Breakdown and fair value of financial assets and liabilities according to the measurement categories defined by IAS 39


Balance Fair Balance Fair Balance Fair sheet value value sheet value value sheet value value

Non-current available for sale financial assets 8 6,004 6,004 5,982 5,982 3,891 3,891Current available for sale financial assets 13 177 177 145 145 219 219

Available for sale financial assets (see Note 1.13) 6,181 6,181 6,127 6,127 4,110 4,110

Other non-current assets, excluding derivatives 9 348 348 335 335 256 256Trade accounts receivable 11 1,985 1,985 1,878 1,878 1,565 1,565Other current assets(a) 12 925 925 914 914 636 636

Loans and receivables (see Note 1.15) 3,258 3,258 3,127 3,127 2,457 2,457Cash and cash equivalents (see Note 1.16) 14 2,196 2,196 2,303 2,303 2,292 2,292

Financial assets, excluding derivatives 11,635 11,635 11,557 11,557 8,859 8,859

Long term borrowings 18 3,836 3,977 4,132 4,275 3,432 3,582Short term borrowings 18 2,976 2,978 3,134 3,143 1,834 1,840Trade accounts payable 3,134 3,134 2,952 2,952 2,298 2,298Other non-current liabilities(b) 20 393 393 307 307 259 259Other current liabilities(c) 21 2,459 2,459 2,340 2,340 1,922 1,922

Financial liabilities, excluding derivatives (see Note 1.18) 12,798 12,941 12,865 13,017 9,745 9,901

Derivatives (see Note 1.19) 22.3 540 540 21 21 123 123

(a) Excluding derivatives, available for sale financial assets and prepaid expenses.(b) Excluding derivatives and purchase commitments for minority interests.(c) Excluding derivatives and deferred income.

Fair value may be considered as nearly equivalent to market value, the latter being defined as the price that an informed third partyacting freely would be willing to pay or receive for the asset or liability in question.

Financial instruments are mainly used by the Group to hedgerisks arising from Group activity and protect its assets.

The management of foreign exchange and interest rate risk, inaddition to transactions involving shares and financial instruments,are centralized.

The Group has implemented a stringent policy, as well as rigorousmanagement guidelines to manage, measure, and monitor thesemarket risks.

These activities are organized based on a segregation of dutiesbetween risk measurement, hedging (front office), administration(back office) and financial control.

The backbone of this organization is an integrated informationsystem which allows hedging transactions to be monitoredquickly.

The Group’s hedging strategy is presented to the AuditCommittee. Hedging decisions are made according to anestablished process that includes regular presentations to theGroup’s Executive Committee and detailed documentation.

Counterparties are selected based on their rating and inaccordance with the Group’s risk diversification strategy.

22. FINANCIAL INSTRUMENTS AND MARKET RISK MANAGEMENT

22.1. Organization of foreign exchange, interest rate and equity market risk management




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Breakdown of financial assets and liabilities measured at fair value by measurement method

(EUR millions) 2012 2011 2010

Available Derivatives Cash and Available Derivatives Cash and Available Derivatives Cash and for sale cash for sale cash for sale cash financial equivalents financial equivalents financial equivalents assets assets assets Valuation based on(a): Published price quotations 5,761 - 2,196 5,738 - 2,303 3,750 - 2,292Formula based on marketdata 131 601 - 112 290 - 119 270 -Private quotations 289 - - 277 - - 241 - -

Assets 6,181 601 2,196 6,127 290 2,303 4,110 270 2,292

Valuation based on(a): Published price quotations - - - - - - - - -Formula based on marketdata - 61 - - 269 - - 147 -Private quotations - - - - - - - - -

Liabilities - 61 - - 269 - - 147 -

(a) The valuation methods used correspond to the following levels in the IFRS 7 fair value measurement hierarchy:.- quoted prices Level 1- formulas based on market data Level 2- private quotations Level 3

The amount of financial assets valued on the basis of private quotations changed as follows in 2012:

(EUR millions) 2012

As of January 1 277

Purchases 46Proceeds from disposals (at net realized value) (33)Gains and losses recognized in income statement 10Gains and losses recognized in equity (11)

As of December 31 289




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(EUR millions) Nominal amounts by maturity Market value(a)

2013 2014 Total Fair value Not Total to 2017 hedges allocated

Interest rate swaps in euros: - fixed rate payer 91 - 91 - (4) (4)- floating rate payer 91 1,900 1,991 171 3 174- floating rate/floating rate - 152 152 - - -

Foreign currency swaps 438 1,621 2,059 8 - 8

Total 179 (1) 178

(a) Gain/(Loss).

The aim of the Group’s debt management policy is to adapt the debt maturity profile to the characteristics of the assetsheld, to contain borrowing costs, and to protect net profit fromthe effects of significant changes in interest rates.

As such, the Group uses interest rate swaps and options.

Derivatives used to manage interest rate risk outstanding as ofDecember 31, 2012 break down as follows:

22.3. Summary of derivatives

Derivatives are recorded in the balance sheet for the amounts and in the captions detailed as follows:


Interest rate risk Assets: non-current 131 113 41current 56 57 66

Liabilities: non-current (1) (1) (1)current (8) (10) (24)

22.4 178 159 82

Foreign exchange risk Assets: non-current 17 2 8current 369 83 139

Liabilities: non-current (40) (3) (1)current (9) (255) (121)

22.5 337 (173) 25

Other risks Assets: non-current 28 28 12current - 7 4

Liabilities: non-current - - -current (3) - -

25 35 16

Total Assets: non-current 9 176 143 61current 12 425 147 209

Liabilities: non-current 20 (41) (4) (2)current 21 (20) (265) (145)

540 21 123

22.4. Derivatives used to manage interest rate risk




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Derivatives used to manage foreign exchange risk outstanding as of December 31, 2012 break down as follows:

(EUR millions) Nominal amounts by fiscal year of allocation Market value(a)

2012 2013 Beyond Total Fair value Future Foreign Not Total hedges cash flow currency net allocated hedges investment hedges

Options purchased Put USD 74 19 - 93 - 1 - 2 3Put JPY - 29 - 29 - 5 - - 5Put GBP 36 62 - 98 1 2 - - 3

110 110 - 220 1 8 - 2 11

Collars Written USD 358 3,652 - 4,010 5 147 - 2 154Written JPY 17 47 - 64 1 5 - - 6Written Other - - - - - - - - -

375 3,699 - 4,074 6 152 - 2 160

Forward exchange contracts(b) USD 139 (25) - 114 3 - - 1 4JPY 134 590 89 813 10 77 - 2 89GBP - 13 - 13 - - - - -Other 41 (58) - (17) 1 2 - - 3

314 520 89 923 14 79 - 3 96

Foreign exchange swaps(b) USD 3,083 58 - 3,141 (2) - 21 20 39CHF 249 40 - 289 - - (3) 1 (2)GBP 265 5 - 270 - - - 3 3JPY 196 - - 196 1 - 4 21 26Other 330 8 - 338 - - 14 (10) 4

4,123 111 - 4,234 (1) - 36 35 70

Total 20 239 36 42 337

(a) Gain/(Loss).(b) Sale/(Purchase).

The impact on income statement of gains and losses on hedges of future cash flows as well as the future cash flows hedged, usingthese instruments, will be recognized in 2013; the amount will depend on exchange rates at this date.

A significant part of Group companies’ sales to customers and totheir own retail subsidiaries as well as certain purchases are denominated in currencies other than their functionalcurrency; the majority of these foreign currency-denominatedcash flows are inter-company cash flows. Hedging instrumentsare used to reduce the risks arising from the fluctuations ofcurrencies against the exporting and importing companies’functional currencies and are allocated to either accounts receivableor accounts payable (fair value hedges) for the fiscal year, or totransactions anticipated for future periods (cash flow hedges).

Future foreign currency-denominated cash flows are brokendown as part of the budget preparation process and are hedgedprogressively over a period not exceeding one year unless alonger period is justified by probable commitments. As such,and according to market trends, identified foreign exchangerisks are hedged using forward contracts or options.

In addition, the Group may also use appropriate financialinstruments to hedge the net worth of subsidiaries outside the euro zone, in order to limit the impact of foreign currencyfluctuations against the euro on consolidated equity.

22.5. Derivatives used to manage foreign exchange risk




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The Group’s investment policy is designed to take advantage ofa long term investment horizon. Occasionally, the Group mayinvest in equity-based financial instruments with the aim ofenhancing the dynamic management of its investment portfolio.

The Group is exposed to risks of share price changes either directly,as a result of its holding of equity investments and currentavailable for sale financial assets, or indirectly, as a result of itsholding of funds which are themselves partially invested in shares.

The Group may also use equity-based derivatives to createsynthetically an economic exposure to certain assets, or to hedgecash-settled compensation plans index-linked to the LVMHshare price. The carrying amount of these unlisted financialinstruments corresponds to the estimate of the amount, providedby the counterparty, of the valuation at the balance sheet date. The valuation of financial instruments thus takes intoconsideration market parameters such as interest rates andshare prices. As of December 31, 2012, derivatives used tomanage equity risk with an impact on the Group’s net profithave a positive market value of 28 million euros. Consideringnominal values of 20 million euros for those derivatives, a uniform 1% change in their underlying assets’ share prices as

of December 31, 2012 would induce a net impact on theGroup’s profit for an amount of less than 0.3 million euros.Most of these instruments mature in 2014.

The Group, mainly through its Watches and Jewelry businessgroup, may be exposed to changes in the prices of certainprecious metals, such as gold. In certain cases, in order toensure visibility with regard to production costs, hedges maybe implemented. This is achieved either by negotiating theforecast price of deliveries of alloys with precious metal refiners,or the price of semi-finished products with producers, ordirectly by purchasing hedges from top-ranking banks. In thelatter case, gold may be purchased from banks, or future and/oroptions contracts may be taken out with a physical delivery ofthe gold. Derivatives outstanding relating to the hedging ofprecious metal prices as of December 31, 2012 have a negativemarket value of 4 million euros. Considering nominal values of97 million euros for those derivatives, a uniform 1% change intheir underlying assets’ share prices as of December 31, 2012would induce a net impact on the Group’s consolidated reservesfor an amount of less than 1 million euros. These instrumentsmature in 2013.

The Group’s net equity (excluding net profit) exposure to foreign currency fluctuations as of December 31, 2012 is assessed bymeasuring the effect of a 10% change in the value of the US dollar, the Japanese yen, the Swiss franc and the Hong Kong dollarfrom their values as of this date:

(EUR millions) US dollar Japanese yen Swiss franc Hong Kong dollar

+10% -10% +10% -10% +10% -10% +10% -10%

Conversion of foreign-currency denominated net assets 306 (306) 36 (36) 256 (256) 170 (170)Change in market value of net investment hedges, after tax (114) 93 (7) 6 (53) 44 (59) 49

Net impact on equity, excluding net profit 192 (213) 29 (30) 203 (212) 111 (121)

22.6. Financial instruments used to manage other risks

The data presented in the table above should be assessed on thebasis of the characteristics of the hedging instruments outstandingin fiscal year 2012, mainly comprising options and collars.

As of December 31, 2012, forecast cash collections for 2013 inUS dollars and Japanese yen are both hedged in the proportionof 83% and 79%.

The impacts on the net profit for fiscal year 2012 of a 10% change in the value of the US dollar, the Japanese yen, the Swiss francand the Hong Kong dollar against the euro, including impact of foreign currency hedges outstanding during the period, wouldhave been as follows:

(EUR millions) US dollar Japanese yen Swiss franc Hong Kong dollar

+10% -10% +10% -10% +10% -10% +10% -10%

Impact of:

- change in exchange rates of receipts in respect of foreign currency-denominated sales (134) (45) (8) (3) - - 2 (3)

- conversion to euro of net profit of entities outside the euro zone 71 (71) 8 (8) 17 (17) 47 (47)

Impact on net profit (63) (116) - (11) 17 (17) 49 (50)




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The Group’s brands and trade names are organized into sixbusiness groups. Four business groups – Wines and Spirits,Fashion and Leather Goods, Perfumes and Cosmetics, Watchesand Jewelry – comprise brands dealing with the same categoryof products that use similar production and distributionprocesses. The Selective Retailing business comprises the

Group’s own-label retailing activities. Other activities andholding companies comprise brands and businesses that are notassociated with any of the abovementioned business groups,most often relating to the Group’s new businesses and holdingor real estate companies.

(EUR millions) 2013 2014 2015 2016 2017 Over Total 5 years

Bonds and EMTNs 815 1,088 966 38 823 505 4,235Bank borrowings 537 244 113 5 12 4 915Other borrowings and credit facilities 248 - - - - - 248Finance and other long term leases 23 20 18 15 14 329 419Commercial paper 1,212 - - - - - 1,212Bank overdrafts 208 - - - - - 208

Gross financial debt 3,043 1,352 1,097 58 849 838 7,237

Other liabilities, current and non-current(a) 2,459 91 46 48 38 99 2,781Trade accounts payable 3,134 - - - - - 3,134

Other financial liabilities 5,593 91 46 48 38 99 5,915

Total financial liabilities 8,636 1,443 1,143 106 887 937 13,152

(a) Corresponds to “Other current liabilities” (excluding derivatives and deferred income) for 2,459 million euros and to “Other non-current liabilities” (excluding derivatives, purchasecommitments for minority interests and prepaid expenses of 71 million euros as of December 31, 2012) for 322 million euros. See Note 22.2.

See Note 30.3 regarding contractual maturity dates of collateral and other guarantees commitments. See Notes 22.4 and 22.5 regardingforeign exchange derivatives and Notes 18.5 and 22.4 regarding interest rate risk derivatives.

23. SEGMENT INFORMATION

In addition to local liquidity risks, which are generally immaterial,the Group’s exposure to liquidity risk can be assessed inrelation to the amount of its short term borrowings excludingderivatives, net of cash and cash equivalents, i.e. 0.8 billion eurosas of December 31, 2012, or through the outstanding amountof its commercial paper program, i.e. 1.2 billion euros. Shouldany of these instruments not be renewed, the Group has accessto undrawn confirmed credit lines totaling 3.3 billion euros.

The Group’s liquidity is based on the amount of its investments,its capacity to raise long term borrowings, the diversity of itsinvestor base (short term paper and bonds), and the quality of its banking relationships, whether evidenced or not byconfirmed lines of credit.

The following table presents the contractual schedule ofdisbursements for financial liabilities (excluding derivatives)recognized as of December 31, 2012, at nominal value and withinterest, excluding discounting effects:




22.7. Liquidity risk

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23.1. Information by business group

Fiscal year 2012

(EUR millions) Wines and Fashion and Perfumes Watches Selective Other and Eliminations Total Spirits Leather and and Retailing holding and not Goods Cosmetics Jewelry companies allocated(a)

Sales outside the Group 4,116 9,872 3,165 2,778 7,856 316 - 28,103Intra-Group sales 21 54 448 58 23 16 (620) -

Total revenue 4,137 9,926 3,613 2,836 7,879 332 (620) 28,103

Profit from recurring operations 1,260 3,264 408 334 854 (164) (35) 5,921Other operating income and expenses (13) (108) (7) (8) (19) (27) - (182)Depreciation and amortization expense 100 414 112 122 229 42 - 1,019Impairment expense 1 81 - - 3 16 - 101

Intangible assets and goodwill(b) 3,881 4,640 967 5,439 2,916 813 - 18,656Property, plant and equipment 1,937 1,768 312 378 1,252 3,122 - 8,769Inventories 4,008 1,158 339 1,213 1,421 101 (160) 8,080Other operating assets 1,165 875 653 773 589 592 9,778(c) 14,425

Total assets 10,991 8,441 2,271 7,803 6,178 4,628 9,618 49,930

Equity - - - - - - 25,666 25,666Liabilities 1,208 1,824 1,067 693 1,791 622 17,059(d) 24,264

Total liabilities and equity 1,208 1,824 1,067 693 1,791 622 42,725 49,930

Operating investments(e) (182) (579) (196) (136) (332) (277) - (1,702)

Fiscal year 2011


Sales outside the Group 3,511 8,672 2,851 1,911 6,414 300 - 23,659Intra-Group sales 13 40 344 38 22 14 (471) -

Total revenue 3,524 8,712 3,195 1,949 6,436 314 (471) 23,659

Profit from recurring operations 1,101 3,075 348 265 716 (204) (38) 5,263Other operating income and expenses (16) (56) (2) (6) (26) (3) - (109)Depreciation and amortization expense 92 359 105 82 209 37 - 884Impairment expense - 20 - - 5 15 - 40

Intangible assets and goodwill(b) 3,047 4,705 926 5,423 2,905 870 - 17,876Property, plant and equipment 1,820 1,635 237 354 1,114 2,857 - 8,017Inventories 3,905 1,030 337 1,118 1,181 67 (128) 7,510Other operating assets 1,008 669 562 689 496 616 9,626(c) 13,666

Total assets 9,780 8,039 2,062 7,584 5,696 4,410 9,498 47,069

Equity - - - - - - 23,512 23,512Liabilities 1,259 1,708 1,019 672 1,496 662 16,741(d) 23,557

Total liabilities and equity 1,259 1,708 1,019 672 1,496 662 40,253 47,069

Operating investments(e) (159) (437) (150) (117) (215) (652) - (1,730)




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Fiscal year 2010


Sales outside the Group 3,252 7,549 2,806 970 5,360 383 - 20,320Intra-Group sales 9 32 270 15 18 26 (370) -

Total revenue 3,261 7,581 3,076 985 5,378 409 (370) 20,320

Profit from recurring operations 930 2,555 332 128 536 (141) (19) 4,321Other operating income and expenses (21) (30) (39) (3) (26) (33) - (152)Depreciation and amortization expense 97 314 106 29 201 38 - 785Impairment expense - 21 - - 17 16 - 54

Intangible assets and goodwill(b) 2,853 4,675 911 1,712 2,729 867 - 13,747Property, plant and equipment 1,722 1,474 221 102 1,060 2,154 - 6,733Inventories 3,626 770 275 403 935 70 (88) 5,991Other operating assets 978 560 465 234 425 535 7,496(c) 10,693

Total assets 9,179 7,479 1,872 2,451 5,149 3,626 7,408 37,164

Equity - - - - - - 18,204 18,204Liabilities 1,069 1,334 971 221 1,188 641 13,536(d) 18,960

Total liabilities and equity 1,069 1,334 971 221 1,188 641 31,740 37,164

Operating investments(e) (83) (370) (104) (36) (196) (187) - (976)

(a) Eliminations correspond to sales between business groups; these generally consist of sales from business groups other than Selective Retailing to Selective Retailing. Selling prices betweenthe different business groups correspond to the prices applied in the normal course of business for sales transactions to wholesalers or distributors outside the Group.

(b) Brands, trade names, licenses, and goodwill correspond to the net carrying amounts shown under Notes 3 and 4.(c) Assets not allocated include investments in associates, available for sale financial assets, other financial assets, and income tax receivables. As of December 31, 2012, they include

the 22.6% shareholding in Hermès International, representing an amount of 5 409 million euros, see Note 8 (5,438 million euros as of December 31, 2011 and 3,345 million euros as ofDecember 31, 2010).

(d) Liabilities not allocated include financial debt and both current and deferred tax liabilities.(e) Increase/(Decrease) in cash and cash equivalents.

23.2. Information by geographic region

Revenue by geographic region of delivery breaks down as follows:

(EUR millions) 2012 2011 2010

France 3,107 2,866 2,725Europe (excluding France) 5,455 4,797 4,236United States 6,390 5,237 4,611Japan 2,363 1,970 1,784Asia (excluding Japan) 7,895 6,430 4,991Other 2,893 2,359 1,973

Revenue 28,103 23,659 20,320

Data for fiscal year 2011 integrated data for Bulgari, which hasbeen fully consolidated since June 30, 2011. Considering thefact that Bulgari is managed by a unique management team,dealing with all of the businesses related to Bulgari, whichinvolve mainly manufacturing and distributing watches andjewelry, all of Bulgari’s activities, including perfumes andcosmetics, have been included in the Watches and Jewelrybusiness group.

As of December 31, 2011 and with respect to the period ofBulgari’s consolidation within the LVMH group, its perfumesand cosmetics business accounted for consolidated revenue of 142 million euros.




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Operating investments by geographic region are as follows:

(EUR millions) 2012 2011 2010

France 648 692 406Europe (excluding France) 290 601 216United States 283 127 124Japan 69 46 28Asia (excluding Japan) 326 194 159Other 86 70 43

Operating investments 1,702 1,730 976

No geographic breakdown of segment assets is provided since a significant portion of these assets consists of brands and goodwill,which must be analyzed on the basis of the revenue generated by these assets in each region, and not in relation to the region of theirlegal ownership.

23.3. Quarterly information

Quarterly sales by business group break down as follows:

(EUR millions) Wines and Fashion and Perfumes Watches Selective Other and Eliminations Total Spirits Leather and and Retailing holding Goods Cosmetics Jewelry companies

First quarter 926 2,374 899 630 1,823 84 (154) 6,582Second quarter 833 2,282 828 713 1,767 99 (138) 6,384Third quarter 1,006 2,523 898 690 1,862 66 (145) 6,900Fourth quarter 1,372 2,747 988 803 2,427 83 (183) 8,237

Total 2012 4,137 9,926 3,613 2,836 7,879 332 (620) 28,103

First quarter 762 2,029 803 261 1,421 74 (103) 5,247Second quarter 673 1,942 715 315 1,410 83 (93) 5,045Third quarter 871 2,218 793 636 1,547 74 (128) 6,011Fourth quarter 1,218 2,523 884 737 2,058 83 (147) 7,356

Total 2011 3,524 8,712 3,195 1,949 6,436 314 (471) 23,659

First quarter 635 1,729 736 204 1,181 78 (91) 4,472Second quarter 667 1,787 705 239 1,238 73 (82) 4,627Third quarter 846 1,948 805 244 1,294 68 (94) 5,111Fourth quarter 1,113 2,117 830 298 1,665 190 (103) 6,110

Total 2010 3,261 7,581 3,076 985 5,378 409 (370) 20,320

24. REVENUE AND EXPENSES BY NATURE

24.1. Analysis of revenue

Revenue consists of the following:

(EUR millions) 2012 2011 2010

Revenue generated by brands and trade names 27,650 23,274 19,957Royalties and license revenue 160 133 119Income from investment property 39 34 31Other revenue 254 218 213

Total 28,103 23,659 20,320




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24.2. Expenses by nature

Profit from recurring operations includes the following expenses:

(EUR millions) 2012 2011 2010

Advertising and promotion expenses 3,277 2,711 2,267Commercial lease expenses 1,944 1,563 1,335Personnel costs 4,803 4,074 3,589Research and development expenses 69 63 46

Advertising and promotion expenses mainly consist of the cost of media campaigns and point-of-sale advertising, and also includepersonnel costs dedicated to this function.

As of December 31, 2012, a total of 3,204 stores were operated by the Group worldwide (3,040 in 2011, 2,545 in 2010),particularly by Fashion and Leather Goods and Selective Retailing.

In certain countries, leases for stores entail the payment of both minimum amounts and variable amounts, especially for stores withlease payments indexed to revenue. The total lease expense for the Group’s stores breaks down as follows:

(EUR millions) 2012 2011 2010

Fixed or minimum lease payments 873 675 561Variable portion of indexed leases 408 348 292Airport concession fees - fixed portion or minimum amount 214 223 279Airport concession fees - variable portion 449 317 203

Commercial lease expenses 1,944 1,563 1,335

Personnel costs consist of the following elements:

(EUR millions) 2012 2011 2010

Salaries and social charges 4,667 3,954 3,473Pensions, reimbursement of medical costs and similar expenses in respect of defined benefit plans 83 67 66Stock option plan and related expenses 53 53 50

Personnel costs 4,803 4,074 3,589

25. OTHER OPERATING INCOME AND EXPENSES

(EUR millions) 2012 2011 2010

Net gains (losses) on disposals of fixed assets (4) (4) (36)Restructuring costs (28) (40) (32)Remeasurement of shares purchased prior to their initial consolidation - 22 -Transaction costs relating to the acquisition of consolidated companies (3) (17) -Impairment or amortization of brands, trade names, goodwill and other property (139) (73) (87)Other items, net (8) 3 3

Other operating income and expenses (182) (109) (152)

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26. NET FINANCIAL INCOME/(EXPENSE)

(EUR millions) 2012 2011 2010

Borrowing costs (164) (189) (168)Income from cash, cash equivalents and current available for sale financial assets 26 41 18Fair value adjustment of borrowings and interest rate hedges (2) (3) (1)

Cost of net financial debt (140) (151) (151)

Dividends received from non-current available for sale financial assets 174 54 14Ineffective portion of foreign currency hedges (49) (105) (96)Net gain/(loss) related to available for sale financial assets and other financial instruments 31 (11) 865Other items - net (30) (29) (20)

Other financial income and expenses 126 (91) 763

Net financial income/(expense) (14) (242) 612

Income from cash, cash equivalents and current available for sale financial assets comprises the following items:

(EUR millions) 2012 2011 2010

Income from cash and cash equivalents 17 33 12Interest from current available for sale financial assets 9 8 6

Income from cash, cash equivalents and current available for sale financial assets 26 41 18

The revaluation effects of financial debt and interest rate derivatives are attributable to the following items:

(EUR millions) 2012 2011 2010

Hedged financial debt (22) (65) (17)Hedging instruments 16 63 15Unallocated derivatives 4 (1) 1

Effects of revaluation of financial debt and interest rate instruments (2) (3) (1)

The ineffective portion of exchange rate derivatives breaks down as follows:

(EUR millions) 2012 2011 2010

Financial cost of commercial foreign exchange hedges (48) (145) (124)Financial cost of foreign-currency denominated net investment hedges 7 34 1Change in the fair value of unallocated derivatives (8) 6 27

Ineffective portion of foreign exchange derivatives (49) (105) (96)

Amounts booked as impairment or amortization in 2012 includean impairment loss of 74 million euros related to fixed propertyassets, with the balance comprised of amortization or impairmentcharges for brands and goodwill.

In 2011, the investments in Bulgari and Ile de Beauté held priorto the acquisition date of a controlling interest were revalued atmarket value at that date. Transaction costs essentially relatedto these two transactions.

In 2010, net losses on disposals mainly related to the disposalsof La Brosse et Dupont and of Montaudon. See Note 2 Changesin the percentage interest of consolidated entities.




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27. INCOME TAXES

27.1. Analysis of the income tax expense

(EUR millions) 2012 2011 2010

Current income taxes for the fiscal year (2,039) (1,671) (1,501)Current income taxes relating to previous fiscal years 20 2 (5)

Current income taxes (2,019) (1,669) (1,506)

Change in deferred income taxes 199 158 35Impact of changes in tax rates on deferred taxes - 58 2

Deferred income taxes 199 216 37

Total tax expense per income statement (1,820) (1,453) (1,469)

Tax on items recognized in equity (102) (59) (3)

The effective tax rate is as follows:

(EUR millions) 2012 2011 2010

Profit before tax 5,725 4,912 4,781Total income tax expense (1,820) (1,453) (1,469)

Effective tax rate 31.8% 29.6% 30.7%

Total income tax expense for fiscal year 2012 includes, for an amount of 30 million euros, the impact of the exceptional contributionapplicable in France from 2011 to 2014.

27.2. Analysis of net deferred tax on the balance sheet

Net deferred taxes on the balance sheet include the following assets and liabilities:

(EUR millions) 2012 2011 2010

Deferred tax assets 881 716 668Deferred tax liabilities (3,960) (3,925) (3,354)

Net deferred tax asset (liability) (3,079) (3,209) (2,686)

In 2012, dividends received in respect of non-current available forsale financial assets include an exceptional dividend receivedfrom Hermès International SCA in the amount of 120 millioneuros (5 euros per share).

In 2010, the net gain related to available for sale financial assetsand other financial instruments included an amount of1,004 million euros related to the Hermès transactions whichcorresponded to the gain, net of transaction costs, recorded on the settlement of equity linked swaps; this gain amounts

to the difference between the market value of the securitiesacquired at the settlement date of the contracts and their valuebased on the Hermès share price on Paris stock exchange as of December 31, 2009.

In 2012, as well as in 2011 and 2010, excluding the Hermèstransactions, the net gain/loss related to available for sale financialassets and other financial instruments is due to changes inmarket performance and the recognition of impairment losseson current and non-current available for sale financial assets.




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27.3. Analysis of the difference between the theoretical and effective income tax rates

The theoretical income tax rate, defined as the rate applicable in law to the Group’s French companies, may be reconciled as followsto the effective income tax rate disclosed in the consolidated financial statements:

(as % of income before tax) 2012 2011 2010

French statutory tax rate 34.4 34.4 34.4

Changes in tax rates - (1.2) (0.1)Differences in tax rates for foreign companies (5.5) (5.7) (5.4)Tax losses and tax loss carry forwards - (0.6) (0.1)Difference between consolidated and taxable income, andincome taxable at reduced rates 2.6 2.4 1.5Withholding taxes 0.3 0.3 0.4

Effective tax rate of the Group 31.8 29.6 30.7

Since 2000, French companies have been subject to additional income tax, at a rate of 3.3% for 2010, 2011 and 2012, bringing the theoretical tax rate to 34.4% in each fiscal year.

27.4. Sources of deferred taxes

In the income statement

(EUR millions) 2012 2011 2010

Valuation of brands 8 42 (65)Other revaluation adjustments 6 (4) 4Gains and losses on available for sale financial assets (2) (5) 3Gains and losses on hedges of future foreign currency cash flows (16) 16 8Provisions for contingencies and losses(a) - 10 24Intercompany margin included in inventories 148 102 39Other consolidation adjustments(a) 81 78 34Losses carried forward (26) (23) (10)

Total 199 216 37

In equity

(EUR millions) 2012 2011 2010

Fair value adjustment of vineyard land (28) (11) (71)Gains and losses on available for sale financial assets (5) (91) (22)Gains and losses on hedges of future foreign currency cash flows (50) 21 14

Total (83) (81) (79)




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28. EARNINGS PER SHARE

2012 2011 2010

Net profit, Group share (EUR millions) 3,424 3,065 3,032

Average number of shares in circulation during the fiscal year 508,041,429 498,874,042 490,124,174Average number of treasury shares owned during the fiscal year (8,907,786) (10,104,756) (13,253,254)

Average number of shares on which the calculation before dilution is based 499,133,643 488,769,286 476,870,920

Basic Group share of profit per share (EUR) 6.86 6.27 6.36

Average number of shares on which the above calculation is based 499,133,643 488,769,286 476,870,920Dilution effect of stock option plans 3,096,309 3,438,206 2,868,777Other dilution effects - - -

Average number of shares in circulation after dilution 502,229,952 492,207,492 479,739,697

Diluted Group share of profit per share (EUR) 6.82 6.23 6.32

• Tax consolidation agreements in France allow virtually allFrench companies of the Group to combine their taxable profitsto calculate the overall tax expense for which only the parentcompany is liable.

This tax consolidation agreement generated a decrease in thecurrent tax expense of 92 million euros in 2012 (136 millioneuros in 2011, 107 million euros in 2010).

• The application of other tax consolidation agreements, notablyin the United States, generated current tax savings of 28 millioneuros in 2012 (52 million euros in 2011, 82 million euros in 2010).

In the balance sheet

(EUR millions) 2012(b) 2011(b) 2010(b)

Valuation of brands (3,187) (3,203) (2,532)Fair value adjustment of vineyard land (607) (579) (568)Other revaluation adjustments (374) (373) (370)Gains and losses on available for sale financial assets (150) (145) (48)Gains and losses on hedges of future foreign currency cash flows (24) 31 (1)Provisions for contingencies and losses(a) 218 205 182Intercompany margin included in inventories 579 416 312Other consolidation adjustments(a) 418 388 295Losses carried forward 48 51 44

Total (3,079) (3,209) (2,686)

(a) Mainly tax-driven provisions, accelerated tax depreciation and finance lease.(b) Asset/(Liability).

27.5. Losses carried forward

As of December 31, 2012, unused tax loss carryforwards and tax credits, for which no deferred tax assets were recognized, had a potential positive impact on the future tax expense of 306 million euros (301 million euros in 2011, 290 million euros in 2010).

27.6. Tax consolidation




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29. PROVISIONS FOR PENSIONS, REIMBURSEMENT OF MEDICAL COSTS AND SIMILAR COMMITMENTS

29.1. Expense for the fiscal year

(EUR millions) 2012 2011 2010

Service cost 64 56 46Interest cost 36 33 31Expected return on plan assets (25) (24) (19)Amortization of actuarial gains and losses 9 5 6Past service cost 1 2 2Changes in regimes (2) (5) -

Total expense for the period for defined benefit plans 83 67 66

Effective return on/(cost of) plan assets 56 (10) 24

29.2. Net recognized commitment

(EUR millions) 2012 2011 2010

Benefits covered by plan assets 1,004 837 707Benefits not covered by plan assets 137 127 118

Defined benefit obligation 1,141 964 825

Market value of plan assets (636) (569) (488)

Actuarial gains and losses not recognized in the balance sheet (220) (122) (78)Past service cost not yet recognized in the balance sheet (3) (4) (6)

Unrecognized items (223) (126) (84)

Net recognized commitment 282 269 253

Of which: Non-current provisions 293 283 261Current provisions 13 11 9Other assets (24) (25) (17)

Total 282 269 253

As of December 31, 2012, all of the instruments in circulationthat may dilute earnings per share have been taken intoconsideration when determining the impact of dilution, giventhat all of the outstanding purchase and subscription optionsare considered to be available to be exercised at that date, since the LVMH share price is higher than the exercise price ofthese options.

No events occurred between December 31, 2012 and the date onwhich the financial statements were approved for publicationthat would have significantly affected the number of sharesoutstanding or the potential number of shares.




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29.3. Breakdown of the change in net recognized commitment

(EUR millions) Defined benefit Market value Unrecognized Net recognized obligation of plan assets items commitment

As of December 31, 2011 964 (569) (126) 269

Net expense for the period 101 (25) 7 83Payments to beneficiaries (66) 51 - (15)Contributions to plan assets - (59) - (59)Contributions of employees 8 (8) - -Changes in scope and reclassifications 9 (5) - 4Changes in regimes (2) - 2 -Actuarial gains and losses: experience adjustments(a) 13 (31) 18 -Actuarial gains and losses: changes in assumptions(a) 128 - (128) -Translation adjustment (14) 10 4 -

As of December 31, 2012 1,141 (636) (223) 282

(a) Gains/(Losses).

Actuarial gains and losses resulting from changes in assumptions related mainly to the decline in discount rates.

Actuarial gains and losses resulting from experience adjustments related to the fiscal years 2008 to 2011 amounted to:

(EUR millions) 2008 2009 2010 2011

Experience adjustments on the defined benefit obligation (2) (16) (14) (9)Experience adjustments on the fair value of plan assets 96 (29) (4) (34)

Actuarial gains and losses resulting from experience adjustments(a) 94 (45) (18) (43)

(a) Gains/(Losses).

The actuarial assumptions applied to estimate commitments as of December 31, 2012 in the main countries where such commitmentshave been undertaken, were as follows:

(as %) 2012 2011 2010

France United United Japan Switzerland France United United Japan Switzerland France United United Japan Switzerland States Kingdom States Kingdom States Kingdom

Discount rate(a) 3.0 3.2 4.3 1.5 2.0 4.65 4.9 4.7 1.75 2.25 4.5 5.1 5.4 1.75 2.5Average expected return on investments 4.0 7.0 4.0 4.0 3.5 4.0 7.75 5.0 4.0 4.0 4.0 7.75 6.0 4.0 4.0Future rate of increase of salaries 3.0 4.0 3.8 2.0 2.5 3.0 4.0 3.8 2.0 2.5 3.0 4.0 4.2 2.0 2.5

(a) Discount rates were determined with reference to market yields of AA-rated corporate bonds at the year-end in the countries concerned. Bonds with maturities comparable to those of the commitments were used.




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The main components of the Group’s net commitment forretirement and other defined benefit obligations as ofDecember 31, 2012 are as follows:

- in France, these commitments include the commitment tomembers of the Group’s Executive Committee and seniorexecutives, who are covered by a supplementary pension planafter a certain number of years of service, the amount of whichis determined on the basis of the average of their three highestamounts of annual remuneration received during the courseof their career with the Group; they also include retirementindemnities and jubilee awards, the payment of which isdetermined by French law and collective bargaining agreements,respectively upon retirement or after a certain number of yearsof service;

- in Europe (excluding France), the main commitments concernpension plans, set up in the United Kingdom by certainGroup companies, in Switzerland, participation by Groupcompanies in the mandatory Swiss occupational pensionplan, the LPP (Loi pour la Prévoyance Professionnelle), as well as the TFR (Trattamento di Fine Rapporto) in Italy, a legallyrequired end-of-service allowance, paid regardless of the reasonfor the employee’s departure from the company;

- in the United States, the commitment relates to defined benefitplans or schemes for the reimbursement of medical expensesof retirees set up by certain Group companies.

29.4. Analysis of benefits

The breakdown of the defined benefit obligation by type of benefit plan is as follows:

(EUR millions) 2012 2011 2010

Retirement and other indemnities 181 149 127Medical costs of retirees 48 45 46Jubilee awards 14 12 11Supplementary pensions 874 741 617Early retirement indemnities 1 2 3Other 23 15 21


The geographic breakdown of the defined benefit obligation is as follows:

(EUR millions) 2012 2011 2010

France 372 309 308Europe (excluding France) 430 367 265United States 210 175 147Japan 107 103 93Asia (excluding Japan) 19 9 11Other countries 3 1 1


The average expected rate of return on investments by type of asset, based on which 2012 net expense was determined,is as follows by type of investment:

(as %) 2012

Shares 6.5Bonds

- private issues 3.9- public issues 2.1

Real estate, cash and other assets 2.3

The assumed rate of increase of medical expenses in the UnitedStates is 7.6% for 2012, then it is assumed to decline progressivelyas of 2013 to reach a rate of 4.5% in 2030.

A rise of 0.5% in the discount rate would result in a reductionof 69 million euros in the amount of the defined benefitobligation as of December 31, 2012; a decrease of 0.5% in the discount rate would result in a rise of 70 million euros.




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As of December 31, 2012, the maturity schedule of these commitments is as follows:

(EUR millions) Less than One to More than Total one year five years five years

Grapes, wines and eaux-de-vie 268 681 63 1,012Other purchase commitments for raw materials 75 5 - 80Industrial and commercial fixed assets 107 81 17 205Investments in joint venture shares and non-current available for sale financial assets 3 9 29 41

Some Wines and Spirits companies have contractual purchasearrangements with various local producers for the future supplyof grapes, still wines and eaux-de-vie. These commitments

are valued, depending on the nature of the purchases, on thebasis of the contractual terms or known year-end prices andestimated production yields.

29.5. Analysis of related plan assets

The breakdown of market value of plan assets by type of investment is as follows:

(as %) 2012 2011 2010

Shares 35 39 45

Bonds - private issues 29 27 23- public issues 18 15 18

Real estate, cash and other assets 18 19 14

Market value of related plan assets 100 100 100

These assets do not include any real estate assets belonging to the Group or any LVMH shares for significant amounts.

The additional sums that will be paid into the funds to build up these assets in 2013 are estimated at 77 million euros.

30. OFF BALANCE SHEET COMMITMENTS

30.1. Purchase commitments

(EUR millions) 2012 2011 2010

Grapes, wines and eaux-de-vie 1,012 1,019 1,139Other purchase commitments for raw materials 80 84 67Industrial and commercial fixed assets 205 154 168Investments in joint venture shares and non-current available for sale financial assets 41 90 96




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As part of its day-to-day management, the Group is party tovarious legal proceedings concerning brand rights, the protectionof intellectual property rights, the set-up of selective retailingnetworks, licensing agreements, employee relations, tax auditsand other areas relating to its business. The Group believes

that the provisions recorded in the balance sheet in respect of these risks, litigation or disputes, known or outstanding atyear-end, are sufficient to avoid its consolidated financial networth being materially impacted in the event of an unfavorableoutcome.

30.3. Collateral and other guarantees

As of December 31, 2012, these commitments break down as follows:

(EUR millions) 2012 2011 2010

Securities and deposits 55 49 46Other guarantees 101 142 78

Guarantees given 156 191 124

Guarantees received 19 28 25

Maturity dates of these commitments are as follows:

(EUR millions) Less than One to More than Total one year five years five years

Securities and deposits 13 28 14 55Other guarantees 64 28 9 101

Guarantees given 77 56 23 156

Guarantees received 15 1 3 19

30.4. Contingent liabilities and outstanding litigation

• In addition, the Group may enter into operating leases or concession contracts including variable payment amounts.For example, in June 2012, DFS was granted three additionalfive-year concessions at Hong Kong International Airport. The concession agreement provides for the payment of variable

concession fees, calculated in particular on the basis of thenumber of passengers passing through the airport. On the basisof an estimate of this number of passengers at the signing dateof the agreement, the total amount of these fees in respect of acalendar year would be about 300 million euros.

30.2. Lease and similar commitments

In connection with its business activities, the Group enters into agreements for the rental of premises or airport concession contracts.The Group also finances a portion of its equipment through long-term operating leases.

• The fixed minimum portion of commitments in respect of such operating lease or concession contracts over the irrevocable periodof the contracts were as follows as of December 31, 2012:

(EUR millions) 2012 2011 2010

Less than one year 1,235 1,094 885One to five years 3,208 2,843 2,237More than five years 1,551 1,279 1,022

Commitments given for operating leases and concessions 5,994 5,216 4,144

Less than one year 15 19 20One to five years 25 30 42More than five years 1 1 5

Commitments received for sub-leases 41 50 67




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Transactions between LVMH and Groupe Arnault and Financière Agache may be summarized as follows:

(EUR millions) 2012 2011 2010

Amounts billed by Groupe Arnault SAS and Financière Agache to LVMH (6) (5) (5)Amount payable outstanding as of December 31 (2) (2) -

Amounts billed by LVMH to Groupe Arnault SAS and Financière Agache 2 2 2Amount receivable outstanding as of December 31 - - -

Groupe Arnault SAS provides assistance to LVMH in the areasof development, engineering, corporate and real estate law. Inaddition, Groupe Arnault leases office premises to LVMH.

LVMH leases office space to Groupe Arnault SAS and FinancièreAgache SA and LVMH also provides them with various formsof administrative assistance.

Transactions between LVMH and Christian Dior, which are completed at market prices, may be summarized as follows, in value:

(EUR millions) 2012 2011 2010

LVMH purchases from Christian Dior (19) (22) (13)Amount payable outstanding as of December 31 (20) (21) (13)

LVMH sales to Christian Dior 39 26 15Amount receivable outstanding as of December 31 7 4 3

Relations of LVMH with Groupe Arnault and Financière Agache

The LVMH group, via its subsidiaries Parfums Christian Diorand Montres Dior, coordinates its communications efforts withChristian Dior SA and its subsidiaries, in particular ChristianDior Couture SA. Christian Dior also provides creative assistanceto LVMH for the design of Dior perfume bottles and watches,as well as in the course of its advertising and promotionalcampaigns. Montres Dior watches are manufactured by a companyequally owned by Christian Dior and LVMH.

LVMH distributes Christian Dior products through its SelectiveRetailing businesses, and distributes Montres Dior watchesthrough its Watches and Jewelry business group’s distributionnetwork. Christian Dior purchases the products manufacturedby Parfums Christian Dior and Montres Dior from LVMH,which it sells in its network of retail stores.

Finally, LVMH provides administrative assistance to thesubsidiaries of Christian Dior located outside France.

30.5. Other commitments

The Group is not aware of any significant off balance sheet commitments other than those described above.

31. RELATED PARTY TRANSACTIONS

31.1. Relations of LVMH with Christian Dior and Groupe Arnault

The LVMH group is consolidated within Christian Dior SA, a public company listed on the Eurolist by Euronext Paris, which is controlled by Groupe Arnault SAS via its subsidiary Financière Agache SA.

Relations of LVMH with Christian Dior




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31.3. Executive bodies

The total compensation paid to the members of the Executive Committee and the Board of Directors, in respect of their functionswithin the Group, breaks down as follows:

(EUR millions) 2012 2011 2010

Gross compensation, employers’ charges and benefits in kind 68 60 56Post-employment benefits 9 11 10Other long term benefits 12 14 13End of contract indemnities 3 9 -Stock option and similar plans 26 26 24

Total 118 120 103

The commitment recognized as of December 31, 2012 for post-employment benefits, net of related financial assets was 28 millioneuros (19 million euros as of December 31, 2011 and 18 million euros as of December 31, 2010).

32. SUBSEQUENT EVENTS

No significant subsequent events occurred between December 31, 2012 and January 31, 2013, the date on which the financialstatements were approved for publication by the Board of Directors.

Moët Hennessy SNC and Moët Hennessy International SAS(hereafter referred to as “Moët Hennessy”) are the holdingcompanies for LVMH’s Wines and Spirits businesses, with theexception of Château d’Yquem, Château Cheval Blanc and certainchampagne vineyards. Diageo holds a 34% stake in MoëtHennessy. In 1994, at the time when Diageo acquired this 34%stake, an agreement was concluded between Diageo and LVMH

for the apportionment of holding company expenses betweenMoët Hennessy and the other holding companies of the LVMHgroup.

Under this agreement, Moët Hennessy assumed 19% of sharedexpenses in 2012 (19% in 2011 and 20% in 2010) representingan amount of 14 million euros in 2012 (20 million euros in 2011and 9 million in 2010).

31.2. Relations with Diageo




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CONSOLIDATED COMPANIES



Consolidated companies

WINES AND SPIRITS

MHCS SCS Epernay, France 100% 66%Champagne Des Moutiers SA Epernay, France 100% 66%Société Viticole de Reims SA Epernay, France 100% 66%Cie Française du Champagne et du Luxe SA Epernay, France 100% 66%Chamfipar SA Epernay, France 100% 66%STM Vignes SAS Epernay, France 95% 63%GIE MHIS Epernay, France 100% 66%Moët Hennessy Entreprise Adaptée Epernay, France 100% 66%Champagne Bernard Breuzon SAS Colombe le Sec, France 100% 66%Champagne de Mansin SAS Gye sur Seine, France 100% 66%Pressoir MHCS SRL Reims, France 100% 66%Société Civile des Crus de Champagne SA Reims, France 100% 66%Moët Hennessy Italia Spa Milan, Italy 100% 66%Moët Hennessy UK Ltd London, United Kingdom 100% 66%Moët Hennessy España SA Barcelona, Spain 100% 66%Moët Hennessy (Suisse) SA Geneva, Switzerland 100% 66%Moët Hennessy Deutschland GmbH Munich, Germany 100% 66%Moët Hennessy de Mexico, SA de C.V. Mexico City, Mexico 100% 66%Moët Hennessy Belux SA Brussels, Belgium 100% 66%Moët Hennessy Osterreich GmbH Vienna, Austria 100% 66%Moët Hennessy Suomi OY Helsinki, Finland 100% 66%Moët Hennessy Polska SP Z.O.O. Warsaw, Poland 100% 66%Moët Hennessy Czech Republic Sro Prague, Czech Republic 100% 66%Moët Hennessy Sverige AB Stockholm, Sweden 100% 66%Moët Hennessy România Srl Bucharest, Romania 100% 66%Moët Hennessy Norge AS Hoevik, Norway 100% 66%Moët Hennessy Danmark A/S Copenhagen, Denmark 100% 66%Moët Hennessy Nederland BV Baarn, Netherlands 100% 66%Moët Hennessy USA Inc New York, USA 100% 66%MHD Moët Hennessy Diageo SAS Courbevoie, France(c) 100% 66%Clicquot Inc New York, USA(*) 100% 66%Cheval des Andes SA Buenos Aires, Argentina(a) 50% 33%Domaine Chandon Inc California, USA 100% 66%Cape Mentelle Vineyards Ltd Margaret River, Australia 100% 66%Veuve Clicquot Properties, Pty Ltd Margaret River, Australia 100% 66%Moët Hennessy do Brasil – Vinhos E Destilados Ltda São Paulo, Brazil 100% 66%Cloudy Bay Vineyards Ltd Blenheim, New Zealand 100% 66%Bodegas Chandon Argentina SA Buenos Aires, Argentina 100% 66%Domaine Chandon Australia Pty Ltd Coldstream Victoria, Australia 100% 66%Newton Vineyards LLC California, USA 90% 59%Domaine Chandon (Ningxia) Moët Hennessy Co, Ltd Yinchuan, China 100% 66%Moët Hennessy Chandon (Ningxia) Vineyards Co, Ltd Yinchuan, China 60% 40%Château d’Yquem SA Sauternes, France 65% 65%Château d’Yquem SC Sauternes, France 64% 64%Société Civile Cheval Blanc (SCCB) Saint Emilion, France(a) 50% 50%MH Shangri-La (Deqin) Winery Company Ltd Deqin, China 67% 44%Jas Hennessy & Co SCS Cognac, France 99% 65%Distillerie de la Groie SARL Cognac, France 100% 65%SICA de Bagnolet Cognac, France 100% 3%Sodepa SARL Cognac, France 100% 65%Diageo Moët Hennessy BV Amsterdam, Netherlands(c) 100% 66%Hennessy Dublin Ltd Dublin, Ireland 100% 66%Edward Dillon & Co Ltd Dublin, Ireland(b) 40% 26%Hennessy Far East Ltd Hong Kong, China 100% 65%Moët Hennessy Diageo Hong Kong Ltd Hong Kong, China(c) 100% 66%Moët Hennessy Diageo Macau Ltd Macao, China(c) 100% 66%Riche Monde (China) Ltd Hong Kong, China(c) 100% 66%Moët Hennessy Diageo Singapore Pte Ltd Singapore(c) 100% 66%Moët Hennessy Ukraine Kiev, Ukraine 100% 66%MH Services UK Ltd London, United Kingdom 100% 66%MH Services Singapore Limited Pte Singapore 100% 66%Moët Hennessy Diageo Malaysia SDN BHD Kuala Lumpur, Malaysia(c) 100% 66%Diageo Moët Hennessy Thailand Ltd Bangkok, Thailand(c) 100% 66%Moët Hennessy Shanghai Ltd Shanghai, China 100% 66%Moët Hennessy India Pvt. Ltd New Delhi, India 100% 66%Moët Hennessy Taiwan Ltd Taipei, Taiwan 100% 65%MHD Chine Co Ltd Shanghai, China(c) 100% 66%MHWH Limited Limassol, Cyprus 100% 66%Moët Hennessy Whitehall Russia SA Moscow, Russia 100% 66%Moët Hennessy Vietnam Importation Co Ltd Ho Chi Minh City, Vietnam 100% 65%Moët Hennessy Vietnam Distribution Co Pte Ltd Ho Chi Minh City, Vietnam 51% 33%Moët Hennessy Rus LLC Moscow, Russia 100% 66%Moët Hennessy Diageo KK Tokyo, Japan(c) 100% 66%Moët Hennessy Asia Pacific Pte Ltd Singapore 100% 65%

Moët Hennessy Australia Ltd Rosebury, Australia 100% 65%Millennium Import LLC Minnesota, USA 100% 66%Polmos Zyrardow LLC Zyrardow, Poland 100% 66%The Glenmorangie Company Ltd Edinburgh, United Kingdom 100% 66%Macdonald & Muir Ltd Edinburgh, United Kingdom 100% 66%The Scotch Malt Whisky Society Ltd Edinburgh, United Kingdom 100% 66%Wenjun Spirits Company Ltd Chengdu, China 55% 36%Wenjun Spirits Sales Company Ltd Chengdu, China 55% 36%

FASHION AND LEATHER GOODS

Louis Vuitton Malletier SA Paris, France 100% 100%Manufacture de Souliers Louis Vuitton Srl Fiesso d’Artico, Italy 100% 100%Louis Vuitton South Europe Srl Milan, Italy 100% 100%Louis Vuitton Saint Barthélémy SNC Saint Bartholomew,

French Antilles 100% 100%Louis Vuitton Cantacilik Ticaret AS Istanbul, Turkey 100% 100%Louis Vuitton Editeur SAS Paris, France 100% 100%Louis Vuitton International SNC Paris, France 100% 100%Louis Vuitton India Holding Private Ltd Bangalore, India 100% 100%Société des Ateliers Louis Vuitton SNC Paris, France 100% 100%Les Tanneries de la Comète SA Estaimpuis, Belgium 60% 60%Manufacture des accessoires Louis Vuitton Srl Milan, Italy 100% 100%Louis Vuitton Bahrain WLL Manama, Bahrain (d) (d)

Société Louis Vuitton Services SNC Paris, France 100% 100%Louis Vuitton Qatar LLC Doha, Qatar (d) (d)

Société des Magasins Louis Vuitton France SNC Paris, France 100% 100%Belle Jardinière SA Paris, France 100% 100%Belle Jardinière Immo SAS Paris, France 100% 100%Les Ateliers Horlogers Louis Vuitton SA La Chaux-de-Fonds, Switzerland 100% 100%Les Ateliers Joaillers Louis Vuitton SAS Paris, France 100% 100%Léman Cadrans SA Satigny, Switzerland 100% 100%Operadora Louis Vuitton Mexico SRLCV Mexico City, Mexico 100% 100%Louis Vuitton Monaco SA Monaco 100% 100%ELV SNC Paris, France 100% 100%Louis Vuitton Services Europe Sprl Brussels, Belgium 100% 100%Louis Vuitton UK Ltd London, United Kingdom 100% 100%Finnina Srl Stra, Italy 100% 100%Louis Vuitton Ireland Ltd Dublin, Ireland 100% 100%Louis Vuitton Deutschland GmbH Dusseldorf, Germany 100% 100%Louis Vuitton Ukraine LLC Kiev, Ukraine 100% 100%Catalana Talleres Artesanos Louis Vuitton SA Barcelona, Spain 100% 100%Sociedad de Talleres de Accesorios en Cuero LV SL Barcelona, Spain 100% 100%Atepeli – Ateliers de Ponte de Lima SA Ponte de Lima, Portugal 100% 100%La Fabrique de Maroquinerie Louis Vuitton Paris, France 100% 100%ATECB – Les Ateliers de Cabeceiras de Basto SA Lameiros, Portugal 100% 100%Louis Vuitton BV Amsterdam, Netherlands 100% 100%Louis Vuitton Belgium SA Brussels, Belgium 100% 100%Louis Vuitton Luxembourg SARL Luxembourg 100% 100%Louis Vuitton Hellas SA Athens, Greece 100% 100%Louis Vuitton Cyprus Limited Nicosia, Cyprus 100% 100%Louis Vuitton Portugal Maleiro, Ltda Lisbon, Portugal 100% 100%Louis Vuitton Ltd Tel Aviv, Israel 100% 100%Louis Vuitton Danmark A/S Copenhagen, Denmark 100% 100%Louis Vuitton Aktiebolag SA Stockholm, Sweden 100% 100%Louis Vuitton Suisse SA Geneva, Switzerland 100% 100%Louis Vuitton Polska sp. zoo. Warsaw, Poland 100% 100%Louis Vuitton Ceska s.r.o. Prague, Czech Republic 100% 100%Louis Vuitton Osterreich GmbH Vienna, Austria 100% 100%Louis Vuitton Kazakhstan LLP Almaty, Kazakhstan 100% 100%LV US Manufacturing, Inc New York, USA 100% 100%Somarest SARL Sibiu, Romania 100% 100%Louis Vuitton Hawaii Inc Hawaii, USA 100% 100%Atlantic Luggage Company Ltd Hamilton, Bermuda 100% 40%Louis Vuitton Guam Inc Guam 100% 100%Louis Vuitton Saipan Inc Saipan, Mariana Islands 100% 100%Louis Vuitton Norge AS Oslo, Norway 100% 100%San Dimas Luggage Company New York, USA 100% 100%Louis Vuitton North America Inc New York, USA 100% 100%Louis Vuitton USA Inc New York, USA 100% 100%Louis Vuitton Liban retail SAL Beirut, Lebanon 100% 100%Louis Vuitton Liban Holding SAL Beirut, Lebanon 100% 100%Louis Vuitton Vietnam Company Ltd Hanoi, Vietnam 100% 100%Louis Vuitton Suomy Oy Helsinki, Finland 100% 100%Louis Vuitton România Srl Bucharest, Romania 100% 100%

Companies Registered office Percentage

Control Interest


Control Interest

4|1_VA_V5 26/03/13 20:31 Page174

LVMH FG Brasil Ltda São Paulo, Brazil 100% 100%Louis Vuitton Panama Inc Panama City, Panama 100% 100%Louis Vuitton Mexico S de RL de CV Mexico City, Mexico 100% 100%Louis Vuitton Uruguay SA Montevideo, Uruguay 100% 100%Louis Vuitton Chile Ltda Santiago de Chile, Chile 100% 100%Louis Vuitton (Aruba) N.V Oranjestad, Aruba 100% 100%Louis Vuitton Republica Dominica Srl Santo Domingo,

Dominican Republic 100% 100%LVMH Fashion Group Pacific Ltd Hong Kong, China 100% 100%Louis Vuitton Trading Hong Kong Ltd Hong Kong, China 100% 100%Louis Vuitton Hong Kong Ltd Hong Kong, China 100% 100%Louis Vuitton (Philippines) Inc Makati, Philippines 100% 100%LVMH Fashion (Singapore) Pte Ltd Singapore 100% 100%LV IOS Private Ltd Singapore 100% 100%Heng Long International Holding Pte Ltd Singapore 61% 61%Heng Long International Ltd Singapore 100% 61%Heng Long Leather Co (Pte) Ltd Singapore 100% 61%Heng Long Leather (Guangzhou) Co Ltd Guangzhou, China 100% 61%PT Louis Vuitton Indonesia LLC Jakarta, Indonesia 98% 98%Louis Vuitton (Malaysia) SDN BHD Kuala Lumpur, Malaysia 100% 100%Louis Vuitton (Thailand) SA Bangkok, Thailand 100% 100%Louis Vuitton Taïwan Ltd Taipei, Taiwan 98% 98%Louis Vuitton Australia PTY Ltd Sydney, Australia 100% 100%Louis Vuitton (China) Co Ltd Shanghai, China 100% 100%Louis Vuitton Mongolia LLC Ulaan Baatar, Mongolia 100% 100%Louis Vuitton New Zealand Limited Auckland, New Zealand 100% 100%Louis Vuitton Trading India Private Ltd New Delhi, India 51% 51%Louis Vuitton EAU LLC Dubai, United Arab Emirates (d) (d)

Louis Vuitton FZCO Dubai, United Arab Emirates 65% 65%Louis Vuitton – Jordan PCLS Amman, Jordan 100% 100%Louis Vuitton Orient FZ LLC Emirate of Ras Khaime,

United Arab Emirates 65% 65%Louis Vuitton Korea Ltd Seoul, South Korea 100% 100%LVMH Fashion Group Trading Korea Ltd Seoul, South Korea 100% 100%Louis Vuitton Hungaria Sarl Budapest, Hungary 100% 100%Louis Vuitton Argentina SA Buenos Aires, Argentina 100% 100%Louis Vuitton Vostock LLC Moscow, Russia 100% 100%LV Colombia SA Santafe de Bogota, Colombia 100% 100%Louis Vuitton Maroc Sarl Casablanca, Morocco 100% 100%Louis Vuitton South Africa Ltd Johannesburg, South Africa 100% 100%Louis Vuitton Macau Company Ltd Macao, China 100% 100%LVMH Fashion (Shanghai) Trading Co., Ltd Shanghai, China 100% 100%LVJ Group KK Tokyo, Japan 99% 99%Louis Vuitton Services KK Tokyo, Japan 100% 99%Louis Vuitton Canada Inc Toronto, Canada 100% 100%Louis Vuitton (Barbados) Ltd Saint Michael, Barbados 100% 100%FG Industries Paris, France 100% 100%Les tanneries Roux SA Romans sur Isère, France 100% 100%Perida Financière SA Romans sur Isère, France 100% 100%Marc Jacobs International LLC New York, USA(*) 96% 96%Marc Jacobs International (UK) Ltd London, United Kingdom 100% 96%Marc Jacobs Trademark LLC New York, USA(*) 33% 33%Marc Jacobs Japon KK Tokyo, Japan 50% 48%Marc Jacobs international Italia Srl Milan, Italy 100% 96%Marc Jacobs International France SAS Paris, France 100% 96%Marc Jacobs Commercial & Trading (Shanghai) Shanghai, China 100% 96%Marc Jacobs Hong Kong Ltd Hong Kong, China 100% 96%Loewe SA Madrid, Spain 100% 100%Loewe Hermanos SA Madrid, Spain 100% 100%Manufacturas Loewe SL Madrid, Spain 100% 100%LVMH Fashion Group France SNC Paris, France 100% 100%Loewe Hermanos UK Ltd London, United Kingdom 100% 100%Loewe Guam Inc Guam 100% 100%Loewe Hong Kong Ltd Hong Kong, China 100% 100%Loewe Commercial & Trading (Shanghai) Co Ltd Shanghai, China 100% 100%Loewe Fashion Pte Ltd Singapore 100% 100%Loewe Fashion (M) SDN BHD Kuala Lumpur, Malaysia 100% 100%Loewe Taïwan Ltd Taipei, Taiwan 100% 98%Loewe Korea Ltd Seoul, South Korea 100% 100%Loewe Macao Ltd Macao, China 100% 100%Loewe Italy Milan, Italy 100% 100%Berluti SA Paris, France 100% 100%Manifattura Ferrarese Srl Ferrara, Italy 100% 100%Berluti LLC New York, USA 100% 100%Berluti UK Ltd London, United Kingdom 100% 100%Berluti Macau Company Ltd Macao, China 100% 100%Berluti (Shanghai) Company Ltd Shanghai, China 100% 100%Berluti Hong Kong Company Ltd Hong Kong, China 100% 100%Berluti Singapore Private Ltd Singapore 100% 100%

Berluti Orient FZ LLC Raz Al-Kamah, United Arab Emirates 65% 65%

Berluti UAE LLC Dubai, United Arab Emirates 100% 65%FG SAS Paris, France 100% 100%Arnys SA Paris, France 100% 100%Rossimoda Spa Vigonza, Italy 100% 100%Rossimoda USA Ltd New York, USA 100% 100%Rossimoda France SARL Paris, France 100% 100%Brenta Suole Srl Vigonza, Italy 65% 65%LVMH Fashion Group Services SAS Paris, France 100% 100%Montaigne KK Tokyo, Japan 100% 99%Interlux Company Ltd Hong Kong, China 100% 100%Celine SA Paris, France 100% 100%Avenue M International SCA Paris, France 100% 100%Enilec Gestion SARL Paris, France 100% 100%Celine Montaigne SA Paris, France 100% 100%Celine Monte-Carlo SA Monaco 100% 100%Celine Germany GmbH Berlin, Germany 100% 100%Celine Production Srl Florence, Italy 100% 100%Celine Suisse SA Geneva, Switzerland 100% 100%Celine UK Ltd London, United Kingdom 100% 100%Celine Inc New York, USA(*) 100% 100%Celine Hong Kong Ltd Hong Kong, China 100% 100%Celine Commercial & Trading (Shanghai) Co Ltd Shanghai, China 100% 100%Celine Taïwan Ltd Taipei, Taiwan 100% 99%CPC International Ltd Hong Kong, China 100% 100%CPC Macau Ltd Macao, China 100% 100%LVMH FG Services UK Ltd London, United Kingdom 100% 100%Kenzo SA Paris, France 100% 100%Kenzo Belgique SA Brussels, Belgium 100% 100%Kenzo UK Ltd London, United Kingdom 100% 100%Kenzo Japan KK Tokyo, Japan 100% 100%Kenzo Accessories Srl Lentate Sul Seveso, Italy 100% 100%Kenzo Seta Srl Grandate, Italy 51% 51%Givenchy SA Paris, France 100% 100%Givenchy Corporation New York, USA 100% 100%Givenchy China Co Ltd Hong Kong, China 100% 100%Givenchy Shanghai Commercial and Trading Co Ltd Shanghai, China 100% 100%GCCL Macau Co Ltd Macao, China 100% 100%Givenchy Italia Srl Florence, Italy 100% 100%Gabrielle Studio Inc New York, USA 100% 100%Donna Karan International Inc New York, USA(*) 100% 100%The Donna Karan Company LLC New York, USA 100% 100%Donna Karan Service Company BV Oldenzaal, Netherlands 100% 100%Donna Karan Company Store Ireland Ltd Dublin, Ireland 100% 100%Donna Karan Studio LLC New York, USA 100% 100%The Donna Karan Company Store LLC New York, USA 100% 100%Donna Karan International (Canada) Inc Vancouver, Canada 100% 100%Donna Karan Company Store UK Holdings Ltd London, United Kingdom 100% 100%Donna Karan Management Company UK Ltd London, United Kingdom 100% 100%Donna Karan Company Stores UK Retail Ltd London, United Kingdom 100% 100%Donna Karan Company Store (UK) Ltd London, United Kingdom 100% 100%Donna Karan HK Ltd Hong Kong, China 100% 100%Donna Karan (Italy) Srl Milan, Italy 100% 100%Donna Karan (Italy) Production Services Srl Milan, Italy 100% 100%Fendi International BV Baarn, Netherlands 100% 100%Fun Fashion Bari Srl Bari, Italy 100% 100%Fen Fashion Hellas SA Athens, Greece 51% 51%Fendi Prague S.r.o. Prague, Czech Republic 100% 100%Luxury Kuwait for Ready Wear Company WLL Kuwait City, Kuwait 80% 58%Fun Fashion Qatar LLC Doha, Qatar (d) (d)

Fendi International SA Paris, France 100% 100%Fun Fashion Emirates LLC Dubai, United Arab Emirates (d) (d)

Fendi SA Luxembourg 100% 100%Fun Fashion Bahrain WLL Manama, Bahrain (d) (d)

Fendi Srl Rome, Italy 100% 100%Fendi Dis Ticaret LSi Istanbul, Turkey 100% 100%Fendi Adele Srl Rome, Italy 100% 100%Fendi Italia Srl Rome, Italy 100% 100%Fendi UK Ltd London, United Kingdom 100% 100%Fendi France SAS Paris, France 100% 100%Fendi Austria Vienna, Austria 100% 100%Fendi North America Inc New York, USA(*) 100% 100%Fendi Guam Inc Guam 100% 100%Fendi (Thailand) Company Ltd Bangkok, Thailand 100% 100%Fendi Asia Pacific Ltd Hong Kong, China 100% 100%





Control Interest


Control Interest

4|1_VA_V5 26/03/13 20:31 Page175

Fendi Korea Ltd Seoul, South Korea 100% 100%Fendi Taiwan Ltd Taipei, Taiwan 100% 100%Fendi Hong Kong Ltd Hong Kong, China 100% 100%Fendi China Boutiques Ltd Hong Kong, China 100% 100%Fendi (Singapore) Pte Ltd Singapore 100% 100%Fendi Fashion (Malaysia) Snd. Bhd. Kuala Lumpur, Malaysia 100% 100%Fendi Switzerland SA Geneva, Switzerland 100% 100%Fun Fashion FZCO LLC Dubai, United Arab Emirates 73% 73%Fendi Marianas Inc Guam 100% 100%Fun Fashion Kuwait Co. WLL Kuwait City, Kuwait (d) (d)

Fendi Macau Company Ltd Macao, China 100% 100%Fendi Germany GmbH Stuttgart, Germany 100% 100%Fun Fashion Napoli Srl Rome, Italy 100% 100%Fendi (Shanghai) Co Ltd Shanghai, China 100% 100%Fun Fashion India Pte Ltd Mumbai, India (d) (d)

Interservices & Trading SA Lugano, Switzerland 100% 100%Fendi Silk SA Lugano, Switzerland 51% 51%Outshine Mexico, S. de RL de C.V. Mexico City, Mexico 100% 100%Maxelle SA Neuchatel, Switzerland 100% 51%Taramax USA Inc New Jersey, USA 100% 51%Primetime Inc New Jersey, USA 100% 51%Taramax SA Neuchatel, Switzerland 51% 51%Taramax Japan KK Tokyo, Japan 100% 51%Support Retail Mexico, S. de RL de C.V. Mexico City, Mexico 100% 100%Fendi Brasil – Grupo de Moda Ltda São Paulo, Brazil 100% 100%Emilio Pucci Srl Florence, Italy 100% 100%Emilio Pucci International BV Baarn, Netherlands 67% 67%Emilio Pucci, Ltd New York, USA 100% 100%Emilio Pucci Hong Kong Co Ltd Hong Kong, China 100% 100%Emilio Pucci (Shanghai) Commercial Ltd Shanghai, China 100% 100%Emilio Pucci UK Ltd London, United Kingdom 100% 100%Thomas Pink Holdings Ltd London, United Kingdom 100% 100%Thomas Pink Ltd London, United Kingdom 100% 100%Thomas Pink BV Rotterdam, Netherlands 100% 100%Thomas Pink Inc New York, USA(*) 100% 100%Thomas Pink Ireland Ltd Dublin, Ireland 100% 100%Thomas Pink France SAS Paris, France 100% 100%Thomas Pink Canada Inc Toronto, Canada 100% 100%Edun Apparel Ltd Dublin, Ireland(b) 49% 49%Edun Americas Inc. North Carolina, USA(b) 49% 49%Nowness LLC New York, USA(*) 100% 100%

PERFUMES AND COSMETICS

Parfums Christian Dior SA Paris, France 100% 100%LVMH P&C Thailand Co Ltd Bangkok, Thailand 49% 49%LVMH Parfums & Cosmétiques do Brasil Ltda São Paulo, Brazil 100% 100%France Argentine Cosmetics SA Buenos Aires, Argentina 100% 100%LVMH P&C Shanghai Co Ltd Shanghai, China 100% 100%Parfums Christian Dior Finland Oy Helsinki, Finland 100% 100%LVMH P&C Inc New York, USA 100% 100%SNC du 33 avenue Hoche Paris, France 100% 100%LVMH Fragrances & Cosmetics (Sinpagore) Pte Ltd Singapore 100% 100%Parfums Christian Dior Orient Co Dubai, United Arab Emirates 60% 60%Parfums Christian Dior Emirates Dubai, United Arab Emirates 51% 31%LVMH Cosmetics KK Tokyo, Japan 100% 100%Parfums Christian Dior Arabia Riyadh, Saudi Arabia 75% 45%EPCD SP.Z.O.O. Warsaw, Poland 51% 51%EPCD CZ & SK SRO Prague, Czech Republic 100% 51%EPCD RO Distribution Srl Bucharest, Romania 100% 51%Parfums Christian Dior (UK) Ltd London, United Kingdom 100% 100%Parfums Christian Dior BV Rotterdam, Netherlands 100% 100%Iparkos BV Rotterdam, Netherlands 100% 100%Parfums Christian Dior S.A.B. Brussels, Belgium 100% 100%Parfums Christian Dior (Ireland) Ltd Dublin, Ireland 100% 100%Parfums Christian Dior Hellas SA Athens, Greece 100% 100%Parfums Christian Dior AG Zurich, Switzerland 100% 100%Christian Dior Perfumes LLC New York, USA 100% 100%Parfums Christian Dior Canada Inc Montreal, Canada 100% 100%LVMH P&C de Mexico SA de CV Mexico City, Mexico 100% 100%Parfums Christian Dior Japon KK Tokyo, Japan 100% 100%Parfums Christian Dior (Singapore) Pte Ltd Singapore 100% 100%Inalux SA Luxembourg 100% 100%LVMH P&C Asia Pacific Ltd Hong Kong, China 100% 100%Fa Hua Fragrance & Cosmetic Co Ltd Hong Kong, China 100% 100%Parfums Christian Dior China Shanghai, China 100% 100%LVMH P&C Korea Ltd Seoul, South Korea 100% 100%Parfums Christian Dior Hong Kong Ltd Hong Kong, China 100% 100%LVMH P&C Malaysia Sdn Berhad Inc Kuala Lumpur, Malaysia 100% 100%Pardior SA de CV Mexico City, Mexico 100% 100%Parfums Christian Dior A/S Ltd Copenhagen, Denmark 100% 100%

LVMH Perfumes & Cosmetics Group Pty Ltd Sydney, Australia 100% 100%Parfums Christian Dior AS Ltd Hoevik, Norway 100% 100%Parfums Christian Dior AB Stockholm, Sweden 100% 100%Parfums Christian Dior (New Zealand) Ltd Auckland, New Zealand 100% 100%Parfums Christian Dior GmbH Austria Vienna, Austria 100% 100%Cosmetic of France Inc Florida, USA 100% 100%LVMH Recherche GIE Saint-Jean-de Braye, France 100% 100%Parfums et Cosmétiques Information Services – PCIS GIE Levallois Perret, France 100% 100%Perfumes Loewe SA Madrid, Spain 100% 100%Acqua Di Parma Srl Milan, Italy 100% 100%Acqua Di Parma LLC New York, USA 100% 100%Guerlain SA Paris, France 100% 100%LVMH Parfums & Kosmetik Deutschland GmbH Dusseldorf, Germany 100% 100%Guerlain GmbH Vienna, Austria 100% 100%Guerlain SA (Belgique) Fleurus, Belgium 100% 100%Guerlain Ltd London, United Kingdom 100% 100%LVMH Perfumes e Cosmetica Lda Lisbon, Portugal 100% 100%PC Parfums Cosmétiques SA Zurich, Switzerland 100% 100%Guerlain Inc New York, USA 100% 100%Guerlain Canada Ltd Montreal, Canada 100% 100%Guerlain De Mexico SA Mexico City, Mexico 100% 100%Guerlain Asia Pacific Ltd Hong Kong, China 100% 100%Guerlain KK Tokyo, Japan 100% 100%Guerlain KSA Paris, France 100% 100%Guerlain Orient - JLT Dubai, United Arab Emirates 100% 100%Guerlain Oceania Australia Pty Ltd Melbourne, Australia 100% 100%Montecristo Elysées SAS Paris, France 100% 100%Make Up For Ever SA Paris, France 100% 100%SCI Edison Paris, France 100% 100%Make Up For Ever LLC New York, USA(*) 100% 100%Make Up For Ever Canada Ltd Montreal, Canada 100% 100%LVMH Fragrance Brands SA Levallois Perret, France 100% 100%LVMH Fragrance Brands Ltd London, United Kingdom 100% 100%LVMH Fragrance Brands GmbH Dusseldorf, Germany 100% 100%LVMH Fragrance Brands LLC New York, USA(*) 100% 100%LVMH Fragrance Brands Ltd Toronto, Canada 100% 100%LVMH Fragrance Brands KK Tokyo, Japan 100% 100%LVMH Fragrance Brands WHD Inc New York, USA(*) 100% 100%LVMH P&K GmbH Dusseldorf, Germany 100% 100%LVMH Fragrance Brands Singapore Pte Ltd Singapore 100% 100%BeneFit Cosmetics LLC California, USA 100% 100%BeneFit Cosmetics Ireland Ltd Dublin, Ireland 100% 100%BeneFit Cosmetics UK Ltd London, United Kingdom 100% 100%BeneFit Cosmetics Services Canada Inc Vancouver, Canada 100% 100%BeneFit Cosmetics Korea Seoul, South Korea 100% 100%BeneFit Cosmetics SAS Boulogne Billancourt, France 100% 100%BeneFit Cosmetics Hong Kong Limited Hong Kong, China 100% 100%BeneFit Cosmetics Malaysia Sdn Bhn Kuala Lumpur, Malaysia 100% 100%BeneFit Cosmetics Philippines Inc Taguig City, Philippines 100% 51%BeneFit Cosmetics South East Asia Pte Ltd Singapore 51% 51%Fresh Inc Massachusetts, USA 80% 80%Fresh Cosmetics Ltd London, United Kingdom 100% 80%Fresh Hong Kong Ltd Hong Kong, China 100% 80%Fresh Korea Ltd Seoul, South Korea 100% 80%

WATCHES AND JEWELRY

TAG Heuer International SA Luxembourg 100% 100%LVMH Swiss Manufactures SA La Chaux-de-Fonds, Switzerland 100% 100%LVMH Relojeria & Joyeria España SA Madrid, Spain 100% 100%LVMH Montres & Joaillerie France SA Paris, France 100% 100%LVMH Watch & Jewelry Central Europe GmbH Bad Homburg, Germany 100% 100%LVMH Watch & Jewelry UK Ltd Manchester, United Kingdom 100% 100%LVMH Watch & Jewelry USA Inc New Jersey, USA 100% 100%LVMH Watch & Jewelry Canada Ltd Toronto, Canada 100% 100%LVMH Watch & Jewelry Far East Ltd Hong Kong, China 100% 100%LVMH Watch & Jewelry Singapore Pte Ltd Singapore 100% 100%LVMH Watch & Jewelry Malaysia Sdn Bhd Kuala Lumpur, Malaysia 100% 100%LVMH Watch & Jewelry Capital Pte Ltd Singapore 100% 100%LVMH Watch & Jewelry Japan KK Tokyo, Japan 100% 100%LVMH Watch & Jewelry Australia Pty Ltd Melbourne, Australia 100% 100%LVMH Watch & Jewelry Hong Kong Ltd Hong Kong, China 100% 100%LVMH Watch & Jewelry Taiwan Ltd Hong Kong, China 100% 100%LVMH Watch & Jewelry India Pvt Ltd New Delhi, India 100% 100%LVMH Watch & Jewelry (Shanghai) Commercial Co Ltd Shanghai, China 100% 100%LVMH Watch & Jewelry Russia SARL Moscow, Russia 100% 100%Timecrown Ltd Worsley, United Kingdom 100% 100%ArteCad SA Tramelan, Switzerland 100% 100%Alpha Time Corp. Ltd Hong Kong, China 100% 100%





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Dream Tech (Shanghai) Co. Ltd Shanghai, China 100% 100%Dream Tech Intl Trading Co. Ltd Shanghai, China 100% 100%Chaumet International SA Paris, France 100% 100%Chaumet London Ltd London, United Kingdom 100% 100%Chaumet Horlogerie SA Bienne, Switzerland 100% 100%Chaumet Korea Chusik Hoesa Seoul, South Korea 100% 100%Chaumet Middle East FZCO Dubai, United Arab Emirates 60% 60%Chaumet UAE Dubai, United Arab Emirates 100% 60%Farouk Trading Riyadh, Saudi Arabia 100% 60%LVMH Watch & Jewelry Italy Spa Milan, Italy 100% 100%Delano SA La Chaux-de-Fonds, Switzerland 100% 100%Fred Paris SA Paris, France 100% 100%Joaillerie de Monaco SA Monaco 100% 100%Fred Inc California, USA(*) 100% 100%Fred Londres Ltd London, United Kingdom 100% 100%Dior Montres SARL Paris, France(a) 50% 50%Les Ateliers Horlogers Dior SA La Chaux-de-Fonds,

Switzerland(a) 50% 50%Hublot SA Nyon, Switzerland 100% 100%Bentim International SA Luxembourg 100% 100%Hublot SA Genève Geneva, Switzerland 100% 100%Hublot of America, Inc Florida, USA 100% 100%Hublot Japan KK Ltd Tokyo, Japan 100% 100%Profusion SARL Gland, Switzerland 100% 100%Nyon LLC Florida, USA 51% 51%De Beers Diamond Jewellers Ltd London, United Kingdom(a) 50% 50%De Beers Diamond Jewellers Trademark Ltd London, United Kingdom(a) 100% 50%De Beers Diamond Jewellers UK Ltd London, united Kingdom(a) 100% 50%De Beers Diamond Jewellers Japan KK Co Tokyo, Japan(a) 100% 50%De Beers Diamond Jewellers (Hong Kong) Ltd Hong Kong, China(a) 100% 50%De Beers Diamond Jewellers Limited Taiwan Taipei, Taiwan(a) 100% 50%De Beers Diamond Jewellers US. Inc Delaware, USA(a) 100% 50%De Beers Jewellers Commercial (Shanghai) Co, Ltd Shanghai, China(a) 100% 50%Bulgari SpA Rome, Italy 100% 100%Bulgari Italia SpA Rome, Italy 100% 100%Bulgari International Corporation (BIC) NV Amsterdam, Netherlands 100% 100%Bulgari Corporation of America Inc. New York, USA 100% 100%Bulgari SA Geneva, Switzerland 100% 100%Bulgari Horlogerie SA Neuchatel, Switzerland 100% 100%Bulgari France SAS Paris, France 100% 100%Bulgari Montecarlo SAM Monaco 100% 100%Bulgari (Deutschland) GmbH Munich, Germany 100% 100%Bulgari Espana SA Unipersonal Madrid, Spain 100% 100%Bulgari South Asian Operations Pte Ltd Singapore 100% 100%Bulgari (UK) Ltd London, United Kingdom 100% 100%Bulgari Belgium SA Brussels, Belgium 100% 100%Bulgari Australia Pty Ltd Sydney, Australia 100% 100%Bulgari (Malaysia) Sdn Bhd Kuala Lumpur, Malaysia 100% 100%Bulgari Global Operations SA Neuchatel, Switzerland 100% 100%Bulgari Asia Pacific Ltd Hong Kong, China 100% 100%Bulgari (Taiwan) Ltd Taipei, Taiwan 100% 100%Bulgari Korea Ltd Seoul, South Korea 100% 100%Bulgari Saint Barth SAS Saint Bartholomew,

French Antilles 100% 100%Bulgari Gioielli SpA Valenza, Italy 100% 100%Bulgari Accessori Srl Florence, Italy 100% 100%Bulgari Holdings (Thailand) Ltd Bangkok, Thailand 100% 100%Bulgari (Thailand) Ltd Bangkok, Thailand 100% 100%Bulgari Commercial (Shanghai) Co. Ltd Shanghai, China 100% 100%Bulgari Japan Ltd Tokyo, Japan 100% 100%Bulgari Panama Inc Panama City, Panama 100% 100%Bulgari Ireland Ltd Dublin, Ireland 100% 100%Bulgari Qatar Lcc Doha, Qatar (d) (d)

Bulgari Kuwait Wll Kuwait City, Kuwait (d) (d)

Bulgari do Brazil Ltda São Paulo, Brazil 100% 100%Bulgari Hotels & Resorts BV Amsterdam, Netherlands(a) 65% 65%Bulgari Hotels and Resorts Milano Srl Milan, Italy(a) 98% 65%

SELECTIVE RETAILING

LVMH Iberia SL Madrid, Spain 100% 100%LVMH Italia SpA Milan, Italy 100% 100%Sephora SA Boulogne Billancourt, France 100% 100%Sephora Luxembourg SARL Luxembourg 100% 100%Sephora Portugal Perfumaria Lda Lisbon, Portugal 100% 100%Sephora Pologne Spzoo Warsaw, Poland 100% 100%Sephora Marinopoulos SA Alimos, Greece 100% 100%Sephora Marinopoulos Romania SA Bucharest, Romania 100% 100%Sephora S.R.O. Prague, Czech Republic 100% 100%Sephora Monaco SAM Monaco 99% 99%Sephora Cosmeticos España Madrid, Spain(a) 50% 50%

S+ Boulogne Billancourt, France 100% 100%Sephora Marinopoulos Bulgaria EOOD Sofia, Bulgaria 100% 100%Sephora Marinopoulos Cyprus Ltd Nicosia, Cyprus 100% 100%Sephora Unitim Kozmetik AS Istanbul, Turkey 100% 100%Perfumes & Cosmeticos Gran Via SL Madrid, Spain(a) 45% 45%Sephora Marinopoulos D.O.O. Zagreb, Croatia 100% 100%Sephora Marinopoulos Cosmetics D.O.O. Belgrade, Serbia 100% 100%Sephora Nederland BV Amsterdam, Netherlands 100% 100%Sephora Danmark ApS Copenhagen, Denmark 100% 100%Sephora Moyen Orient SA Fribourg, Switzerland 60% 60%Sephora Middle East FZE Dubai, United Arab Emirates 100% 60%Sephora Asia Pte Ltd Shanghai, China 100% 100%Sephora (Shanghai) Cosmetics Co. Ltd Shanghai, China 81% 81%Sephora (Beijing) Cosmetics Co. Ltd Beijing, China 81% 81%Sephora Xiangyang (Shanghai) Cosmetics Co., Ltd Shanghai, China 100% 81%Sephora Singapore Pte Ltd Singapore 100% 100%Sephora USA Inc California, USA(*) 100% 100%Sephora Cosmetics Private Ltd News Delhi, India 100% 100%Sephora Beauty Canada, Inc California, USA 100% 100%Sephora Puerto Rico LLC California, USA 100% 100%Sephora Mexico, SRLCV Lomas de Chapultepec, Mexico 51% 51%Sephora Do Brasil Participacoes SA Rio de Janeiro, Brazil 100% 100%Dotcom group Comercio de Presentes SA Rio de Janeiro, Brazil 70% 70%Kendo Holdings Inc California, USA 100% 100%LGCS Inc New York, USA 100% 100%Ole Henriksen of Denmark Inc. California, USA 100% 100%Sephora Do Brazil – avenue Hoche São Paulo, Brazil 100% 100%Galonta Holdings Limited Nicosia, Cyprus 65% 65%United Europe - Securities OJSC Moscow, Russia 100% 65%Beauty in Motion Sdn. Bhd. Kuala Lumpur, Malaysia 100% 100%Le Bon Marché SA Paris, France 100% 100%SEGEP SNC Paris, France 99% 99%Franck & Fils SA Paris, France 100% 100%DFS Holdings Ltd Hamilton, Bermuda 61% 61%DFS Australia Pty Ltd Sydney, Australia 100% 61%DFS Group Ltd Delaware, USA 100% 61%DFS China Partners Ltd Hong Kong, China 100% 61%DFS Hong Kong Ltd Hong Kong, China 100% 61%TRS Hong Kong Ltd Hong Kong, China(b) 45% 28%DFS France SAS Paris, France 100% 61%DFS Okinawa KK Okinawa, Japan 100% 61%TRS Okinawa Okinawa, Japan(b) 45% 28%JAL/DFS Co., Ltd Chiba, Japan(b) 40% 24%DFS Korea Ltd Seoul, South Korea 100% 61%DFS Seoul Ltd Seoul, South Korea 100% 61%DFS Cotai Limitada Macao, China 100% 61%DFS Sdn. Bhd. Kuala Lumpur, Malaysia 100% 61%Gateshire Marketing Sdn Bhd Kuala Lumpur, Malaysia 100% 61%DFS Merchandising Ltd Delaware, USA 100% 61%DFS New Caledonia Sarl Noumea, New Caledonia 100% 61%DFS New Zealand Ltd Auckland, New Zealand 100% 61%TRS New Zealand Ltd Auckland, New Zealand(b) 45% 28%Commonwealth Investment Company Inc Saipan, Mariana Islands 97% 59%DFS Saipan Ltd Saipan, Mariana Islands 100% 61%Kinkaï Saipan LP Saipan, Mariana Islands 100% 61%Saipan International Boutique Partners Saipan, Mariana Islands(b) 50% 31%DFS Palau Ltd Koror, Palau 100% 61%DFS Business consulting (Shanghai) Co. Ltd Shanghai, China 100% 61%Hainan DFS Retail Company Limited Hainan, China 100% 61%DFS Taiwan Ltd Taipei, Taiwan 100% 61%Tou You Duty Free Shop Co. Ltd Taipei, Taiwan 100% 61%DFS Singapore (Pte) Ltd Singapore 100% 61%DFS Trading Singapore (Pte) Ltd Singapore 100% 61%DFS Venture Singapore (Pte) Ltd Singapore 100% 61%TRS Singapore Pte Ltd Singapore(b) 45% 28%Singapore International Boutique Partners Singapore(b) 50% 31%DFS India Private Ltd Mumbai, India 70% 43%DFS Vietnam (S) Pte Ltd Singapore 70% 43%New Asia Wave International Pte Ltd Singapore 70% 43%IPP Group Pte Ltd Singapore 70% 43%L Development & Management Ltd Hong Kong, China(b) 40% 25%DFS Group LP Delaware, USA 61% 61%LAX Duty Free Joint Venture 2000 California, USA 77% 47%Royal Hawaiian Insurance Company Ltd Hawaii, USA 100% 61%Hawaii International Boutique Partners Hawaii, USA(b) 50% 31%JFK Terminal 4 Joint Venture 2001 New York, USA 80% 49%DFS Guam LP Guam 61% 61%Guam International Boutique Partners Guam(b) 50% 31%DFS Liquor Retailing Ltd Delaware, USA 61% 61%Twenty Seven – Twenty Eight Corp. Delaware, USA 61% 61%TRS Hawaii LLC Hawaii, USA(b) 45% 28%TRS Saipan Ltd Saipan, Mariana Islands(b) 45% 28%TRS Guam LLC Guam(b) 45% 28%





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(*) The address given corresponds to the company’s administrative headquarters; the corporate registered office is located in the state of Delaware.(a) Consolidated on a proportional basis.(b) Accounted for using the equity method.(c) Joint venture companies with Diageo: only the Moët Hennessy activity is consolidated.(d) The Group’s percentages of control and interest are not disclosed, the result of these companies being consolidated on the basis of the Group’s contractual share in their business.

Tumon Entertainment LLC Guam 100% 100%Comete Guam Inc Guam 100% 100%Tumon Aquarium LLC Guam 97% 97%Comete Saipan Inc Saipan, Mariana Islands 100% 100%Tumon Games LLC Guam 100% 100%DFS Vietnam LLC Ho Chi Minh City, Vietnam 100% 61%PT Sona Topas Tourism industry Tbk Jakarta, Indonesia(b) 45% 28%Cruise Line Holdings Co Delaware, USA 100% 100%Starboard Cruise Services Inc Delaware, USA 100% 100%Starboard Holdings Ltd Delaware, USA 100% 100%International Cruise Shops Ltd Cayman Islands 100% 100%Vacation Media Ltd Kingston, Jamaica 100% 100%STB Srl Florence, Italy 100% 100%On Board Media Inc Delaware, USA 100% 100%Parazul LLC Delaware, USA 100% 100%Onboard.com LLC Delaware, USA 100% 100%Y.E.S. Your Extended Services LLC Delaware, USA(a) 33% 33%

OTHER ACTIVITIES

Groupe Les Echos SA Paris, France 100% 100%Les Echos Services SAS Paris, France 100% 100%Radio Classique SAS Paris, France 100% 100%Prélude & Fugue SAS Paris, France(b) 49% 49%DI Régie SAS Paris, France 100% 100%SFPA SARL Paris, France 100% 100%La Fugue SAS Paris, France 100% 100%Les Echos SAS Paris, France 100% 100%Hera SAS Paris, France 100% 100%Percier Publications SNC Paris, France 100% 100%Investir Publications SAS Paris, France 100% 100%SID Développement SAS Paris, France 100% 100%SID Presse SAS Paris, France 100% 100%Magasins de la Samaritaine SA Paris, France 99% 99%Société Financière de la Samaritaine SA Paris, France 99% 98%DMB Gestion SARL Paris, France 100% 98%Mongoual SA Paris, France(b) 40% 40%Le Jardin d’Acclimatation Paris, France 99% 99%RVL Holding BV Kaag, Netherlands 91% 91%Royal Van Lent Shipyard BV Kaag, Netherlands 100% 91%Tower Holding BV Kaag, Netherlands 100% 91%Green Bell BV Kaag, Netherlands 100% 91%Gebroeders Olie Beheer BV Waddinxveen, Netherlands 100% 91%Van der Loo Yachtinteriors BV Waddinxveen, Netherlands 100% 91%Red Bell BV Kaag, Netherlands 100% 91%De Voogt Naval Architects BV Haarlem, Netherlands(b) 50% 46%Feadship Holland BV Amsterdam, Netherlands(b) 50% 46%Feadship America Inc Florida, USA(b) 50% 46%OGMNL BV Nieuw-Lekkerland,

Netherlands(b) 50% 46%Probinvest SAS Boulogne Billancourt, France 100% 100%Ufipar SAS Boulogne Billancourt, France 100% 100%L Capital Management SAS Paris, France 100% 100%Sofidiv SAS Boulogne Billancourt, France 100% 100%

GIE LVMH Services Boulogne Billancourt, France 100% 85%Moët Hennessy SNC Boulogne Billancourt, France 66% 66%LVMH Services Ltd London, United Kingdom 100% 100%UFIP (Ireland) PRU Dublin, Ireland 100% 100%Moët Hennessy Investissements SA Boulogne Billancourt, France 100% 66%LVMH Fashion Group SA Paris, France 100% 100%Moët Hennessy International SAS Boulogne Billancourt, France 66% 66%Creare SA Luxembourg 100% 86%Creare Pte Ltd Singapore 100% 86%Société Montaigne Jean Goujon SAS Paris, France 100% 100%Delphine SAS Boulogne Billancourt, France 100% 100%LVMH Finance SA Boulogne Billancourt, France 100% 100%Primae SAS Boulogne Billancourt, France 100% 100%Eutrope SAS Boulogne Billancourt, France 100% 100%Flavius Investissements SA Paris, France 100% 100%LBD HOLDING SA Boulogne Billancourt, France 100% 100%Eley Finance SA Boulogne Billancourt, France 100% 100%Ashbury Finance SA Boulogne Billancourt, France 100% 100%Ivelford Business SA Boulogne Billancourt, France 100% 100%Bratton Service SA Boulogne Billancourt, France 100% 100%LVMH Hotel Management SAS Boulogne Billancourt, France 100% 100%Altair Holding LLC New York, USA(*) 100% 100%Moët Hennessy Inc New York, USA(*) 100% 66%One East 57th Street LLC New York, USA(*) 100% 100%LVMH Moët Hennessy Louis Vuitton Inc New York, USA(*) 100% 100%Moët Hennessy Acquisition Sub Inc New York, USA(*) 100% 66%Sofidiv Art Trading LLC New York, USA(*) 100% 100%Sofidiv Inc New York, USA(*) 100% 100%598 Madison Leasing Corp New York, USA(*) 100% 100%1896 Corp New York, USA(*) 100% 100%319-323 N. Rodeo LLC New York, USA(*) 100% 100%LVMH Participations BV Naarden, Netherlands 100% 100%LVMH Moët Hennessy Louis Vuitton BV Naarden, Netherlands 100% 100%LVP Holding BV Naarden, Netherlands 100% 100%LVMH Services BV Baarn, Netherlands 100% 100%LVMH Finance Belgique SA Brussels, Belgium 100% 100%Hannibal SA Luxembourg 100% 100%L Real Estate SA Luxembourg(b) 49% 49%Ufilug SA Luxembourg 100% 100%Delphilug SA Luxembourg 100% 100%Glacea SA Luxembourg 100% 100%Naxara SA Luxembourg 100% 100%Pronos SA Luxembourg 100% 100%Hanninvest SA Brussels, Belgium 100% 100%LVMH Publica SA Brussels, Belgium 100% 100%Sofidiv UK Ltd London, United Kingdom 100% 100%LVMH Moët Hennessy Louis Vuitton KK Tokyo, Japan 100% 100%Osaka Fudosan Company Ltd Tokyo, Japan 100% 100%LVMH Asia Pacific Ltd Hong Kong, China 100% 100%LVMH Shanghai Management and Consultancy Co, Ltd Shanghai, China 100% 100%L Capital Asia Advisors PLC Port Louis, Mauritius 100% 100%LVMH South & South East Asia Pte Ltd Singapore 100% 100%

LVMH Moët Hennessy – Louis Vuitton SA Paris, France Parent company





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Statutory Auditors’ report on the consolidated financial statements


STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS


In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year endedDecember 31, 2012, on:

- the audit of the accompanying consolidated financial statements of the company LVMH Moët Hennessy – Louis Vuitton;- the justification of our assessments;- the specific verification required by law.

These consolidated financial statements have been approved by your Board of Directors. Our role is to express an opinion on theseconsolidated financial statements based on our audit.

I. Opinion on the consolidated financial statements

We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of materialmisstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain auditevidence about the amounts and disclosures in the consolidated financial statements. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentationof the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial positionof the Group as at December 31, 2012, and of the results of its operations for the year then ended in accordance with InternationalFinancial Reporting Standards as adopted by the European Union

II. Justification of our assessments

In accordance with the requirements of Article L. 823-9 of the French Commercial Code (Code de commerce) relating to thejustification of our assessments, we bring to your attention the following matters:

• the valuation of brands and goodwill has been tested under the method described in Note 1.12 to the consolidated financialstatements. Based on the aforementioned, we have assessed the appropriateness of the methodology applied based on certainestimates and have reviewed the data and assumptions used by the Group to perform these valuations;

• we have verified that Note 1.10 to the consolidated financial statements provides an appropriate disclosure on the accountingtreatment of commitments to purchase minority interests, as such treatment is not provided for by the IFRS framework asadopted by the European Union.

These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and thereforecontributed to the opinion we formed which is expressed in the first part of this report.

4|1_VA_V5 26/03/13 20:31 Page179

III. Specific verification

As required by law we have also verified in accordance with professional standards applicable in France the information presented inthe Group’s Management Report.

We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.



DELOITTE & ASSOCIÉS ERNST & YOUNG et Autres



This is a free translation into English of the Statutory Auditors’ report on the consolidated financial statements issued in French and it is providedsolely for the convenience of English-speaking users.

The Statutory Auditors’ report includes information specifically required by French law in such reports, whether modified or not. This information ispresented below the audit opinion on the consolidated financial statements and includes an explanatory paragraph discussing the auditors’ assessmentsof certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on theconsolidated financial statements taken as a whole and not to provide separate assurance on individual account balances, transactions or disclosures.

This report also includes information relating to the specific verification of information given in the Group’s Management Report.

This report should be read in conjunction with and construed in accordance with French law and professional auditing standards applicable in France.


Statutory Auditors’ report on the consolidated financial statements

4|1_VA_V5 26/03/13 20:31 Page180

FINANCIAL STATEMENTSParent company financial statements: LVMH Moët Hennessy – Louis Vuitton

INCOME STATEMENT 182BALANCE SHEET 183CASH FLOW STATEMENT 184NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS 185INVESTMENT PORTFOLIO 202SUBSIDIARIES AND INVESTMENTS 203COMPANY RESULTS OVER THE LAST FIVE FISCAL YEARS 204STATUTORY AUDITORS’ REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS 205STATUTORY AUDITORS’ SPECIAL REPORT ON REGULATED RELATED PARTY AGREEMENTS AND COMMITMENTS 207


4|2_VA_V5 26/03/13 20:31 Page181

INCOME STATEMENT

Income/(Expenses) (EUR millions) Notes 2012 2011

Income from subsidiaries and investments 1,950.7 2,603.1Investment portfolio: impairment and provisions 8.2 52.1

gains and losses on disposal - -Income from managing subsidiaries and investments 4.1 1,958.9 2,655.2

Cost of net financial debt 4.2 (133.6) (158.9)Foreign exchange gains and losses 4.3 4.4 (87.7)Other financial income and expense 4.4 (5.9) 12.0

FINANCIAL INCOME/(EXPENSE) 4 1,823.8 2,420.6

Services provided and other income 5 222.9 180.0Personnel costs 6 (77.0) (122.5)Other net management charges 7 (238.8) (217.7)

OPERATING PROFIT/(LOSS) (92.9) (160.2)

PROFIT FROM RECURRING OPERATIONS BEFORE TAX 1,730.9 2,260.4

EXCEPTIONAL INCOME/(EXPENSE) 8 - -

Income tax (income)/expense 9 (64.2) 65.1

NET PROFIT 1,666.7 2,325.5



Parent company financial statements: LVMH Moët Hennessy – Louis Vuitton

4|2_VA_V5 26/03/13 20:31 Page182

BALANCE SHEET

ASSETS Notes 2012 2011(EUR millions)

Gross Depreciation, Net Net amortization and impairment

Intangible assets - - - -

Vineyards 44.7 - 44.7 38.6Other property, plant and equipment 9.0 (1.1) 7.9 7.5

Property, plant and equipment 10 53.7 (1.1) 52.6 46.1

Investments 11 18,499.9 (1,298.2) 17,201.7 17,138.1LVMH treasury shares 12 306.4 - 306.4 353.4Other non-current financial assets 0.3 - 0.3 0.3

Non-current financial assets 18,806.6 (1,298.2) 17,508.4 17,491.8

NON-CURRENT ASSETS 18,860.3 (1,299.3) 17,561.0 17,537.9

Receivables 13 567.1 (4.5) 562.6 481.3LVMH treasury shares 12 107.8 - 107.8 128.1Cash and cash equivalents 34.7 - 34.7 24.1

CURRENT ASSETS 709.6 (4.5) 705.1 633.5

Prepayments and accrued income 14 143.4 - 143.4 147.3

TOTAL ASSETS 19,713.3 (1,303.8) 18,409.5 18,318.7

LIABILITIES AND EQUITY Notes 2012 2011(EUR millions)

Before Before appropriation appropriation

Share capital (fully paid up) 15.1 152.4 152.3Share premium account 15.2 3,848.4 3,801.4Reserves and revaluation adjustments 16 583.0 583.0Retained earnings 4,937.3 3,907.9Interim dividends (550.0) (398.6)Profit for the year 1,666.7 2,325.5Regulated provisions 0.1 0.1

EQUITY 15.2 10,637.9 10,371.6

PROVISIONS FOR LOSSES AND CONTINGENCIES 17 792.8 906.5

Bonds 18 3,922.9 4,021.9Other financial debt 18 2,776.1 2,837.0Other debt 19 238.5 181.7

OTHER LIABILITIES 6,937.5 7,040.6

Accruals and deferred income 20 41.3 -

TOTAL LIABILITIES AND EQUITY 18,409.5 18,318.7




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CASH FLOW STATEMENT

(EUR millions) 2012 2011

OPERATING ACTIVITIES Net profit 1,666.7 2,325.5Depreciation, amortization and impairment of fixed assets (63.5) (146.4)Change in other provisions (117.6) 107.4Gains on sale of fixed assets and LVMH treasury shares 19.7 (0.8)

CASH FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 1,505.3 2,285.7

Change in inter-company current accounts (60.8) 473.1Change in other receivables and payables 16.8 1.9

NET CASH FROM OPERATING ACTIVITIES 1,461.3 2,760.7

INVESTING ACTIVITIES Purchase of tangible and intangible fixed assets (6.6) (3.9)Purchase of equity investments - (2,231.0)Proceeds from sale of equity investments and similar transactions 0.3 -Subscription to capital increases carried out by subsidiaries (0.5) -

NET CASH FROM/(USED IN) INVESTING ACTIVITIES (6.8) (2,234.9)

FINANCING ACTIVITIES Capital increase 94.1 94.0Change in LVMH treasury shares 4.8 2.1Dividends and interim dividends paid during the year (1,446.8) (1,069.2)Proceeds from issuance of financial debt 680.4 1,246.7Repayments in respect of financial debt (776.4) (839.9)(Acquisition)/disposal of listed securities - -

NET CASH USED IN FINANCING ACTIVITIES (1,443.9) (566.3)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 10.6 (40.5)

CASH AND CASH EQUIVALENTS AT BEGINNING OF FISCAL YEAR 24.1 64.6CASH AND CASH EQUIVALENTS AT END OF FISCAL YEAR 34.7 24.1




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NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

1. BUSINESS ACTIVITY AND KEY EVENTS DURING THE FISCAL YEAR 1862. ACCOUNTING POLICIES AND METHODS 1863. SIGNIFICANT SUBSEQUENT EVENTS 1884. FINANCIAL INCOME/(EXPENSE) 1895. SERVICES PROVIDED AND OTHER INCOME 1906. PERSONNEL COSTS 1907. OTHER NET MANAGEMENT CHARGES 1918. EXCEPTIONAL INCOME/(EXPENSE) 1919. INCOME TAXES 19110. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT 19211. EQUITY INVESTMENTS 19212. TREASURY SHARES AND RELATED DERIVATIVES 19313. RECEIVABLES 19514. PREPAYMENTS AND ACCRUED INCOME 19515. SHARE CAPITAL AND SHARE PREMIUM ACCOUNT 19616. RESERVES AND REVALUATION ADJUSTMENTS 19617. MOVEMENTS IN IMPAIRMENT AND PROVISIONS 19718. GROSS BORROWINGS 19819. OTHER DEBT 20020. ACCRUALS AND DEFERRED INCOME 20021. MARKET RISK EXPOSURE 20022. OTHER INFORMATION 201

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2.1. General framework; changes in accounting policies

The balance sheet and income statement of LVMH have beenprepared in accordance with French legal requirements, particularlyRegulation 99-03 of the CRC (Comité de la RéglementationComptable); it should be noted that presentation of the incomestatement was modified in 2011.

The presentation used for the income statement is designed toclearly distinguish the Company’s two categories of activities: itsactivities in asset management, related to its equity investments,and its activities in the management and coordination of theoperational activities of all entities within the LVMH group, asdescribed in Note 1.1.

The presentation of the income statement includes three maincomponents of profit or loss: net financial income/expense, netoperating income/expense and net exceptional income/expense.The total of net financial income/expense and net operatingprofit/loss corresponds to profit from recurring operationsbefore tax.

Net financial income includes net income from the managementof subsidiaries and other investments, the cost of net financialdebt relating, in essence, to the holding of these investments,as well as other items resulting from the management ofsubsidiaries or of financial debt, particularly gains or losses on foreign exchange or hedging instruments. Net income from the management of subsidiaries and other investmentsincludes all portfolio management items: dividends, changes inimpairment, changes in provisions for contingencies and lossesrelated to the portfolio, and gains or losses arising on the disposalof investments.

Operating profit/loss includes costs related to the managementof the Company and to the Group’s operational managementand coordination costs, personnel costs or other administrativecosts, less the amount recharged to the subsidiaries, either via theinvoicing of management support services or via the rechargingof expenses paid by the Group on behalf of these entities.

Net financial income/expense and net operating profit/lossinclude items relating to the financial management of theCompany or administrative operations, irrespective of theiramounts or their occurrence. Net exceptional income/expensethus comprises only those transactions that, due to their nature,may not be included in net financial income/expense oroperating profit/loss.

2.2. Property, plant and equipment

Property, plant and equipment are stated at acquisition cost(purchase price and incidental costs, excluding acquisitionexpenses) or at contribution value, with the exception of property,plant and equipment acquired prior to December 31, 1976 whichwas revalued in 1978 (revaluation pursuant to the French lawof 1976).

Property, plant and equipment are depreciated, where applicable,on a straight-line basis over their estimated useful lives; thefollowing useful lives are applied:

- vehicles 4 years- fixtures, furniture and leasehold improvements 5 to 10 years

Vineyard land is not subject to depreciation.

2.3. Non-current financial assets

Non-current financial assets, excluding receivables, loans anddeposits, are stated at acquisition cost (excluding incidental costs)or at contribution value.

When net realizable value as of the year-end is lower than thecarrying amount, a provision is recorded in the amount of the difference. The net realizable value is measured with referenceto the value in use or the net selling price. Value in use is basedon the entities’ forecast future cash flows; the net selling priceis calculated with reference to ratios or share prices of similarentities, on the basis of valuations performed by independentexperts or by comparison with recent similar transactions.

2. ACCOUNTING POLICIES AND METHODS

1.1. Business activity

In addition to managing its portfolio of investments in itscapacity as the Group’s holding company, LVMH Moët Hennessy– Louis Vuitton SA (“LVMH”, “the Company”) manages andcoordinates the operational activities of all of its subsidiaries,and offers them various management support services, forwhich they are invoiced, particularly in legal, financial, tax andinsurance matters.

1.2. Key events during the fiscal year

Nil.

1. BUSINESS ACTIVITY AND KEY EVENTS DURING THE FISCAL YEAR



Notes to the parent company financial statements

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Changes in the amount of provisions for impairment of the equityinvestment portfolio are classified under income from managingsubsidiaries and investments.

Portfolio investments held as of December 31, 1976 were revaluedin 1978 (revaluation pursuant to the French law of 1976).

2.4. Accounts receivable

Accounts receivable are recorded at their face value. Impairmentfor doubtful accounts is recorded if their net realizable value,based on the probability of their collection, is lower than theircarrying amount.

2.5. Short term investments

Short term investments, including money market investmentson which interest is rolled up, are stated at acquisition cost(excluding transaction costs); when their market value is lowerthan their acquisition cost, an impairment expense is recordedin Financial income/expense for the amount of the difference.

The market value of listed investments is calculated based onaverage listed share prices during the last month of the year andtranslated, where applicable, at year-end exchange rates. Themarket value of non-listed securities is calculated based on theirestimated realizable value.

This calculation is performed on a line-by-line basis, withoutoffsetting any unrecognized capital gains and losses.

In the event of partial investment sales, any gains or losses arecalculated based on the FIFO method.

2.6. LVMH treasury shares and LVMH-sharesettled derivatives; stock option and bonus share plans

2.6.1. LVMH treasury shares

Treasury shares acquired under share repurchase programs orunder the terms of the liquidity contract are recorded as shortterm investments with the exception of shares held on a longterm basis, or intended to be cancelled or exchanged at a laterdate, which are recorded as Non-current financial assets.

Treasury shares held for share purchase option plans and bonusshares are allocated to these plans.

Treasury shares are recorded, on their date of delivery, at theiracquisition cost excluding transaction costs.

The cost of disposals is determined by allocation category usingthe FIFO method, with the exception of shares held in sharepurchase option plans for which the calculation is performed foreach plan individually using the weighted average cost method.

2.6.2. Impairment of LVMH treasury shares

If the market value of LVMH shares recorded in short terminvestments, calculated in accordance with the method describedin Note 2.5 above, falls below their acquisition cost, impairmentin the amount of the difference is recognized and charged to Netfinancial income/expense, under Other financial income/expense.

With respect to LVMH shares allocated to share purchaseoption plans:

- if the plan is non-exercisable (market value of the LVMH sharelower than the exercise price of the option), the calculation of the impairment, charged to Operating profit under theheading Personnel costs, is made in relation to the average priceof all non-exercisable plans involved;

- if the plan is exercisable (market value of the LVMH sharegreater than the exercise price of the option), a provision forlosses is recognized and calculated as described in §2.6.3 below.

No impairment is recognized for LVMH shares allocated to bonusshare plans or shares recorded in long term investments.

2.6.3. Expense relating to stock option and bonus share plans based on LVMH treasury shares

The expense relating to stock option and bonus share plans basedon LVMH shares is allocated on a straight-line basis over thevesting periods for the plans. It is recognized in the incomestatement under the heading Salaries and social charges, offsetby a provision for losses recorded in the balance sheet.

The expense relating to stock option and bonus share plansbased on LVMH shares is calculated as follows:

- for share purchase option plans, as the difference between the portfolio value of shares allocated to these plans and thecorresponding exercise price, if lower;

- for bonus share plans, as the portfolio value of shares allocatedto these plans.

Share subscription option plans do not give rise to the recognitionof an expense.

2.6.4. LVMH-share settled derivatives

Under the terms of share purchase option plans, as an alternativeto holding shares allocated to these plans, LVMH may acquirederivatives settled in shares. These derivatives consist of LVMHshare purchase options (“calls”), acquired when the plan was set up or after that date until the end of the vesting period. The premiums paid in respect of these options are recognizedas assets in Other receivables. These premiums give rise whereapplicable to the recognition of impairment charged to theheading Other financial income/expense; this impairment isdetermined according to the same rules as those defined abovefor LVMH shares allocated to the share option plans, with the value of LVMH shares held in the portfolio being replacedfor these purposes by the amount of the premium paidsupplemented by the exercise price of the calls.




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3. SIGNIFICANT SUBSEQUENT EVENTS

There were no significant subsequent events as of January 31, 2013, the date on which the Board of Directors approved the financialstatements for publication.

2.7. Income from equity investments

Amounts distributed by subsidiaries and other investments, inaddition to the share in income from partnerships subject to statutory clauses providing for the allocation of income topartners, are recognized as of the date that they accrue to theshareholders or partners.

2.8. Foreign currency transactions

Foreign currency transactions are recorded at the exchange ratesprevailing on the dates of transactions.

Foreign currency receivables and payables are revalued at year-end exchange rates and any resulting unrealized gains andlosses are recorded in the cumulative translation adjustment.Provisions are recorded for unrealized foreign exchange lossesat year-end, except for losses offset by potential gains in thesame currency.

Year-end foreign exchange gains and losses on foreign currencycash and cash equivalents are recorded in the income statement.

2.9. Hedging instruments

Gains and losses arising from derivatives are recognized as Netfinancial income/expense, under Foreign exchange gains andlosses in the case of foreign exchange derivatives, and underOther financial income/expenses for interest rate derivatives.

Foreign exchange derivatives are remeasured at year-end exchangerates:

• in the case of derivatives designated as hedging instruments,any unrealized gains or losses resulting from this remeasurementare:- recorded in the income statement as an offset against

unrealized gains and losses on the assets and liabilitieshedged by these instruments;

- deferred, if these instruments have been allocated to futuretransactions.

• in the case of derivatives not designated as hedging instruments:- any unrealized gains resulting from their remeasurement at

year-end exchange rates are deferred, while only gains realizeddefinitively on the maturity of the instrument are taken tothe income statement;

- any unrealized losses give rise to a provision for losses.

Interest rate derivatives designated as hedging instruments are recognized on a pro rata basis over the term of the contracts,without any impact on the face value of the debt whose rate is hedged.

Interest rate derivatives not designated as hedging instrumentsare remeasured at market value as of the balance sheet date.Any unrealized gains resulting from this remeasurement aredeferred; any unrealized losses give rise to a provision for losses.

2.10. Bond issue premiums

Bond issue premiums are amortized over the life of bonds. Issuecosts are expensed upon issuance.

2.11. Provisions

A provision is recognized whenever an obligation existstowards a third party resulting in a probable disbursement forthe company, the amount of which may be reliably estimated.

2.12. Income tax: tax consolidation agreement

LVMH is the parent company of a tax group comprising mostof its French subsidiaries (Article 223-A et seq. of the FrenchGeneral Tax Code). In the majority of cases, the tax consolidationagreement does not alter the tax expense or the right to thebenefit from the tax losses carried forward of the subsidiariesconcerned: their tax position with respect to LVMH, insofar as they remain part of the tax group, remains identical to thatwhich would have been reported had the subsidiaries beentaxed individually. Any additional tax savings or tax expense,in other words, the sum of any difference between the taxrecognized by each consolidated company and the tax resultingfrom the calculation of taxable income for the tax group, isrecognized by LVMH.




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4. FINANCIAL INCOME/(EXPENSE)

4.1. Income from managing subsidiaries and investments

The income from managing subsidiaries and investments breaks down as follows:


Dividends received from French companies 1,670.2 2,333.3Share of income from French partnerships 280.5 269.8

Financial income from subsidiaries and other investments 1,950.7 2,603.1

Changes in impairment 63.6 146.6Changes in provisions for losses and contingencies (55.4) (94.5)

Impairment and provisions related to subsidiaries and other investments 8.2 52.1

Income from managing subsidiaries and investments 1,958.9 2,655.2

The change in income from investments from French subsidiaries and investments is primarily attributable to the decrease in thedividends paid by LV Group SA, formerly LVMH Fashion Group SA, and Parfums Christian Dior SA of 1,080 million euros and 30 million euros, respectively, given that exceptional dividends were distributed by these subsidiaries in 2011, and to the increasein dividends paid by Sofidiv SAS and Moët Hennessy International SAS of 320 million euros and 137 million euros, respectively.

See also Note 17 concerning the change in impairment and provisions.

4.2. Cost of net financial debt

The cost of the net financial debt, including the impact of interest rate hedging instruments, breaks down as follows:


Interest and premiums on bonds (99.1) (128.4)Interest on other debt (1.6) (2.9)Financial income and revenue 4.8 4.7

Cost of non-Group net financial debt (95.9) (126.6)

Intra-Group interest expense (37.7) (35.1)Intra-Group interest income - 2.8

Cost of intra-Group net financial debt (37.7) (32.3)

Cost of net financial debt (133.6) (158.9)

4.3. Foreign exchange gains and losses

Foreign exchange gains and losses comprise the following items:


Foreign exchange gains 179.0 242.0Foreign exchange losses (299.7) (332.3)Changes in provisions for unrealized foreign exchange losses 125.1 2.6

Foreign exchange gains and losses 4.4 (87.7)

Regarding the change in provisions, please also refer to Note 17.

Foreign exchange gains and losses correspond to those arising on the outstanding borrowings denominated in foreign currency and foreign exchange derivatives entered into for the purposes described in Note 18.4 and 21 (Foreign currency net investmenthedges of subsidiaries).




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Due to the nature of the Company’s business, as describedunder Note 1.1 Business activity, a significant portion of thiscompensation is reinvoiced to Group companies in connectionwith management support services.

The total gross compensation paid to company officers andmembers of the Company’s Executive Committee for 2012amounted to 34 million euros, including 1.0 million euros indirectors’ fees.

6.1. Gross compensation

Personnel costs include gross remuneration and employers’ socialcharges, post-employment benefits, other long term benefits

and the cost of stock option and similar plans (see Note 6.2 and 12.3.2).

6. PERSONNEL COSTS

Services provided and other income relates exclusively tosubsidiaries:

- services provided consist of support services (See Note 1.1Business activity);

- recharged expenses refer to expenses incurred by LVMH onaccount of related companies;

- real estate revenue is attributable to the lease of Champagnevineyards owned by LVMH.

Beginning with the 2012 fiscal year, the cost of share purchaseoptions exercised and of definitively allocated bonus shares isrecharged to the subsidiaries employing the beneficiaries.

4.4. Other financial income and expense

The amount of Other financial income and expenses breaks down as follows:


Income and expenses from LVMH shares and LVMH share-based calls 2.1 2.3Other financial income 2.8 32.2Other financial expense (11.2) (22.7)Changes in provisions 0.4 0.2

Other financial income and expense (5.9) 12.0

See also Note 17 on changes in provisions.

5. SERVICES PROVIDED AND OTHER INCOME

Services provided and other income break down as follows:


Services provided 124.9 111.6Recharged expenses 91.0 61.7Real estate revenue 7.0 6.7

Total 222.9 180.0




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8. EXCEPTIONAL INCOME/(EXPENSE)

Nil.

9. INCOME TAXES

9.1. Breakdown of corporate income tax

Corporate income tax breaks down as follows:

(EUR millions) Profit Tax (expense)/ Net before tax income profit

Profit from recurring operations 1,730.9 (147.9) 1,583.0Exceptional income/(expense) - - -

1,730.9 (147.9) 1,583.0Tax in respect of prior years - (2.5) (2.5)Impact of tax consolidation - 86.2 86.2

1,730.9 (64.2) 1,666.7


Management charges comprise in particular rent, fees, insurancepremiums and communication expenses.

Due to the nature of the Company’s business, as describedunder Note 1.1 Business activity, a significant portion of Othermanagement charges are re-invoiced to Group companies,either in connection with management support services or withthe rebilling of expenses incurred on their behalf.

Also, in 1994, at the time when Diageo acquired a stake in theMoët Hennessy group, an agreement was concluded between

Diageo and LVMH for the apportionment of common holdingcompany expenses between Moët Hennessy SNC and the otherholding companies of the LVMH group, including the parentcompany, LVMH. Pursuant to this agreement, the proportionof common holding company expenses reinvoiced by MoëtHennessy to LVMH amounted to 110 million euros in 2012.

Taxes, duties and similar levies recognized in Other managementcharges amounted to 5 million euros for fiscal year 2012(3.6 million euros in 2011).

6.3. Average headcount

In 2012, the Company had an average headcount of 22 (2011: 23; 2010: 22).

7. OTHER NET MANAGEMENT CHARGES

These commitments mainly relate to members of the ExecutiveCommittee who, after a certain length of service in their function,benefit from a supplementary pension plan, the amount ofwhich is determined on the basis of the average of the threehighest amounts of yearly remuneration.

As of December 31, 2012, the commitment that has not beenrecognized, net of financial assets covering this commitment,determined according to the same principles as those used forthe Group’s consolidated financial statements, amounts to62.8 million euros.

Commitments are estimated on the basis of the followingactuarial assumptions:

- Discount rate: 3.00%

- Long term rate of return on investments: 4.00%

The payments made to cover this commitment, 2.3 millioneuros in 2012 (12.3 in 2011), are recognized under the headingPersonnel costs.

6.2. Commitments given in respect of post-employment benefits: supplementary pensions and retirement benefits



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The investment portfolio is presented in the “Subsidiaries andinvestments” and “Investment portfolio” tables.

Methods used for calculating impairment of equity investmentsare described in Note 2.3. In most cases, impairment iscalculated in reference to the value in use of the investment in question, which is determined on the basis of forecast cashflows generated by the entity in question.

The change in impairment of investment portfolio is analyzedin Note 17.

The tax expense for the fiscal year includes, for the tax group as a whole, a charge of 37 million euros relating to the exceptionalcontribution of 5% in 2012, together with the amount of 17 million euros, corresponding to the 3% tax on interim dividends paidin December 2012.

9.2. Tax consolidation agreement

As of December 31, 2012, under the tax consolidation agreement, the amount of tax losses that may be reclaimed from LVMH by subsidiaries totaled 3,533 million euros.

9.3. Deferred tax

Deferred taxes arising from timing differences amount to a net debit balance of 20 million euros as of December 31, 2012,including 4 million euros relating to timing differences that are expected to reverse in 2013.

10. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

(EUR millions) 2012

Net amount of fixed assets as of December 31, 2011 46.1Additions 6.6Disposals and retirements (0.2)Net change in depreciation/amortization 0.1

Net amount of fixed assets as of December 31, 2012 52.6

11. EQUITY INVESTMENTS


Gross amount of equity investments 18,499.9 18,499.9Provision for impairment (1,298.2) (1,361.8)

Net amount of equity investments 17,201.7 17,138.1




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12. TREASURY SHARES AND RELATED DERIVATIVES

12.1. LVMH treasury shares

The value of the treasury shares held is allocated as follows as of December 31, 2012:


Gross Impairment Net Net

Share subscription option plans 270.1 - 270.1 318.6Future plans 36.3 - 36.3 34.8Pending retirement - - - -

Long term investments 306.4 - 306.4 353.4

Share purchase option plans 7.2 - 7.2 22.2Bonus share plans 74.8 - 74.8 64.3Future plans 12.4 - 12.4 28.6Liquidity contract 13.4 - 13.4 13.0

Short term investments 107.8 - 107.8 128.1

Portfolio movements over the period were as follows:

Long term investments Share subscription Future plans Pending retirement Total(EUR millions) option plans

Number Gross value Number Gross value Number Gross value Number Gross value

As of January 1 6,749,676 318.6 747,337 34.8 - - 7,497,013 353.4

Purchases - - - - - - - -Transfers (29,546) (1.5) 29,546 1.5 - - - -Shares retired (997,250) (47.0) - - - - (997,250) (47.0)

As of December 31 5,722,880 270.1 776,883 36.3 - - 6,499,763 306.4

Short term investments Share purchase option plans Other plans Liquidity contract Total(EUR millions) Number Gross value Number Gross value Number Gross value Number Gross value

As of January 1 285,070 22.2 1,635,595 92.9 119,000 13.0 2,039,665 128.1

Purchases 100,000 7.7 - - 1,950,314 242.3 2,050,314 250.0Sales - - - - (1,972,314) (241.9) (1,972,314) (241.9)Transfers (143,650) (11.9) 143,650 11.9 - - - -Options exercised (136,100) (10.8) (313,809) (17.6) - - (449,909) (28.4)Share allocations - - - - - - - -

As of December 31 105,320 7.2 1,465,436 87.2 97,000 13.4 1,667,756 107.8

The gain recognized on disposals under the liquidity contract amounted to 3.5 million euros. As of December 31, 2012, based on stock market quote at that dates, the stock market value of shares, held under this contract is 13 million euros.




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Share subscription options granted under the plan dated May 14,2009 may only be exercised if, in fiscal years 2009 and 2010(or, for senior executive officers, in three of the four fiscal yearsfrom 2009 to 2012), at least one of following indicators: profit

from recurring operations, net cash from operating activities andoperating investments, or the Group’s current operating margin,shows a positive change compared to 2008. This performancecondition was met in respect of fiscal years 2009 to 2012.

12.3.2. Movements relating to stock option and similar plans

Movements during the fiscal year relating to rights allocated under the various plans based on LVMH shares were as follows:

(number) Share subscription Share purchase Bonus Cash-settled option plans option plans share plans plans

Rights not exercised as of January 1, 2012 6,603,917 385,070 1,160,441 70,414

Allocations - - 462,439 -Expired options and allocations (29,546) (143,650) (35,935) -Options exercised/Definitive allocation of shares (1,344,975) (136,100) (313,809) (62,364)

Rights not exercised as of December 31, 2012 5,229,396 105,320 1,273,136 8,050

12.3.1. Plan characteristics

Share subscription and purchase option plans

The Shareholders’ Meeting of April 5, 2012 renewed theauthorization granted to the Board of Directors, for a period ofthirty-eight months expiring in June 2015, to allocate sharesubscription or purchase options to employees or directors ofGroup companies, on one or more occasions, in an amount notto exceed 3% of the Company’s share capital.

Each plan is valid for ten years. The options may be exercisedafter a three-year period for plans issued before 2004 or after a four-year period for plans issued in 2004 or later years.

For all plans, one option entitles the holder to purchase oneLVMH share.

Bonus share plans

The Shareholders’ Meeting of March 31, 2011 renewed theauthorization given to the Board of Directors, for a period ofthirty-eight months expiring in May 2014, to grant bonusshares to Group company employees or directors, on one or moreoccasions, in an amount not to exceed 1% of the Company’sshare capital on the date of this authorization.

The allocation of bonus shares to the beneficiaries who areFrench residents for tax purposes becomes definitive after atwo-year vesting period (generally three years for plans createdfrom 2011 onwards), which is followed by a two-year holdingperiod during which the beneficiaries may not sell their shares.

Bonus shares allocated to beneficiaries who are not Frenchresidents for tax purposes shall be definitive after a vestingperiod of four years and shall be freely transferable at that time.

Cash-settled compensation plans indexed to the change in the LVMH share price

As a replacement for its stock option and bonus share plans,the Group has established plans equivalent to share purchaseoption plans or to bonus share plans in terms of the gains receivedby the beneficiary, but which are settled in cash rather than inshares. The vesting period for these plans is four years.

Performance conditions

Since 2009, share subscription option plans and bonus shareplans have been subject to performance conditions, that determinewhether the beneficiaries are entitled to receive the definitiveallocation of these plans.

12.2. Derivatives settled in shares

During the fiscal year, the only derivatives used were LVMH calls; the movements were as follows:

Number Premiums paid (EUR millions)

As of December 31, 2011 100,000 4.0

Purchased - -Exercised (100,000) (4.0)

As of December 31, 2012 - -

12.3. Stock option and similar plans




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13. RECEIVABLES

Receivables break down as follows:



Receivables from related companies 462.4 - 462.4 391.3o/w: tax consolidation current accounts 116.1 - 116.1 103.7

share of profit from flow-through subsidiaries to be received 280.9 - 280.9 271.3

Receivables from the State 21.7 - 21.7 34.8

Other receivables 83.0 (4.5) 78.5 55.2o/w: swap residual balance receivable 28.8 - 28.8 32.0

Total 567.1 (4.5) 562.6 481.3

All these receivables mature within one year, with the exception of a portion of the swap residual balance.

14. PREPAYMENTS AND ACCRUED INCOME

Prepayments and accrued income break down as follows:



Cumulative translation adjustments 138.3 - 138.3 141.4Bond redemption premiums 4.3 - 4.3 4.9Prepaid expenses 0.8 - 0.8 1.0

Total 143.4 - 143.4 147.3

Cumulative translation adjustments recorded as assets relate to the revaluation as of December 31, 2012 of receivables, payables and bonds denominated in foreign currencies.

The bonus share plans launched in 2010 and 2012 as well asone such plan launched in 2011 are subject to performanceconditions to a variable extent depending on the beneficiaries.Bonus shares may only be definitively granted if, in fiscal years2012 and 2013 (2011 and 2012 for the plan launched in 2011,2010 and 2011 for the plan launched in 2010), at least one of following indicators: profit from recurring operations, netcash from operating activities and operating investments, orthe Group’s current operating margin, shows a positive changecompared to 2011 (2010 for the plan launched in 2011, 2009for the plan launched in 2010). These performance conditions,which were met for fiscal years 2010, 2011 and 2012, wereconsidered to have been met for fiscal year 2013 for thepurpose of determining the expense for 2012.

Previously owned shares were remitted in settlement of the bonusshares definitively allocated.

The total gain recognized under Personnel costs in 2012 forstock option and similar plans was 5.3 million euros (2011:loss of 25.1 million euros; 2010: loss of 24.4 million euros).

Due to the decision, beginning with the 2012 fiscal year, to rechargethe cost of share purchase options exercised and of definitivelyallocated bonus shares to the subsidiaries employing thebeneficiaries, LVMH’s net residual commitment has beenreduced, resulting in a provision reversal. See also Note 17.

The values used as the basis for the calculation of the 14% and 30% social security contributions are 122.41 euros and111.29 euros per share, respectively, allocated under the plansset up in April and July 2012.




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15.2. Change in equity

The change in equity during the period may be analyzed as follows:

(EUR millions) Number Share Share Other Retained Interim Net Total of shares capital premium reserves and earnings dividend profit equity account regulated provisions

As of December 31, 2011 before appropriation of net profit 507,815,624 152.3 3,801.4 583.1 3,907.9 (398.6) 2,325.5 10,371.6

Appropriation of net profit for 2011 - - - - 2,325.5 - (2,325.5) -2011 dividends - - - - (1,320.3) 398.6 - (921.7)Of which treasury shares - - - - 24.2 - - 24.2

As of December 31, 2011 after appropriation of net profit 507,815,624 152.3 3,801.4 583.1 4,937.3 - - 9,474.1

Exercise of subscription options 1,344,975 0.4 93.7 - - - - 94.1Retirement of shares (997,250) (0.3) (46.7) - - - - (47.0)2012 interim dividend - - - - - (559.0) - (559.0)Of which treasury shares - - - - - 9.0 - 9.0

Net profit for 2012 - - - - - - 1,666.7 1,666.7

As of December 31, 2012 before appropriation of net profit 508,163,349 152.4 3,848.4 583.1 4,937.3 (550.0) 1,666.7 10,637.9

The appropriation of net profit for 2011 resulted from the resolutions of the Combined Shareholders’ Meeting of April 5, 2012.

16. RESERVES AND REVALUATION ADJUSTMENTS

Reserves break down as follows:


Legal reserve 15.2 15.2Regulated reserves 331.3 331.3Other reserves 195.0 195.0Revaluation adjustments 41.5 41.5

Total 583.0 583.0

The Company’s share capital comprises 508,163,349 fullypaid-up shares, each with a par value of 0.30 euros.

All the shares comprising the Company’s share capital have thesame voting and dividend rights, except for registered sharesheld for at least three years which have double voting rights.Treasury shares do not have voting or dividend rights.

During the fiscal year, 1,344,975 shares were issued in connectionwith the exercise of share subscription options and 997,250shares were retired.

As of December 31, 2012, the Company’s share capital breaksdown as follows:

Number %

Shares with double voting rights 224,699,349 44.22Shares with single voting rights 275,296,481 54.17

499,995,830 98.39LVMH treasury shares 8,167,519 1.61

Total number of shares 508,163,349 100.00

15. SHARE CAPITAL AND SHARE PREMIUM ACCOUNT

15.1. Share capital




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Provisions for general contingencies correspond to an estimateof the impact on assets and liabilities of risks, disputes, or actualor probable litigation arising from the Company’s activities or those of its subsidiaries; such activities are carried outworldwide, within what is often an imprecise regulatory

framework that is different for each country, changes over time,and applies to areas ranging from product composition to thetax computation.

See also Notes 4, 11 and 12.

16.3. Revaluation adjustments

Revaluation adjustments are the result of revaluations carried out in 1978 pursuant to the French law of 1976. The adjustmentsconcern the following non-amortizable fixed assets:


Vineyards 17.9 17.9Equity investments (Parfums Christian Dior) 23.6 23.6

Total 41.5 41.5

17. MOVEMENTS IN IMPAIRMENT AND PROVISIONS

Movements in asset impairment and provisions break down as follows:

(EUR millions) December 31, Increase Amounts Amounts December 31, 2011 used released 2012

Equity investments 1,361.8 - - (63.6) 1,298.2LVMH shares: premium paid for LVMH calls 4.0 - (4.0) - -Other assets 4.5 - - - 4.5

Asset impairment 1,370.3 - (4.0) (63.6) 1,302.7

Share purchase option and related plans 47.6 15.7 (16.7) (28.2) 18.4General contingencies 548.2 68.3 (11.9) (0.3) 604.3Unrealized forex losses 267.2 1.4 - (126.6) 142.0Other losses 43.5 25.9 (38.2) (3.1) 28.1

Provisions for contingencies and losses 906.5 111.3 (66.8) (158.2) 792.8

Total 2,276.8 111.3 (70.8) (221.8) 2,095.5

o/w: financial income/(expense) 67.4 (14.2) (191.1) operating profit/(loss) 43.9 (56.6) (30.7) of which personnel costs 31.4 (54.8) (30.7) exceptional income/(expense) - - -

111.3 (70.8) (221.8)

Following changes in the law relating to long term capital gainsintroduced by the amended French Finance Act for 2004(Article 39) and by decision of the Shareholders’ Meeting ofMay 12, 2005, an amount of 200 million euros was transferred,

in 2005, from the special reserve for long term capital gains to an ordinary reserve account, less a 2.5% tax deduction of5 million euros. The amount of these reserves, of 195 millioneuros, may be distributed without tax being deducted.

16.2. Other reserves

Regulated reserves comprise the special reserve for long termcapital gains and restricted reserves, in the amount of 2.2 millioneuros, which were created as a result of the reduction of capital

performed at the same time as the conversion of the Company’sshare capital into euros. The special reserve for long termcapital gains may only be distributed after tax has been levied.

16.1. Regulated reserves




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Since May 2000, public issues and private placements havemainly been made under a 10 billion euro Euro Medium-TermNote (EMTN) program, with a total outstanding amount of3.2 billion euros as of December 31, 2012.

Unless otherwise indicated, bonds are redeemable at par uponmaturity.

The interest rate swaps presented in the table above were enteredinto on the issue date of the bonds. Subsequent optimizationtransactions may also have been performed.

In June 2012, LVMH carried out a public bond issue in a totalamount of 850 million US dollars, redeemable at par uponmaturity in June 2017. These bonds pay interest at a rate of1.625% per annum and were swapped on issuance, thusconverting the entire issue into a floating-rate euro-denominatedfinancing arrangement.

Also in June 2012, LVMH redeemed the 760 million eurobonds issued in two tranches in 2005 and 2008.

Gross borrowings break down as follows:


Bonds 3,922.9 4,021.9

Bank loans and borrowings 152.6 152.7Intra-Group financial debt 2,623.5 2,684.3

Other financial debt 2,776.1 2,837.0

Gross borrowings 6,699.0 6,858.9

18.1. Bonds

Bonds consist of public issues and private placements and break down as follows:

(EUR millions) Nominal Floating-rate Issuance Maturity Nominal Accrued Total interest rate swap price value as of interest (in % of the December 31, after swap

par value) 2012

Public issues:

EUR 1,000,000,000; 2009 4.375% total 99.348% 2014 1,000.0 2.3 1,002.3EUR 500,000,000; 2011 3.375% total 99.617% 2015 500.0 0.9 500.9EUR 500,000,000; 2011 4.000% - 99.484% 2018 500.0 14.8 514.8CHF 300,000,000; 2007 3.375% - 99.624% 2013 248.5 0.9 249.4CHF 200,000,000; 2008 4.000% - 99.559% 2015 165.7 3.9 169.5USD 850,000,000; 2012 1.625% total 99.456% 2017 680.4 0.1 680.5

Private placements:

JPY 15,000,000,000; 2008 floating - 100.000% 2013 116.1 0.4 116.5JPY 5,000,000,000; 2009 1.229% - 99.650% 2013 44.0 0.1 44.1EUR 250,000,000; 2009 4.500% total 99.532% 2015 250.0 0.1 250.1EUR 150,000,000; 2009 4.775% total 99.800% 2017 150.0 - 150.0USD 125,000,000; 2011 floating - 99.950% 2013 86.9 - 86.9USD 125,000,000; 2011 floating - 99.950% 2013 86.9 - 86.9USD 100,000,000; 2011 floating - 99.950% 2013 71.0 0.1 71.0

Total 3,899.4 23.5 3,922.9

18. GROSS BORROWINGS




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18.3. Analysis of borrowings by payment date

The breakdown of gross borrowings by type and payment date, and the related accrued expenses, are shown in the table below:

Borrowings Total Amount Of which Of which(EUR millions)

Less than From 1 to More than accrued related

1 year 5 years 5 years

expenses companies

Bonds 3,922.9 676.9 2,746.0 500.0 23.6 -

Bank loans and borrowings 152.6 0.6 152.0 - 0.2 -Intra-Group financial debt 2,623.5 2,623.5 - - 5.4 2,623.5

Other financial debt 2,776.1 2,624.1 152.0 - 5.6 2,623.5

Gross borrowings 6,699.0 3,301.0 2,898.0 500.0 29.2 2,623.5

Intra-Group financial debt represents, in the amount of 1,169 million euros, the balance of a current account with the LVMH groupcompany responsible for managing cash pooling.

18.4. Analysis of gross borrowings by currency

As of December 31, 2012, the breakdown by currency of the Company’s gross borrowings taking into account any hedgingarrangements contracted at the time of recognition of debts or subsequently, is as follows:

Currency Equivalent stated (EUR millions)

On issue After taking into account hedging instruments

2012 2011

Euro 2,570.6 3,051.6 3,150.8Swiss franc 419.0 980.0 973.5Dollars 925.3 0.2 0.4Other currency 160.6 43.7 49.9

Non Group financial debt 4,075.5 4,075.5 4,174.6

Intra-Group financial debt 2,623.5 2,684.3

Total gross borrowings 6,699.0 6,858.9

The purpose of foreign currency borrowings is, in general, to hedge net foreign currency-denominated assets of acquired companieslocated outside the Eurozone.

18.5. Covenants

In connection with certain credit lines, LVMH is in a position to comply with a net financial debt to equity ratio calculated based on consolidated data. As of December 31, 2012, no drawn or undrawn credit lines are concerned by this provision.

18.6. Guarantees and collateral

As of December 31, 2012, financial debt was not subject to any guarantees or collateral.

The intra-Group financial debt corresponds to an outstandingdebt due to the company that centralizes the Group’s cash; at December 31, 2012 this comprised a loan of 1,454.8 millioneuros due within one year, and a current account balance of1,168.7 million euros.

Accrued interest as of December 31, 2012 included in thisbalance amounted to 5.4 million euros.

18.2. Intra-Group financial debt




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(EUR millions) Nominal Expiration period Market

amount

Less than From 1 to More than value(a)

1 year

5 years 5 years

Fixed-rate payer swap 167.1 167.1 - - (4.6)Floating-rate payer swap 4,078.1 452.9 3,625.1 - 158.5

(a) Gain/(loss).

Interest rate instruments are generally allocated to borrowingsfalling due either at the same time as, or after, the instruments.

The types of instruments outstanding as of December 31, 2012,the underlying amounts broken down by expiration period and their fair value are as follows:

21.1. Interest rate instruments

LVMH regularly uses financial instruments. This practice meetsthe foreign currency and interest rate hedging needs for financialassets and liabilities, including dividends receivable from foreigninvestments; each instrument used is allocated to the financialbalances or hedged transactions.

Given the role of LVMH within the Group, financial instrumentsdesigned to hedge net assets denominated in foreign currency

may be used in the consolidated financial statements but notmatched in the parent company financial statements, or areallocated to underlying amounts maintained at historicalexchange rates, such as equity investments.

Counterparties for hedging contracts are selected on the basis of their international rating as well as for reasons ofdiversification.

19. OTHER DEBT

The breakdown of other liabilities by type and payment date and the related accrued expenses is shown in the table below:

(EUR millions) Total Amount Of which Of which

Less than From 1 to More than accrued related

1 year 5 years 5 years

expenses companies

Trade payables 109.4 109.4 - - 108.3 93.3Tax and social liabilities 88.6 88.6 - - 39.3 -Other debt 40.5 40.5 - - 2.9 36.5

o/w tax consolidation current accounts 36.5 36.5 - - - 36.5

Other debt 238.5 238.5 - - 150.5 129.8

20. ACCRUALS AND DEFERRED INCOME

The balance of accruals and deferred income consists of deferred income corresponding to unrealized capital gains on derivatives.

21. MARKET RISK EXPOSURE




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22.2. Other commitments given

(EUR millions) December 31, 2012

Guarantees and comfort letters granted to subsidiaries or other Group companies 6,654.2

22.3. Other commitments given in favor of LVMH

(EUR millions) December 31, 2012

Undrawn confirmed long term lines of credit 2,290.0Undrawn confirmed short term lines of credit 495.0

2,785.0

22.4. Related party transactions

No new related party agreements, within the meaning of ArticleR. 123-198 of the French Commercial Code, were entered into during the fiscal year in significant amounts and underconditions other than normal market conditions.

See also Note 7 – Other net management charges, for informationon the agreement between Diageo and LVMH.

22.5. Identity of the consolidating parent company

The financial statements of LVMH Moët Hennessy – LouisVuitton SA are fully consolidated by Christian Dior SA - 30,avenue Montaigne - 75008 Paris, France.

Share purchase commitments amount to 5,020 million eurosand represent the contractual commitments entered into by the Group to purchase minority interests’ shares in consolidatedcompanies, shareholdings or additional shareholdings in unconsolidated companies, or for additional payments inconnection with transactions already entered into. This amount

includes the impact of the memorandum of understandingentered into on January 20, 1994 between LVMH and Diageo,according to which LVMH agreed to repurchase Diageo’s 34%interest in Moët Hennessy SNC and Moët Hennessy InternationalSAS, with six months’ notice, for an amount equal to 80% of its market value at the exercise date of the commitment.

21.2. Foreign exchange derivatives

The nominal values of hedges outstanding as of December 31, 2012 for all currencies, revalued at the year-end exchange rates, are as follows:

Type Currency Nominal Market (EUR millions) amounts value (a)

Options USD - 0.1

Foreign exchange swaps USD 1,557.6 21.5 HKD 808.6 13.8

CHF 561.3 (2.2) JPY 50.2 4.0

(a) Gain/(loss).

All of the contracts presented in the table above mature within one year.

22. OTHER INFORMATION

22.1. Share purchase commitments




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INVESTMENT PORTFOLIO

Equity investments % of direct Carrying(EUR millions) ownership amount

508,493,000 shares in Sofidiv SAS with a par value of EUR 16.57 each 100.00 10,116.4245,000 shares in Bulgari SpA (Italy) with a par value of EUR 100 each 100.00 4,268.735,931,661 shares in Moët Hennessy SNC with a par value of EUR 7 each 58.67 1,018.923,743,081 shares in LV Group SA (previously LVMH Fashion Group SA) with a par value of EUR 1.50 each 99.95 822.235,666,395 shares in LVMH Finance SA with a par value of EUR 15 each 99.99 346.71,961,048 shares in Le Bon Marché SA with a par value of EUR 15 each 99.99 259.2164,999,994 shares in ELEY Finance SA with a par value of EUR 1 each 99.99 165.068,958 shares in Parfums Christian Dior SA with a par value of EUR 38 each 99.98 76.531,482,978 shares in Moët Hennessy International SAS with a par value of EUR 2.82 each 58.67 74.434,414,870 shares in LVMH Services Ltd (UK) with a par value of GBP 1 each 100.00 29.47,000 shares in the GIE LVMH Services with a par value of EUR 1,265 each 20.00 8.923,000 shares in LVMH KK (Japan) with a par value of JPY 50,000 each 100.00 7.69,660 shares in Loewe SA (Spain) with a par value of EUR 30 each 5.44 6.737,000 shares in Creare SA (Luxembourg) with a par value of EUR 15.24 each 32.17 1.1

Total 17,201.7

See also Note 12 – Treasury shares.




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SUBSIDIARIES AND INVESTMENTS

Company Head office Currency Share Equity Percentage Carrying amount Loans and Deposits Revenue Net profit Dividends(all amounts capital(a) other than share of shares held(c) advances and excluding (loss) receivedin millions) share capital provided(c) sureties taxes(a) from the in 2012(c)

capital (a)(b) held Gross Net granted(c) previousyear(a)

1. Subsidiaries (>50%)

Bulgari SpA Rome EUR 24.5 420.6 100.00 4,268.7 4,268.7 - - 118.9 50.5 -Moët Hennessy SNC Boulogne- EUR 428.7 2,324.3 58.67 1,018.9 1,018.9 - - 719.5 478.8 -

BillancourtMoët Hennessy Inter. SAS ” EUR 151.6 115.6 58.67 74.4 74.4 - - 91.5 90.3 164.0Sofidiv SAS ” EUR 8,427.4 4,253.7 100.00 10,116.4 10,116.4 - - 718.3 1,986.7 320.4LVMH Finance SA ” EUR 535.0 (188.3) 99.99 1,630.5 346.7 - - 6.1 70.9 -Eley Finance SA ” EUR 165.0 1.3 99.99 165.0 165.0 - - - - -LV Group SA Paris EUR 35.6 3,731.8 99.95 822.2 822.2 - - 1,921.8 2,005.7 1,021.0Parfums Christian Dior SA Paris EUR 2.6 446.2 99.98 76.5 76.5 - 5.3 1,130.9 195.6 150.0Le Bon Marché SA Paris EUR 29.4 49.0 99.99 259.2 259.2 - - 285.3 21.3 14.3LVMH KK Tokyo JPY 1,150.0 704.7 100.00 7.6 7.6 - 393.5 725.0 11.1 0.5LVMH Services Ltd London GBP 34.4 (10.4) 100.00 43.8 29.4 - 6.1 1.2 (0.1) -

2. Other shareholdings(>10% and <50%)

GIE LVMH Services Boulogne- EUR 44.3 (2.4) 20.00 8.9 8.9 - - 2.3 (2.4) -Billancourt

3. Other investments(<10%)

Loewe SA Madrid EUR 5.3 45.6 5.44 6.7 6.7 - - 120.3 17.3 -

4. Other 1.1 1.1

Total 18,499.9 17,201.7 - 404.9 1,670.2

(a) In local currency for foreign subsidiaries.(b) Prior to the appropriation of earnings for the fiscal year.(c) EUR millions.




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COMPANY RESULTS OVER THE LAST FIVE FISCAL YEARS

(EUR millions, except earnings per share, expressed in euros) 2008 2009 2010 2011 2012

1. Share capital at fiscal year-end

Share capital 147.0 147.1 147.2 152.3 152.4Number of ordinary shares outstanding 489,937,410 490,405,654 490,642,232 507,815,624 508,163,349Maximum number of future shares to be created:

- through conversion of bonds - - - - -- through exercise of equity warrants - - - - -- through exercise of share subscription options 9,569,660 10,214,500 8,084,215 6,603,917 5,229,396

2. Operations and profit for the fiscal year

Income from investments and other revenues 1,369.0 1,261.8 2,171.8 2,783.1 2,173.6Profit before taxes, depreciation, amortization and movements in provisions 904.5 915.3 1,532.6 2,221.2 1,549.5Income tax (income)/expense(a) - - - - -Profit after taxes, depreciation, amortization and movements in provisions(b) 898.9 436.1 2,317.9 2,325.5 1,666.7Profit distributed as dividends(c) 783.9 809.2 1,030.3 1,320.3 1,473.7

3. Earnings per share

Profit after taxes but before depreciation, amortization and movements in provisions 1.64 1.90 3.34 4.50 2.92Profit after taxes, depreciation, amortization and movements in provisions(b) 1.83 0.89 4.72 4.58 3.28Gross dividend distributed per share(d) 1.60 1.65 2.10 2.60 2.90

4. Employees

Average number of employees 26 23 22 23 22Total payroll 59.8 64.5 61.4 104.8 54.2Amounts paid in respect of social security 18.2 15.9 13.8 17.7 22.8

(a) Excluding the impact of the tax consolidation agreement.(b) Including the impact of the tax consolidation agreement.(c) Amount of the distribution resulting from the resolution of the Shareholders’ Meeting, before the impact of LVMH treasury shares held as of the distribution date. For fiscal year 2012,

amount proposed to the Shareholders’ Meeting of April 18, 2013.(d) Excluding the impact of tax regulations applicable to the beneficiary.




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STATUTORY AUDITORS’ REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS


In accordance with our appointment as Statutory Auditors at your Annual Shareholders’ Meeting, we hereby report to you for theyear ended December 31, 2012 on:

- the audit of the accompanying financial statements of LVMH Moët Hennessy – Louis Vuitton;- the justification of our assessments;- the specific procedures and disclosures required by law.

The financial statements have been approved by the Board of Directors. Our role is to express an opinion on these financialstatements, based on our audit.

I. Opinion on the financial statements

We conducted our audit in accordance with professional practice standards applicable in France. These standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, using sample testing techniques or other selection methods, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade, as well as evaluating the overall financial statements presentation. We believe that the audit evidence we have obtained issufficient and appropriate to provide a reasonable basis for our opinion.

In our opinion, the financial statements give a true and fair view of the financial position and the assets and liabilities of theCompany as of December 31, 2012 and the results of its operations for the year then ended in accordance with accounting principlesgenerally accepted in France.

II. Justification of our assessments

In accordance with Article L. 823-9 of the French Commercial Code (Code de commerce) relating to the justification of ourassessments, we bring the following matters to your attention:

Note 2.3. to the financial statements describes the accounting principles and methods applicable to long-term investments. As part of our assessment of the accounting policies implemented by your Company, we have verified the appropriateness of theabove-mentioned accounting methods and that of the disclosures in the Notes to the financial statements, and have ascertained thatthey were properly applied.

These assessments were performed as part of our audit approach for the financial statements taken as a whole and thereforecontributed to the expression of our opinion in the first part of this report.


Statutory Auditors’ reports


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III. Specific procedures and disclosures

We have also performed the other specific procedures required by law, in accordance with professional practice standards applicablein France.

We have no matters to report regarding the fair presentation and consistency with the financial statements of the information givenin the Management Report of the Board of Directors and the documents addressed to the shareholders in respect of the financialposition and the financial statements.

Concerning the information given in accordance with the requirements of Article L. 225-102-1 of the French Commercial Coderelating to remuneration and benefits received by the corporate officers and any other commitments made in their favor, we haveverified its consistency with the financial statements, or with the underlying information used to prepare these financial statementsand, where applicable, with the information obtained by your Company, from companies controlling your Company or controlled by it.

Based on this work, we attest that such information is accurate and fair. It being specified that, as indicated in the ManagementReport, this information relates to the remuneration and benefits in-kind paid or borne by your Company and the companies whichit controls as well as the remuneration and benefits paid or borne by the companies Financière Jean Goujon and Christian Dior.

Pursuant to the law, we have verified that the Management Report contains the appropriate disclosures as to the identity of andpercentage interests and votes held by shareholders.








This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speakingreaders. The Statutory Auditors’ report includes information specifically required by French law in such reports, whether modified or not. Thisinformation is presented below the opinion on the Parent company financial statements and includes an explanatory paragraph discussing theStatutory Auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing anaudit opinion on the Parent company financial statements taken as a whole and not to provide separate assurance on individual account captions or oninformation taken outside of the Parent company financial statements. This report should be read in conjunction and construed in accordance withFrench law and professional auditing standards applicable in France.

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STATUTORY AUDITORS’ SPECIAL REPORT ON REGULATED RELATED PARTYAGREEMENTS AND COMMITMENTS


In our capacity as Statutory Auditors of your Company, we hereby report on regulated related party agreements and commitments.

Our responsibility is to inform you, on the basis of the information provided to us, of the terms and conditions of the agreementsand commitments that have been indicated to us or that we would have identified performing our role. We are not required tocomment as to whether they are beneficial or appropriate, or to ascertain the existence of any other agreements or commitments. Itis your responsibility, in accordance with Article R. 225-31 of the French Commercial Code (Code de commerce), to evaluate thebenefits resulting from these agreements and commitments prior to their approval.

In addition, we are required, if any, to inform you in accordance with Article R. 225-31 of the French Commercial Code of theimplementation during the year of related party agreements and commitments already approved by the Shareholder’s Meeting.

We performed those procedures which we considered necessary to comply with professional guidance issued by the French Instituteof Statutory Auditors (Compagnie Nationale des Commissaires aux comptes) relating to this type of engagement. These proceduresconsisted in verifying that the information provided to us is consistent with the documentation from which it has been extracted.

AUTHORIZED AGREEMENTS AND COMMITMENTS SUBMITTED TO THE APPROVAL OF THE SHAREHOLDERS’ MEETING

In accordance with Article L.225-40 of the French Commercial Code, we have been advised of the following related partyagreements and commitments previously authorized by your Board of Directors.

1. Agreement entered into with Groupe Arnault SAS

Directors involved: Messrs. Bernard Arnault, Nicolas Bazire, Albert Frère and Pierre Godé.Nature, purpose, terms and conditions: Amendment to the service agreement entered into with Groupe Arnault SAS on July 31, 1998.

On February 2, 2012, the Board of Directors authorized the signature of an amendment to the service agreement entered intobetween your Company and Groupe Arnault SAS. The amendment modifies the annual fees set by this agreement to 5,200,000euros per year (exclusive of VAT) as from January 1, 2012.

Pursuant to this agreement, your Company paid 5,200,000 euros to Groupe Arnault SAS in respect of fiscal year 2012.

2. Agreement entered into with Messrs. Bernard Arnault, Antonio Belloni and Nicolas Bazire, Directors

Nature, purpose, terms and conditions: Amendment to the supplementary pension scheme.

On February 2, 2012, the Board of Directors authorized the amendment to the supplementary pension scheme, set up in 1999and modified in 2004, which provides for a supplementary pension to members of the Executive Committee, who have beenmembers for six years at least, whether they are employees or CEOs of French companies, subordinated to the pay off of externalpensions acquired at the date of their departure from the Group. This condition is not required in the event that they are dismissedby the Group after the age of 55 and if they do not pursue any other professional activity until their external pensions are paid off.

The amendment concerns the valuation method of the supplementary pension scheme, henceforward calculated based on theaverage of the three highest annual salaries received during their career with the Group, capped at thirty-five times the annualsocial security cap.

The resulting expense for your Company in 2012 is included in the amount disclosed in Note 31.3 to the consolidated financialstatements.

3. Agreement entered into with Christian Dior Couture SA

Director involved: Mr. Bernard Arnault.Nature, purpose, terms and conditions: “Les Ateliers Horlogers Dior SA” joint-venture agreement.

On February, 2, 2012, the Board of Directors authorized the prorogation by tacit agreement of the contracts signed in 2008 andextended in March 2011, for the production and distribution of Dior watches, for an extendable one year period.




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AGREEMENTS AND COMMITMENTS ALREADY APPROVED BY THE SHAREHOLDERS’ MEETING

In accordance with Article R.225-30 of the French Commercial Code, we have been advised that the following agreements andcommitments which were approved in prior fiscal years remained current during the fiscal year under review.

1. Agreement entered with Moët Hennessy SNC, a subsidiary of your Company

Nature, purpose, terms and conditions: LVMH group holding company cost-sharing agreement.

The LVMH group holding company cost-sharing agreement with Diageo plc (formerly Guinness plc) dated January 20, 1994,based on the annual revenue generated by the “Wines and Spirits” business group on one side and other activities on the otherside, was continued in 2012.

The portion borne by Moët Hennessy SNC amounted to 13.6 million euros during the 2012 fiscal year.

2. Agreement entered with Christian Dior SA

Directors involved: Messrs. Bernard Arnault, Pierre Godé and Mrs. Delphine Arnault.Nature, purpose, terms and conditions: Legal services agreement.

This service agreement entered into with Christian Dior for the provision of legal services provided by your Company, particularlyfor corporate law issues and the management of Christian Dior’s securities department, was continued in 2012.

Pursuant to this service agreement, your Company received a fixed fee of 45,750 euros (excluding VAT) for fiscal year 2012.









4|2_VA_V5 26/03/13 20:31 Page208

OTHER INFORMATIONGovernance

1. PRINCIPAL POSITIONS AND OFFICES OF MEMBERS OF THE BOARD OF DIRECTORS 210

1.1. Directors’ appointments to be renewed 2101.2. Currently serving Directors 2131.3. Advisory Board members 221

2. STATUTORY AUDITORS 2232.1. Principal Statutory Auditors 2232.2. Alternate Statutory Auditors 2232.3. Fees paid in 2011 and 2012 223

3. CHARTER OF THE BOARD OF DIRECTORS 2243.1. Structure of the Board of Directors 2243.2. Missions of the Board of Directors 2243.3. Operating procedures of the Board of Directors 2243.4. Responsibilities 2253.5. Compensation 2253.6. Scope of application 225

4. INTERNAL RULES OF THE PERFORMANCE AUDIT COMMITTEE 2254.1. Structure of the Committee 2254.2. Role of the Committee 2264.3. Operating procedures of the Committee 2264.4. Prerogatives of the Committee 2264.5. Compensation of Committee members 226

5. INTERNAL RULES OF THE NOMINATIONS AND COMPENSATION COMMITTEE 2275.1. Structure of the Committee 2275.2. Role of the Committee 2275.3. Operating procedures of the Committee 2275.4. Prerogatives of the Committee 2285.5. Compensation of Committee members 228

6. BYLAWS 228


5|1_VA_V5 26/03/13 20:31 Page209

Date of birth: May 18, 1933. French.Mailing address: BP 70316 – 75007 Paris Cedex 07 (France).Date of first appointment: April 15, 2010.Number of LVMH shares held in a personal capacity: 500 shares.

Married to Mr. Jacques Chirac, President of France from 1995to 2007, Mrs. Bernadette Chirac was elected to the local councilof the town of Sarran in 1971 and was named as deputy mayor

in 1977. She was elected as Departmental councilor of Corrèzein 1979 and was reelected continuously until 2011. In 1990, shefounded the association Le Pont Neuf, and serves as its Presidentto this day. In 1994, she was named Chairman of FondationHôpitaux de Paris – Hôpitaux de France and took an active rolein its “Pièces Jaunes” and “Plus de vie” operations which, thanksto her support and involvement, have become widely recognizedcharity events in France. Since 2007, she has also served asChairman of Fondation Claude Pompidou.

Current positions and offices

LVMH group/Arnault group:

France LVMH Moët Hennessy – Louis Vuitton SA(a) Chairman and Chief Executive OfficerChristian Dior SA(a) Chairman and Chief Executive OfficerChristian Dior Couture SA DirectorFinancière Jean Goujon SAS Member of the Supervisory CommitteeGroupe Arnault SAS ChairmanChâteau Cheval Blanc Chairman of the Board of DirectorsLouis Vuitton pour la Création, Fondation d’Entreprise Chairman of the Board of Directors

International LVMH International SA (Belgium) DirectorLVMH Moët Hennessy – Louis Vuitton Inc. (United States) DirectorLVMH Moët Hennessy – Louis Vuitton Japan KK (Japan) Director

Other

France Carrefour SA(a) Director

Positions and offices that have terminated after January 1, 2008

France Lagardère SCA(a) Member of the Supervisory BoardMétropole Télévision “M6” SA(a) Member of the Supervisory BoardRaspail Investissements SA Director

Mrs. Bernadette CHIRAC

Date of birth: March 5, 1949. French.Business address: LVMH – 22, avenue Montaigne – 75008 Paris(France).Date of first appointment: September 26, 1988.Number of LVMH shares held in a personal capacity: 47,225 shares.

Mr. Bernard Arnault began his career as an engineer withFerret-Savinel, where he became Senior Vice-President forconstruction in 1974, Chief Executive Officer in 1977 andfinally Chairman and Chief Executive Officer in 1978.

He remained with this company until 1984, when he becameChairman and Chief Executive Officer of Financière Agacheand of Christian Dior. Shortly thereafter he spearheaded areorganization of Financière Agache following a developmentstrategy focusing on luxury brands. Christian Dior was to becomethe cornerstone of this new structure.

In 1989, he became the leading shareholder of LVMH MoëtHennessy – Louis Vuitton, and thus created the world’s leadingluxury products group. He assumed the position of Chairmanand Chief Executive Officer in January 1989.

OTHER INFORMATION

1. PRINCIPAL POSITIONS AND OFFICES OF MEMBERS OF THE BOARD OF DIRECTORS

1.1. Directors’ appointments to be renewed

Mr. Bernard ARNAULT, Chairman and Chief Executive Officer


Governance

(a) French listed company.

5|1_VA_V5 26/03/13 20:31 Page210


LVMH group/Arnault group

France LVMH Moët Hennessy – Louis Vuitton SA(a) Director

Other

France Euler Hermès SA(a) Member of the Supervisory BoardRenault SA(a) DirectorRenault SAS DirectorFondation du Patrimoine Chairman

International Goldman Sachs International (United Kingdom) International Advisor

Date of birth: September 28, 1943. French.Business address: Goldman Sachs International – PeterboroughCourt, 133 Fleet Street – EC4A 2BB London (United Kingdom).Date of first appointment: May 15, 2008.Number of LVMH shares held in a personal capacity: 1,000 shares.

Mr. Charles de Croisset entered the Inspection des Finances in

1968. After a career in the administration, he joined CréditCommercial de France (CCF) in 1980 as Corporate Secretarybefore being appointed Deputy Chief Executive and then ChiefExecutive. In 1993, he was named Chairman and ChiefExecutive Officer of CCF, then Executive Director of HSBCHoldings Plc in 2000. In March 2004, he joined GoldmanSachs Europe as its Vice-Chairman and was named asInternational Advisor to Goldman Sachs International in 2006.




Other

France Financière de Services Maritimes SA DirectorWorms 1848 SAS Chairman

International Worms (Luxembourg) Chairman


International Permal UK Ltd (United Kingdom) Chairman of the Board of Directors

Mr. Charles de CROISSET

Date of birth: November 14, 1942. French.Business address: Worms 1848 SAS – 48, rue Notre-Dame desVictoires – 75002 Paris (France).Date of first appointment: September 22, 1988.Number of LVMH shares held in a personal capacity: 3,330 shares.

Mr. Nicholas Clive Worms was General Partner and laterManaging Partner of Maison Worms & Cie between 1970 and1996, Managing Partner and subsequently Chairman of theSupervisory Board of Worms & Cie between 1991 and 2004.He also served as Chairman and Chief Executive Officer and then Managing Partner of Pechelbronn between 1976 and1991. He is currently Chairman of Worms 1848 SAS.

OTHER INFORMATION




Other

France Departmental Council of Corrèze Departmental councilorFondation Hôpitaux de Paris-Hôpitaux de France ChairmanFondation Claude Pompidou Chairman

Mr. Nicholas CLIVE WORMS


Governance


5|1_VA_V5 26/03/13 20:31 Page211



France LVMH Moët Hennessy – Louis Vuitton SA(a) DirectorFred Paris SA Permanent Representative of Ufipar, Director

International Bulgari SpA (Italy) Director delegateBulgari Hotels and Resorts Milano Srl (Italy) Director delegateDe Beers Diamond Jewellers Limited (United Kingdom) Chairman of the Board of DirectorsHublot SA (Switzerland) DirectorLes Ateliers Horlogers Dior SA (Switzerland) DirectorLVMH Swiss Manufactures SA (Switzerland) DirectorTAG Heuer International SA (Switzerland) Director

Other

International Elystone Capital (Switzerland) Chairman of the Board of DirectorsFrancesco Trapani Srl (Italy) Chairman of the Board of Directors, Director delegate


France Bulgari France SAS DirectorInternational BootB (Italy) Director

Bulgari Asia Pacific Ltd (Hong Kong) DirectorBulgari Australia Pty Ltd (Australia) DirectorBulgari Belgium SA (Belgium) DirectorBulgari Corporation of America (United States) DirectorBulgari Espana SA (Spain) DirectorBulgari Hotels and Resorts BV (Netherlands) DirectorBulgari Malaysia Sdn Bhd (Malaysia) DirectorBulgari Montecarlo (Principality of Monaco) DirectorBulgari South Asian Operations SA (Switzerland) DirectorEsprit Holding (Hong Kong) Independent DirectorUIR – Confindustria Committee (Italy) MemberRome 2020 Olympic Games Support Committee (Italy) Member

Date of birth: March 10, 1957. Italian.Business address: Bulgari – Lungotevere Marzio, 11 – 00187Rome (Italy).Date of first appointment on the Board of Directors: March 31,2011.Number of LVMH shares held in a personal capacity:1,382,092 shares.

Over the past 28 years during which he has served as ChiefExecutive of Bulgari, Francesco Trapani has significantlyexpanded the company, giving it an international dimension,with a rich and diverse portfolio, which now includes, jewelry,watches, fragrances, accessories, and more recently, hotels.Since Bulgari’s tie-up with LVMH, in June 2011, FrancescoTrapani has been President of the Watches and Jewelry businessgroup.

OTHER INFORMATION


France Bouygues SA(a) DirectorGaleries Lafayette SA(a) Member of the Advisory BoardThales SA(a) Director

International Thales Holdings Plc (United Kingdom) Advisor

Mr. Francesco TRAPANI, President of the Watches and Jewelry business group


Governance


5|1_VA_V5 26/03/13 20:31 Page212



France LVMH Moët Hennessy – Louis Vuitton SA(a) DirectorBerluti SA Chairman of the Executive BoardF.G SAS ChairmanLes Echos SAS Member of the Supervisory BoardSociété nouvelle de Chemiserie Arnys Chairman of the Board of Directors

Other

France Comité Colbert DirectorLagardère SCA(a) Member of the Supervisory Board

Date of birth: June 4, 1977. French.Business address: Berluti – 120, rue du Faubourg Saint-Honoré– 75008 Paris (France).Date of first appointment: May 11, 2006.Expiration of term: Annual Shareholders’ Meeting convened in2015.Number of LVMH shares held in a personal capacity: 12,875 shares.

Mr. Antoine Arnault graduated from HEC Montreal andINSEAD. In 2000 he created an Internet company, specializedin the registration of domain names.

In 2002, he sold his company and joined Louis Vuitton Malletier,with whom he successively held the following positions:

- Marketing Manager, an area in which he led a number of majorinitiatives, particularly in relation to advertising;

- Director of Regional Operations for Louis Vuitton France, withdirect managerial responsibility for 12 Louis Vuitton stores;

- Director of Communications at Louis Vuitton, a role he assumedin 2007, with responsibility for advertising, publishing,digital content development, and media buying.

In 2011, he was appointed Chief Executive Officer of Berluti,with the aim of making the brand a major player in the luxurymenswear and accessories segment. He continues to serve as aspecial advisor on communications for Louis Vuitton.

He initiated the Journées Particulières open-day event that allowedsome 100,000 visitors to take a look behind the scenes free ofcharge at 25 Group companies in October 2011.




Other

France Hubert Védrine (HV) Conseil SARL Managing PartnerIpsos SA(a) Director


France Audiovisuel Extérieur de la France SA Director

1.2. Currently serving Directors

Mr. Antoine ARNAULT

Date of birth: July 31, 1947. French.Business address: Hubert Védrine (HV) Conseil – 21, rue JeanGoujon – 75008 Paris (France).Date of first appointment: May 13, 2004.Number of LVMH shares held in a personal capacity: 500 shares.

Mr. Hubert Védrine has held a number of French governmentand administrative posts, notably as Diplomatic Advisor to the Presidency from 1981 to 1986, Spokesperson for thePresidency from 1988 to 1991, General Secretary for thePresidency from 1991 to 1995 and Minister for Foreign Affairsfrom 1997 to 2002. In early 2003, he founded a geopoliticalmanagement consulting firm, “Hubert Védrine (HV) Conseil”.

OTHER INFORMATION

Mr. Hubert VÉDRINE


Governance


5|1_VA_V5 26/03/13 20:31 Page213

Date of birth: July 13, 1957. French.Business address: LVMH – 22, avenue Montaigne – 75008 Paris(France).Date of first appointment: May 12, 1999.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 20,618 shares.

Mr. Nicolas Bazire became Chief of Staff of Prime MinisterEdouard Balladur in 1993. He was Managing Partner atRothschild & Cie Banque between 1995 and 1999 and has servedas Managing Director of Groupe Arnault SAS since 1999.



France LVMH Moët Hennessy – Louis Vuitton SA(a) DirectorCéline SA DirectorChristian Dior SA(a) DirectorLes Echos SAS Member of the Supervisory BoardChâteau Cheval Blanc Director

International Emilio Pucci Srl (Italy) DirectorEmilio Pucci International BV (Netherlands) DirectorLoewe SA (Spain) Director

Other

France Métropole Télévision “M6” SA(a) Member of the Supervisory Board

Positions and offices that have terminated since January 1, 2008

International Établissement Public de Sèvres - Cité de la Céramique DirectorCalto Srl (Italy) Chairman of the Board of DirectorsManifatturauno Srl (Italy) Chairman of the Board of Directors

Mr. Nicolas BAZIRE, Senior Vice-President for Development and acquisitions

Date of birth: April 4, 1975. French.Business address: Christian Dior – 30, avenue Montaigne –75008 Paris (France).Date of first appointment: September 10, 2003.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 160,755 shares.

Mrs. Delphine Arnault began her career with the internationalmanagement consulting firm McKinsey & Co, where sheworked as a consultant for two years.

In 2000, she moved to designer John Galliano’s company,where she helped in development, thereby acquiring concreteexperience of the fashion industry. In 2001, she joined the Executive Committee of Christian Dior Couture where shecurrently serves as Deputy Managing Director. She also is amember of Loewe’s Board of Directors, where she is SeniorVice-President for product strategy.

OTHER INFORMATION

International Berluti LLC (United States) ManagerBerluti Hong Kong Company Limited (Hong Kong) DirectorBerluti (Shangai) Company Limited (China) DirectorBerluti Orient FZ-LLC (United Arab Emirates) DirectorManifattura Berluti SRL (Italy) Director


France S.D.R.E Société de Distribution Robert Estienne SNC Legal representative of Berluti, Managing PartnerInternational Spot Runner, Inc. (United States) Member of the Supervisory Board

Mrs. Delphine ARNAULT


Governance


5|1_VA_V5 26/03/13 20:31 Page214



France LVMH Moët Hennessy – Louis Vuitton SA(a) Group Managing Director and DirectorFendi International SA Chairman and Chief Executive OfficerGivenchy SA Permanent Representative of LVMH Finance, DirectorLe Bon Marché, maison Aristide Boucicaut SA Permanent Representative of LVMH, DirectorLVMH Fragrance Brands SA Permanent Representative of LV Group, DirectorSephora SA Permanent Representative of Ufipar, DirectorLouis Vuitton pour la Création, Fondation d’Entreprise Director

Date of birth: June 22, 1954. Italian.Business address: LVMH – 22, avenue Montaigne – 75008 Paris(France).Date of first appointment: May 15, 2002.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 27,118 shares.

Mr. Antonio Belloni joined the LVMH group in June 2001,following 22 years with Procter & Gamble. He was appointedhead of Procter & Gamble’s European division in 1999, having previously served as Chairman and Chief ExecutiveOfficer for the group’s Italian operations. He began his career at Procter & Gamble in Italy in 1978 and subsequently held a number of positions in Switzerland, Greece, Belgium and the United States. He has been Group Managing Director ofLVMH since September 2001.

OTHER INFORMATION



France LVMH Moët Hennessy – Louis Vuitton SA(a) DirectorAgache Developpement SA DirectorEuropatweb SA DirectorFinancière Agache SA Managing Director and Permanent Representative

of Groupe Arnault SAS, DirectorFinancière Agache Private Equity SA DirectorGA Placements Permanent Representative of Montaigne Finance, DirectorGroupe Arnault SAS Managing DirectorGroupe Les Echos SA DirectorLes Echos SAS Vice-Chairman of the Supervisory BoardLouis Vuitton Malletier SA Permanent Representative of Ufipar, DirectorLV Group SA DirectorMontaigne Finance SAS Member of the Supervisory CommitteeSemyrhamis SAS Member of the Supervisory CommitteeLouis Vuitton pour la Création, Fondation d’Entreprise Director

Other

France Atos SA(a) DirectorCarrefour SA(a) DirectorLes chevaux de Malmain SARL ManagerRothschild & Cie Banque SCS Member of the Supervisory BoardSuez Environnement Company SA(a) Director


France Ipsos SA(a) DirectorLyparis SAS Member of the Supervisory CommitteeSociété Financière Saint-Nivard SAS ChairmanTajan SA Director

International Go Invest SA (Belgium) Director

Mr. Antonio BELLONI, Group Managing Director


Governance


5|1_VA_V5 26/03/13 20:31 Page215


Tod’s SpA group

International DDV partecipazioni Srl (Italy) Sole DirectorDI.VI. Finanziaria Srl (Italy) Sole DirectorDiego Della Valle & C. Srl (Italy) Sole DirectorTod’s SpA (Italy) Chairman of the Board of Directors and Director delegateFondazione Della Valle Onlus (Italy) Chairman of the Board of Directors

Date of birth: December 30, 1953. Italian.Business address: Tod’s Spa – Corso Venisia 30 – 20121 Milan(Italy).Date of first appointment: May 15, 2002.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 500 shares.

Mr. Diego Della Valle joined the family business in 1975. Heplayed a fundamental role in the definition of the Company’sdevelopment strategy and the creation of the brands that haveshaped its image. He developed an innovative marketing plan,which has since served as a model to other companies aroundthe world in the luxury goods industry. Since October 2000, hehas been Chairman and Managing Director of Tod’s SpA,which today is a world leader in the luxury accessories sector.

OTHER INFORMATION

International Benefit Cosmetics LLC (United States) ManagerBulgari SpA (Italy) DirectorDe Beers Diamond Jewellers Limited (United Kingdom) DirectorDe Beers Diamond Jewellers Trademark Ltd (United Kingdom) DirectorDFS Group Limited (Bermuda) DirectorDFS Group Limited (Hong Kong) DirectorDFS Holdings Limited (Bermuda) DirectorDonna Karan International Inc. (United States) DirectorEdun Americas Inc. (United States) DirectorEdun Apparel Limited (United Kingdom) DirectorEmilio Pucci Srl (Italy) DirectorEmilio Pucci International BV (Netherlands) DirectorFendi SA (Luxembourg) DirectorFendi Srl (Italy) DirectorFendi Adele Srl (Italy) DirectorFendi Asia Pacific Limited (Hong Kong) DirectorFendi Italia Srl (Italy) DirectorFendi North America Inc. DirectorFresh Inc. (United States) DirectorLVMH (Shanghai) Management & Consultancy Co. Ltd (China) Chairman of the Board of DirectorsMoët Hennessy Distribution Rus LLC (Russia) Chairman of the Board of DirectorsNude Brands Limited (United Kingdom) DirectorRVL Holding BV (Netherlands) Member of the Supervisory BoardSephora Greece (Greece) DirectorThomas Pink Holdings Limited (United Kingdom) DirectorUfip (Ireland) Director

Other

France Centrale Photovoltaïque de la Roseraye Snc Associate


France Givenchy DirectorLe Bon Marché, Maison Aristide Boucicaut DirectorSephora Group Managing Director and DirectorLVMH Fragrance Brands GIE Member of the College of DirectorsParfums Luxe International – PLI SA Chairman and Chief Executive Officer

International DFS Group LP (United States) Director

Mr. Diego DELLA VALLE


Governance


5|1_VA_V5 26/03/13 20:31 Page216


Frère-Bourgeois group

International Erbé SA (Belgium) Chairman of the Board of DirectorsFinancière de la Sambre SA (Belgium) Chairman of the Board of DirectorsFrère-Bourgeois SA (Belgium) Chairman of the Board of DirectorsGroupe Bruxelles Lambert Chairman and Chief Executive Officer, Director delegateStichting Administratie Kantoor Frère-Bourgeois (Netherlands) Chairman of the Board of Directors


France LVMH Moët Hennessy – Louis Vuitton SA(a) DirectorGroupe Arnault SAS Permanent Representative of Belholding Belgium SA,

Member of the Management CommitteeChâteau Cheval Blanc Director

Other

France GDF-Suez SA(a) Vice-Chairman of the Board of Directors and DirectorMétropole Télévision “M6” SA(a) Chairman of the Supervisory Board

International GBL Energy (Luxembourg) Permanent Representative of Frère-Bourgeois SA, DirectorGBL Verwaltung SARL (Luxembourg) Permanent Representative of Frère-Bourgeois SA, DirectorPargesa Holding SA (Switzerland) Vice-Chairman, Managing Director and Member

of the Management CommitteeBanque Nationale de Belgique (Belgium) Honorary Chairman


France Raspail Investissements SA DirectorSuez SA Vice-Chairman of the Board of Directors and Director

Date of birth: February 4, 1926. Belgian.Business address: Frère-Bourgeois – 12, rue de la Blanche Borne– 6280 Loverval (Belgium).Date of first appointment: May 29, 1997.Expiration of term: Annual Meeting convened in 2015.Number of LVMH shares held in a personal capacity: 500 shares.

Having begun his career within the family metal products

business, Mr. Albert Frère turned his focus to industrialacquisitions and gained control, with his partners, of virtually allthe steel industry around Charleroi. In 1981, he founded PargesaHolding SA jointly with several partners. The following year,this company acquired interests in Groupe Bruxelles Lambert.In 1987 he was appointed Chairman of its Board of Directors,until December 31, 2011. He has also served as Chairman ofthe Board of Directors of Frère-Bourgeois SA since 1970.

OTHER INFORMATION



Other

International ACF Fiorentina SpA (Italy) Honorary ChairmanCompagnia Immobiliare Azionaria (Italy) Director


France Le Monde Europe SA DirectorInternational Assicurazioni Generali SpA (Italy) Director

Ferrari SpA (Italy) DirectorMarcolin SpA (Italy) DirectorRCS Mediagroup SpA (Italy) Director

Mr. Albert FRÈRE


Governance


5|1_VA_V5 26/03/13 20:31 Page217



France LVMH Moët Hennessy – Louis Vuitton SA(a) Vice-Chairman and DirectorChristian Dior SA(a) DirectorChâteau Cheval Blanc Director

International LVMH International SA (Belgium) DirectorLVMH Italia SpA (Italy) Vice-Chairman, Director DelegateLVMH Moët Hennessy – Louis Vuitton Inc. (United States) DirectorLVMH Publica SA (Belgium) DirectorSofidiv UK Limited (United Kingdom) Director

Other

France Redeg SARL Manager


France Christian Dior SA(a) Group Managing DirectorChristian Dior Couture SA DirectorFinancière Agache SA Chairman and Chief Executive OfficerFinancière Jean Goujon SAS ChairmanGroupe Arnault SAS Chief Executive OfficerHavas SA(a) DirectorLes Echos SAS Member of the Supervisory BoardLouis Vuitton Malletier SA DirectorRaspail Investissements SAS ChairmanSA du Château d’Yquem DirectorSemyrhamis SAS Member of the Supervisory CommitteeSofidiv SAS Member of the Management CommitteeSevrilux SNC Legal representative of Financière Agache, ManagerFondation Maeght Director

Date of birth: December 4, 1944. French.Business addresses: LVMH – 22, avenue Montaigne – 75008Paris (France) - LVMH Italia SpA – Via Tommaso Grossi, 2 –20121 Milan (Italy).Date of first appointment: January 13, 1989.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 155,699 shares.

Mr. Pierre Godé began his career as a lawyer admitted to theLille bar and has taught at the Lille and Nice university lawfaculties.

He has served as Advisor to the Chairman of LVMH and Chief Executive Officer of Groupe Arnault. Currently, he isVice-Chairman of LVMH’s Board of Directors and Directordelegated as Vice-Chairman of LVMH Italia.

OTHER INFORMATION

International Assicurazioni Generali SpA (Italy) Member of the International CommitteeFingen SA (Belgium) Chairman of the Board of DirectorsGBL Finance (Luxembourg) DirectorGroupe Bruxelles Lambert SA (Belgium) Chairman and Chief Executive OfficerGruppo Banca Leonardo (Italy) Director

Mr. Pierre GODÉ, Vice-Chairman


Governance


5|1_VA_V5 26/03/13 20:31 Page218



France LVMH Moët Hennessy – Louis Vuitton SA(a) DirectorMHD Moët Hennessy Diageo SAS DirectorMoët Hennessy SNC Vice-ChairmanMoët Hennessy Investissements SA Permanent Representative of Moët Hennessy SNC, Director

International Innovacion en Marcas de Prestigio SA de CV (Mexico) DirectorMoët Hennessy Asia Pacific Pte Ltd (Singapore) DirectorMoët Hennessy Belux SA (Belgium) DirectorMoët Hennessy Deutschland GmbH (Germany) Member of the Supervisory BoardMoët Hennessy Distribution RUS (Russia) DirectorMoët Hennessy de Mexico SA (Mexico) DirectorMoët Hennessy Inc. (United States) DirectorMoët Hennessy UK Ltd (United Kingdom) DirectorMoët Hennessy USA Inc. (United States) DirectorPolmos Zyrardow (Poland) DirectorThe Glenmorangie Company Ltd (United Kingdom) Director

Other

France Effisol SNC PartnerH Com Member of the Executive BoardK. Hennessy SARL Manager


France Champagne Moët & Chandon SCS Permanent Representative of Jas Hennessy & Co, Member of the Board of Partners

France Champagne SA DirectorGroupe Alain Crenn DirectorJas Hennessy & Co. SCS Member of the Board of Limited PartnersKrug, Vins Fins de Champagne SA Chairman and Chief Executive OfficerVeuve Clicquot Ponsardin SCS Member of the Board of Partners

International Jas Hennessy & Co. Ltd (Ireland) Chairman of the Board of DirectorsMillennium Brands Limited (Ireland) DirectorMoët Hennessy Danmark A/S (Denmark) Chairman of the Board of DirectorsMoët Hennessy Do Brasil (Brazil) DirectorSchieffelin & Somerset (United States) Member of the Supervisory Board

Date of birth: May 14, 1949. French.Business address: Moët Hennessy – 65, avenue de la GrandeArmée – 75016 Paris (France).Date of first appointment: June 6, 1990.Expiration of term: Annual Meeting convened in 2015.Number of LVMH shares held in a personal capacity: 74,926 shares.

Mr. Gilles Hennessy joined Jas Hennessy & Co in 1971 as headof marketing and sales and participated in Hennessy’s expansioninto the Japanese market in 1977, followed by the cognacproducer’s introduction into China, South Korea and Vietnam.He has served as Vice-Chairman of Moët Hennessy sinceSeptember 1, 2002.

OTHER INFORMATION


Governance

Mr. Gilles HENNESSY


5|1_VA_V5 26/03/13 20:31 Page219



France LVMH Moët Hennessy – Louis Vuitton SA(a) DirectorFinancière Agache SA Director

International LVMH Services Limited (United Kingdom) Chairman of the Board of Directors

Other

International Capital Generation Partners (United Kingdom) Chairman of the Board of DirectorsCaterpillar Inc. (United States) DirectorHong-Kong Land Holdings (Bermuda) DirectorMandarin Oriental International Holdings (Bermuda) DirectorMatheson & Co Ltd (United Kingdom) DirectorNorthern Trust Global Services (United Kingdom) DirectorSchindler Holding (Switzerland) DirectorTextron Corporation (United States) Director

Date of birth: July 6, 1941. British.Business address: LVMH House – 15 St George Street – W1S1FH London (United Kingdom).Date of first appointment: May 29, 1997.Expiration of term: Annual Meeting convened in 2015.Number of LVMH shares held in a personal capacity: 550 shares.

Lord Powell was Private Secretary and Advisor on ForeignAffairs and Defense to Prime Ministers Margaret Thatcher and John Major from 1983 to 1991. He sits as a cross-benchmember of the House of Lords, the British Parliament’s upperchamber.




Other

France Publicis Groupe SA(a) Member of the Supervisory BoardInternational Federal Reserve Bank of New York (United States) Member of the International Advisory Board

Hudson Institute (United States) Vice-Chairman of the Board of Trustees and senior fellow

Memorial Sloan-Kettering Cancer Center (United States) Director and member of the Executive CommitteeQatar Museum Authority (Qatar) DirectorThe Museum of Modern Art of New York (United States) President


International Ford Motor Co. (United States) DirectorInteractive Data Corporation (United States) Director

Lord POWELL of BAYSWATER

Date of birth: September 11, 1949. American.Business address: The Museum of Modern Art – 11 West 53Street – New York NY 10019 (United States).Date of first appointment: March 31, 2011.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 500 shares.

Mrs. Marie-Josée Kravis is an economist specializing in the fieldsof public policy and strategic planning. She started her career as financial analyst with Power Corporation of Canada andwent on to work with the General Solicitor of Canada and theCanadian minister for Supply and Services. She is Vice-Chairmanof the Board of Trustees and senior fellow of Hudson Institute,and since 2005 has been President of the Museum of ModernArt (MoMA) of New York.

Mrs. Marie-Josée KRAVIS

OTHER INFORMATION


Governance


5|1_VA_V5 26/03/13 20:31 Page220



France LVMH Moët Hennessy – Louis Vuitton SA(a) Advisory Board memberInternational Bulgari SpA (Italy) Chairman of the Board of Directors

Date of birth: October 8, 1937. Italian.Business address: Bulgari – Lungotevere Marzio, 11 – 00187Rome (Italy).Date of first appointment: March 31, 2011.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 500 shares.

The nephew of Mr. Sotirio Bulgari, founder of the House ofBulgari, Mr. Paolo Bulgari began his career as a specialist inprecious stones within the family business in 1960. He hasbeen Chairman of Bulgari since 1984. Recognized as one of theleading experts in precious stones, he embodies the spirit of the company and the inspiration of its creative team.


Vinci group

France Société des Autoroutes du Sud de la France DirectorVinci(a) Vice-Chairman of the Board of Directors and Senior Director



Other

France Sofisport SA Chairman of the Supervisory BoardVTB Bank (France) SA Member of the Supervisory BoardYsilop Consulting SARL ManagerYTSeuropaconsultants SARL Manager

International Solvay (Belgium) DirectorInternational Financial Reporting Standards Fondation (IFRS/IASB) Trustee


International Suez-Tractebel (Belgium) DirectorVTB (Russia) Director

1.3. Advisory Board members

Mr. Paolo BULGARI

Date of birth: July 22, 1948. French.Business address: YTSeuropa consultants – 13bis avenue de laMotte Picquet – 75007 Paris (France).Date of first appointment: May 14, 2009.Expiration of term: Annual Meeting convened in 2015.Number of LVMH shares held in a personal capacity: 500 shares.

Mr. Yves-Thibault de Silguy has held various positions withinFrench Government as well as within the European Community.

In 1988, he joined Usinor-Sacilor, where he was the Director of International Affairs until 1993. From 2000 to 2006, hesuccessively became member of the Management Board, ChiefExecutive and Group Managing Director of Suez. In June2006, he was appointed as Chairman of the Board of Directorsof Vinci and, in May 2010, as Vice-Chairman and SeniorDirector. Since May 2010, he has been Chairman of YTSeuropaConsultants.

OTHER INFORMATION


International Magna Holdings (Bermuda) Chairman of the Board of DirectorsSingapore Millennium Foundation Limited (Singapore) Director

Mr. Yves-Thibault de SILGUY


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France LVMH Moët Hennessy – Louis Vuitton SA(a) Advisory Board member

Other

France Publicis Groupe SA(a) Member of the Supervisory BoardInternational Carnegie Hall (United States) Vice-Chairman emeritus of the Board of Directors

Center for Strategic and International Studies (CSIS) (United States) DirectorCouncil on Foreign Relations (United States) AdvisorLazard Ltd (United States) Special Advisor to the Chairman

Date of birth: May 29, 1928. American.Business address: Lazard Frères & Co. LLC – 30 RockefellerPlaza – 62nd Floor – NY 10020, New York (United States).Date of first appointment on the Board of Directors: May 14,2001.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 1,000 shares.

Mr. Felix G. Rohatyn was United States Ambassador to Francefrom 1997 to 2000. He previously was Managing Partner ofLazard Frères & Co LLC. He also served on the Board of theNew York Stock Exchange from 1968 to 1972. He has been aSpecial Advisor of the President of Lazard Ltd since January 2010.



France LVMH Moët Hennessy – Louis Vuitton SA(a) Advisory Board memberGuerlain SA Permanent Representative of LVMH, DirectorL Capital FCPR Member of the Supervisory CommitteeL Capital 2 FCPR Member of the Consultation CommitteeL Capital 3 FCPR Member of the Consultation CommitteeLe Bon Marché, maison Aristide Boucicaut SA Permanent Representative of LVMH Finance, DirectorLV Group SA Permanent Representative of Ufipar, DirectorParfums Christian Dior SA Permanent Representative of LVMH, DirectorSA du Château d’Yquem Permanent Representative of Ufipar, DirectorWine & Co. SA Permanent Representative of LV Group, Director

International L Development & Management Limited Hong-Kong (Hong Kong) DirectorL Real Estate SA (Luxembourg) DirectorSociedad Textil Lonia (Spain) Director

Other

France LCL Obligations euro Sicav DirectorMongoual SA Permanent Representative of Société Montaigne Jean Goujon, DirectorObjectif Small Caps euro Sicav DirectorPGH Consultant SARL ManagerTikehau Investment Management SAS Member of the Supervisory Board

Mr. Felix G. ROHATYN

Date of birth: July 25, 1942. French.Business address: PGH Consultants – 10, avenue Frederic LePlay – 75007 Paris (France).Date of first appointment on the Board of Directors: May 13,2004.Expiration of term: Annual Meeting convened in 2014.Number of LVMH shares held in a personal capacity: 5,500 shares.

Mr. Patrick Houël worked at Credit Lyonnais for seven yearsbefore being named as Chief Financial Officer of Jas Hennessy& Co in 1978. In 1983, he became Deputy Chief FinancialOfficer of Moët Hennessy Group and took over the post of ChiefFinancial Officer of Moët Hennessy in 1985. In 1987, whenMoët Hennessy merged with Louis Vuitton, he served as ChiefFinancial Officer of the LVMH group until 2004. He wassubsequently Advisor to the Chairman until January 2008.

OTHER INFORMATION

Mr. Patrick HOUËL


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OTHER INFORMATION

2. STATUTORY AUDITORS

2.1. Principal Statutory Auditors

Start date Current term

of first term Date appointed End of term

ERNST & YOUNG et Autres June 6, 1998 April 15, 2010 Annual Meeting convened1 place des Saisons – 92400 Courbevoie – Paris La Défense 1 (France) to approve the financial Represented by Olivier Breillot and Gilles Cohen statements for the 2015 fiscal year

DELOITTE & ASSOCIÉS May 13, 2004 April 15, 2010 Annual Meeting convened185 avenue Charles de Gaulle – 92524 Neuilly-sur-Seine Cedex (France) to approve the financialRepresented by Thierry Benoit statements for the 2015 fiscal year

2.2. Alternate Statutory Auditors

Start date Current term

of first term Date appointed End of term

AUDITEX April 15, 2010 April 15, 2010 Annual Meeting convened 1 place des Saisons – 92400 Courbevoie – Paris La Défense 1 (France) to approve the financial statements for the 2015 fiscal year

Mr. Denis GRISON June 6, 1986 April 15, 2010 Annual Meeting convened61 rue Henri Regnault – 92075 Paris La Défense (France) to approve the financial statements for the 2015 fiscal year

2.3. Fees paid in 2011 and 2012

(in thousands of euros, excluding VAT) ERNST & YOUNG et Autres DELOITTE & ASSOCIÉS

2012 2011 2012 2011

Amount % Amount % Amount % Amount %

Audit

Statutory Audit, certification, audit of the individual company and consolidated financial statements: - LVMH Moët Hennessy – Louis Vuitton 1,102 8 1,054 8 676 11 713 11- Consolidated subsidiaries 7,841 54 7,299 54 3,863 64 3,783 61

Other services relating directly to the Statutory Audit assignment- LVMH Moët Hennessy – Louis Vuitton 636 4 1,436(a) 11 410 7 256 4- Consolidated subsidiaries 1,327(d) 9 165 1 602(d) 10 288 5

10,906 75 9,954 74 5,551 92 5,040 81Other services provided by the firms to consolidated subsidiaries

Legal, tax, employee-related(b) 3,002 21 2,750 20 445 7 366 6Other 611 4 738 6 30 1 810(c) 13

3,613 25 3,488 26 475 7 1,176 19

Total 14,519 100 13,442 100 6,026 100 6,216 100

(a) The amount paid in 2011 included services in relation with the post-acquisition audits of Bulgari and Ile de Beauté.(b) This mainly relates to tax advisory services performed outside France, to ensure that the Group’s subsidiaries and expatriates meet their local tax declaration obligations.(c) The amount paid in 2011 included residual IT assistance services rendered to Bulgari.(d) Of which, respectively, 1,154 thousand euros (Ernst & Young et Autres) and 434 thousand euros (Deloitte & Associés) related to the change in fiscal year-end date of the parent company,

Christian Dior SA.


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The Board of Directors is the strategic body of LVMH MoëtHennessy – Louis Vuitton SA. The competence, integrity andresponsibility of its members, clear and fair decisions reachedcollectively, and effective and secure controls are the ethicalprinciples that govern the Board.

The key priorities pursued by LVMH’s Board of Directors areenterprise value creation and the defense of the Company’sinterests.

LVMH’s Board of Directors acts as guarantor of the rights of each of its shareholders and ensures that shareholders fulfillall of their duties.

The Company adheres to the Code of Corporate Governance for Listed Companies published by AFEP and MEDEF.

Each of these elements contributes to preserving the level ofenterprise performance and transparency required to retain theconfidence of shareholders and partners in the Group.

3.1. Structure of the Board of Directors

The Board of Directors shall have a maximum of 18 members,a third of whom at least are appointed from among prominentindependent persons with no interests in the Company.

In determining whether a Director may be considered asindependent, the Board of Directors refers among others to the criteria set forth in the AFEP/MEDEF Code of CorporateGovernance for Listed Companies.

The number of Directors or permanent representatives of legalentities from outside companies, in which the Chairman of the LVMH Board of Directors or any LVMH Director servingas LVMH Chief Executive Officer or Managing Director holdsan office, shall be limited to four.

3.2. Missions of the Board of Directors

Apart from the selection of the Company’s managementstructure and the appointment of the Chairman of the Board of Directors, Chief Executive Officer and Group ManagingDirector(s), the principal missions of the Board of Directors are to:

- ensure that the Company’s interests and assets are protected;

- define the broad strategic orientations of the Company andthe Group and ensure that their implementation is monitored;

- approve the Company’s annual and half-yearly financialstatements;

- review the essential characteristics of the internal control and risk management systems adopted and implemented bythe Company;

- ensure that major risks to which the Company is exposed arein keeping with its strategies and its objectives, and that theyare taken into account in the management of the Company;

- verify the quality, reliability and fairness of the informationprovided to shareholders concerning the Company and theGroup, in particular to ensure that the management structureand the internal control and risk management systems are able to guarantee the quality and reliability of financialinformation published by the Company and to give a trueand fair view of the results and the financial position of theCompany and the Group;

- set out the organization principles and procedures for thePerformance Audit Committee;

- disseminate the collective values that guide the Companyand its employees and that govern relationships withconsumers and with partners and suppliers of the Companyand the Group;

- promote a policy of economic development consistent with a social and citizenship policy based on concepts that includerespect for human beings and the preservation of theenvironment in which it operates.

3.3. Operating procedures of the Board of Directors

The Board of Directors shall hold at least four meetings a year.

Any individual who accepts the position of Director orpermanent representative of a legal entity appointed as Directorof the Company shall agree to attend Board of Directors’ andShareholders’ Meetings regularly.

On the recommendation of the Board’s Nominations andCompensation Committee, repeated unjustified absenteeismby a Director may cause the Board of Directors to reconsiderhis appointment.

So that members of the Board of Directors can fully serve the function entrusted to them, the Chief Executive Officerprovides members with any and all information necessary forthe performance of their duties.

Decisions by the Board of Directors shall be made by simplemajority vote and are adopted as a board.

If they deem appropriate, independent Directors may meetwithout requiring the presence of the other members of theBoard of Directors.

For special or important issues, the Board of Directors mayestablish one or more ad hoc committees.

Each member of the Board of Directors shall act in the interestsand on behalf of all shareholders.

Once each year, the Board of Directors evaluates its proceduresand informs shareholders as to its conclusions in a reportpresented to the Shareholders’ Meeting. In addition, at leastonce every three years, a fully documented review of the workof the Board, its organization and its procedures is conducted.

OTHER INFORMATION

3. CHARTER OF THE BOARD OF DIRECTORS


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A specialized committee responsible for auditing performanceoperates within the Board of Directors, acting under theresponsibility of the Board of Directors.

4.1. Structure of the Committee

The Performance Audit Committee shall be made up of at leastthree Directors appointed by the Board of Directors. At leasttwo-thirds of the members shall be independent Directors. Themajority of the Committee’s members must have held a positionas a Managing Director or a position involving equivalentresponsibilities or possess specific expertise in financial andaccounting matters.

The Board of Directors shall appoint a Chairman of theCommittee from among its members. The maximum term ofthe Chairman of the Committee is five years.

Neither the Chairman of the Board of Directors nor anyDirector performing the duties of Chief Executive Officer orGroup Managing Director of LVMH may be a member of theCommittee.

A Director may not be appointed as a member of the Committeeif he or she comes from a company for which an LVMHDirector serves as a member of a committee comparable infunction.

4. INTERNAL RULES OF THE PERFORMANCE AUDIT COMMITTEE

OTHER INFORMATION

3.4. Responsibilities

The members of the Board of Directors shall be required tofamiliarize themselves with the general and specific obligationsof their office, and with all applicable laws and regulations.

The members of the Board of Directors shall be required torespect the confidentiality of any information of which they maybecome aware in the course of their duties concerning theCompany or the Group, until such information is made publicby the Company.

The members of the Board of Directors agree not to trade in theCompany’s shares, either directly or indirectly, for their ownaccount or on behalf of any third parties, based on informationdisclosed to them in the course of their duties that is not knownto the public. Moreover, members of the Board of Directorsshall refrain from engaging in any stock market transactionsinvolving the Company’s shares and from any exercise ofoptions for the duration of a period:

- beginning on the 30th calendar day preceding the publicationof the Company’s annual or half-yearly consolidated financialstatements and ending the day after said publication;

- beginning on the 15th calendar day preceding the Company’squarterly consolidated revenue announcement and endingthe day after said announcement.

The Directors agree to:

- warn the Chairman of the Board of Directors of any instance,even potential, of a conflict of interest between their duties andresponsibilities to the Company and their private interestsand/or other duties and responsibilities;

- abstain from voting on any issue that concerns them directlyor indirectly;

- inform the Chairman of the Board of Directors of any operationor agreement entered into with any LVMH group companyto which they are a party;

- provide details to the Chairman of the Board of Directors ofany formal investigation, conviction in relation to fraudulent

offenses, any official public incrimination and/or sanctions, anydisqualifications from acting as a member of an administrative,management or supervisory body imposed by a court as wellas of any bankruptcy, receivership or liquidation proceedingsto which they have been a party.

The Chairman of the Board of Directors shall apprize thePerformance Audit Committee upon receiving any informationof this type.

3.5. Compensation

The Shareholders’ Meeting shall set the total amount of Directors’fees to be paid to the members of the Board of Directors.

This amount shall be distributed among all members of the Boardof Directors and the Advisors, if any, on the recommendation ofthe members of the Directors’ Nominations and CompensationCommittee, taking into account their specific responsibilitieson the Board (e.g. chairman, vice-chairman, participation oncommittees created within the Board).

The settlement of a portion of these fees shall be contingentupon attendance by Directors at the meetings of the Board of Directors and, where applicable, the Committee(s) of whichthey are members, calculated according to a formula to bedetermined by the Board of Directors, acting upon a proposalsubmitted by the Nominations and Compensation Committee.

Exceptional compensation may be paid to some Directors forany special assignment they assume. The amount shall bedetermined by the Board of Directors and reported to theCompany’s Statutory Auditors.

3.6. Scope of application

This Charter shall apply to all members of the Board of Directorsas well as all the members of the Advisory Board. It must begiven to each candidate for the position of Director and to eachpermanent representative of a legal entity prior to the start ofthe letter’s term of office.


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OTHER INFORMATION


Governance

4.2. Role of the Committee

The principal missions of the Committee are to:

- monitor the process for preparing financial information,particularly the individual company and consolidated financialstatements, and verify the quality of this information;

- monitor the statutory audit of the individual company andconsolidated financial statements by the Statutory Auditors,whose conclusions and recommendations it examines;

- ensure the existence, pertinence, application and effectivenessof internal control and risk management systems, monitorthe ongoing effectiveness of these systems, and makerecommendations to the Chief Executive Officer concerningthe priorities and general guidelines for the work of the InternalAudit team;

- examine risks to the Statutory Auditors’ independence and, if necessary, identify safeguards to be put in place in order to minimize the potential of risks to compromise theirindependence, issue an opinion on the fees paid to the StatutoryAuditors, as well as those paid to the network to which theybelong, by the Company and the companies it controls or iscontrolled by, whether in relation to their statutory auditresponsibilities or other related assignments, oversee theprocedure for the selection of the Company’s StatutoryAuditors, and make a recommendation on the appointmentsto be submitted to the Shareholders’ Meeting in considerationof the results of this procedure;

- analyze the exposure of the Company and the Group to risks,and in particular to those identified by the internal controland risk management systems, as well as material off-balancesheet commitments of the Company and the Group;

- review major agreements entered into by Group companiesand agreements entered into by any Group company with a third-party company in which a Director of the LVMHparent company is also a senior executive or principalshareholder. Significant operations within the scope of theprovisions of Article L. 225-38 of the French Commercial Coderequire an opinion issued by an independent expert appointedupon the proposal of the Performance Audit Committee;

- assess any instances of conflict of interest that may affect aDirector and recommend suitable measures to prevent orcorrect them.

4.3. Operating procedures of the Committee

A Director’s agreement to serve on the Committee shall implythat he will devote the necessary time and attention to his dutieson the Committee.

The Committee shall meet at least twice a year, without theChairman of the Board of Directors, the Chief Executive Officer

and the Group Managing Director(s), before the Board ofDirectors’ meetings in which the agenda includes a review ofthe annual and half-yearly parent company and consolidatedfinancial statements.

If necessary, the Committee may be required to hold specialmeetings, when an event occurs that may have a significant effecton the parent company or consolidated financial statements.

Before each meeting, all pertinent documents and analysesrelating to the different items on the agenda for the meetingare sent to each member of the Committee.

Any document submitted to the Committee in connectionwith its responsibilities shall be considered confidential as longas it has not been made public by the Company.

The proceedings of the Committee are confidential and shallnot be discussed outside the Board of Directors.

Decisions of the Committee shall be made by simple majorityvote and shall be deemed to have been reached as a board.

The proceedings of each Committee meeting shall be recordedin minutes of the meeting.

4.4. Prerogatives of the Committee

The Committee shall report on its work to the Board of Directors.It shall submit to the Board its findings, recommendations andsuggestions.

The Committee may request any and all accounting, legal or financial documents it deems necessary to carry out itsresponsibilities.

The Committee may call upon the Company’s staff membersresponsible for preparing the financial statements, carrying out internal control procedures, conducting internal audits,applying risk management or cash management procedures,investigating tax or legal matters, as well as the StatutoryAuditors, to appear before it on any number of occasions toaddress issues in detail, without requiring the presence of theChairman of the Board, the Chief Executive Officer, or GroupManaging Director(s) of LVMH. These meetings may also takeplace in the absence of those responsible for the accounting andfinancial functions.

After having duly notified the Chairman of the Board ofDirectors, the Committee may seek assistance from externalexperts if circumstances require.

4.5. Compensation of Committee members

The Committee members and its Chairman may receive aspecial Director’s fee, the amount of which shall be determinedby the Board of Directors and charged to the total financialpackage allocated by the Shareholders’ Meeting.

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A specialized committee responsible for the nomination andcompensation of Directors operates within the Board ofDirectors, acting under the authority of the Board of Directors.

5.1. Structure of the Committee

The Board’s Nominations and Compensation Committee shallbe made up of at least three Directors and/or Advisors. Themajority of its members shall be independent. Its membersshall be appointed by the Board of Directors.

The Board of Directors shall appoint a Chairman of theCommittee from among its members.

Neither the Chairman of the Board of Directors, nor anyDirector serving as Chief Executive Officer or Group ManagingDirector of LVMH, or who are compensated by any LVMHsubsidiary, may be a member of the Committee.

A Director may not be appointed as a member of the Committeeif he or she comes from a company for which an LVMH Directorserves as a member of a committee comparable in function.

5.2. Role of the Committee

After undertaking its own review, the Committee is responsiblefor issuing opinions on applications and renewals for the positions of Director and Advisor, making certain that theCompany’s Board of Directors includes prominent independentpersons outside the Company. In particular, it discusses theindependence of Board members with respect to applicablecriteria.

The Committee’s opinion may also be sought by the Chairmanof the Board of Directors or by any Directors serving as ChiefExecutive Officer or Managing Director, on potential membersof the Group’s Executive Committee or candidates for seniormanagement positions at the Group’s major subsidiaries. It isthe consultative body responsible for defining the measures to betaken in the event that such an office falls prematurely vacant.

After review, the Committee shall make recommendations onthe distribution of directors’ fees paid by the Company andprepares a summary table of directors’ fees effectively paid toeach Director.

It makes proposals to the Board on the fixed and variableportions of compensation and the benefits in kind to be received(i) by the Chairman of the Company’s Board of Directors, itsChief Executive Officer and its Group Managing Director(s)and (ii) by Directors and Advisors who are employees of theCompany or any of its subsidiaries by virtue of an employmentcontract; it also issues an opinion on any consultancy agreementsentered into, either directly or indirectly, with these sameindividuals. The Committee issues recommendations regarding

the qualitative and quantitative criteria on the basis of whichthe variable portion of compensation for senior executiveofficers is to be determined as well as the performance conditionsapplicable to the exercise of options and the definitive allocationof bonus shares.

The Committee expresses its opinion on the general policy forthe allocation of options and bonus shares within the Group,also making proposals on the granting of options and bonusshares to senior executive officers and to Directors and Advisorswho are employees of the Company or any of its subsidiaries byvirtue of an employment contract.

It adopts positions on any supplemental pension schemesestablished by the Company in favor of its senior executivesand issues recommendations on any retirement benefits thatmight be paid to them upon leaving the Company.

The Committee issues an opinion relating to the fixed and variableportions of compensation, whether immediate or deferred, andbenefits in kind to be received by members of the Group’sExecutive Committee and by other senior executive officers ofthe Group’s main subsidiaries, and on the allocation of optionsand bonus shares to these same individuals. To this end, theCommittee may request copies of any agreements concludedwith these individuals and of any accounting information relatingto payments made.

The Committee is also entitled to receive information onprocedures relating to the payment of external contractors’ feesand the reimbursement of their expenses, issuing anyrecommendations deemed necessary on this subject.

The Committee shall prepare a draft report every year for theShareholders’ Meeting, which it shall submit to the Board ofDirectors, on the compensation of Company officers, any bonusshares granted to them during the year as well as any stockoptions granted or exercised by said officers in the same period.The report shall also list the ten employees of the Company thatreceived and exercised the most options.

5.3. Operating procedures of the Committee

A Director’s agreement to serve on the Committee implies thathe will devote the necessary time and energy to his duties onthe Committee.

The Committee shall meet whenever necessary, either at the initiative of the Chairman of the Board of Directors, or theDirector serving as Chief Executive Officer, or of two Committeemembers.

The proceedings of the Committee are confidential and shallnot be discussed outside the Board of Directors.

Decisions of the Committee shall be made by simple majorityvote and shall be deemed to have been reached as a board.

5. INTERNAL RULES OF THE NOMINATIONS AND COMPENSATION COMMITTEE

OTHER INFORMATION


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The Bylaws presented below reflect the amendments proposedto the Shareholders’ Meeting of April 18, 2013.

Article 1 - Legal Form

The Company, which was formed on April 19, 1962 by way of transformation of a “Société à responsabilité limitée” into a“Société anonyme”, is governed by the provisions of the FrenchCommercial Code as well as by the present Bylaws.

Article 2 - Corporate purpose

1. Any taking of interests, through a direct or indirect equityinvestment, a contribution, merger, spin-off, or joint-venturewith any company or group existing or to be formed, operatingany commercial, industrial, agricultural, personal property,real estate or financial operations, and among others:

- trade in champagne and other wines, cognac and other spiritsand, more generally, any food or beverage product;

- trade in all pharmaceutical products, perfumes and cosmeticsand, more generally, products related to hygiene, beauty andskincare;

- the manufacture, sale and promotion of travel articles, luggage,bags, leather goods, clothing articles, accessories, as well asany high quality and branded articles or products;

- the operation of vineyards, horticultural and arboriculturalestates, as well as the development of any related biotechnologicalprocess;

- the operation of any real estate;

- the development of any trademark, signature, model, designand, more generally, any industrial, literary or artistic propertyright.

2. More generally, to undertake directly any commercial,industrial, agricultural, viticultural operations, or any operationrelating to personal or real property, movable or immovableproperty or financial, management or service operation in anyof the fields of activities described in paragraph 1 above.

Article 3 - Corporate name

The name of the Company is:LVMH Moët Hennessy – Louis Vuitton

All deeds and documents originating from the Company and addressed to third parties, in particular letters, invoices,advertisements and publications of all kinds, must indicate thisname immediately preceded or followed by the words “Sociétéanonyme” or the initials “SA” which should appear legibly and the disclosure of the amount of the share capital, togetherwith the name of the Register of Commerce and Companieswith which the Company is registered and the number underwhich it is registered.

Article 4 - Registered office

The registered office of the Company is at: Paris -75008, 22,avenue Montaigne.It may be transferred to any other place within the same district(“département”) or any adjacent district pursuant to a decision of the Board of Directors subject to the approval of saiddecision by the next Ordinary Shareholders’ Meeting, and toany other place pursuant to a resolution of the ExtraordinaryShareholders’ Meeting.

Article 5 – Duration

The Company, which came into existence on January 1, 1923,shall end on December 31, 2021, except in the event of earlydissolution or extension as provided by these Bylaws.

Article 6 – Capital

1. The share capital is set to the sum of EUR 152,300,959.50(one hundred and fifty-two million, three hundred thousand,nine hundred and fifty-nine euros and fifty cents) divided into507,669,865 (five hundred and seven million, six hundredand sixty-nine thousand, eight hundred and sixty-five) fully-paid shares with a nominal amount of EUR 0.30 per share.

287,232 shares of FRF 50 were issued further to the contributionin kind, valued at FRF 34,676,410, completed upon the mergerwith Champagne Mercier.

772,877 shares of FRF 50 were issued further to the contributionby the shareholders of Jas Hennessy & Co. of 772,877 shares of said company, valued at FRF 407,306,179.

2,989,110 shares of FRF 50 were issued further to the contributionin kind, valued at FRF 1,670,164,511, completed upon themerger with Louis Vuitton.

6. BYLAWS

OTHER INFORMATION

5.4. Prerogatives of the Committee

The Committee shall report on its work to the Board of Directors.It shall submit to the Board its findings, recommendations andsuggestions.

Members of the Committee may request any and all availableinformation that they deem necessary for the purposes ofcarrying out their responsibilities.

Any unfavorable opinion issued by the Committee on anyproposal must be substantiated.

5.5. Compensation of Committee members

The members and Chairman of the Committee may receive aspecial Director’s fee, the amount of which shall be determinedby the Board of Directors and charged to the total financialpackage allocated by the Shareholders’ Meeting.


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OTHER INFORMATION

1,343,150 shares were issued further to the contribution madeby BM Holding, of 1,961,048 shares of Le Bon Marché,Maison Aristide Boucicaut, valued at FRF 1,700,000,000.

18,037,011 shares with a nominal value of EUR 0.30 were issuedfurther to the contribution made by Messrs. Paolo Bulgari,Nicola Bulgari and Francesco Trapani of 166,382,348 Bulgarishares, valued at EUR 2,038,183,763.

2. The share capital may be increased by a resolution of theExtraordinary Shareholders’ Meeting. However, when theincrease of the capital is completed by way of capitalization ofreserves, profits or issue premium, the Shareholders’ Meetingshall vote subject to the quorum and majority conditions ofthe Ordinary Shareholders’ Meetings.

3. The share capital may, by resolution of the ExtraordinaryShareholders’ Meeting, be amortized by means of equalrepayment for each share by use of profits or reserves otherthan the legal reserve, without such amortization causing thereduction of the capital.

4. The share capital may also be reduced by resolution ofthe Extraordinary Shareholders’ Meeting either by reducingthe nominal value or the number of the shares.

Article 7 - Payment for the shares

The amounts to be paid for the shares to be subscribed in cashpursuant to an increase of the capital are payable as provided bythe Extraordinary Shareholders’ Meeting.

Upon subscription the initial payment is of at least one fourthof the nominal value of the shares. The issue premium, if any,must be paid in full on subscription.

The balance of the nominal value of the shares shall be paid, as provided by the Board of Directors, in one or several stages,not later than five years from the date at which the increase incapital was completed.

Calls for funds shall be notified to the shareholders eight daysbefore the time fixed for each payment, either by registeredletter with acknowledgement of receipt or by a notice insertedin a legal gazette published where the registered office is located.

The sums payable for the unpaid part of the shares are subjectto a daily interest charge at a rate of 5% per annum, withoutneed of Court action, as from the date at which they fell due.

When the shares are not fully paid up, upon issuance, they mustbe in the registered form and so remain until they are fullypaid up.

Article 8 - Rights and obligations attached to the shares

The rights and obligations attached to a share follow the shareto any transferee to whom it may be transferred and the transferincludes all the payable and unpaid dividends and dividendspayable, as well as, as the case may be, the corresponding sharein reserves and provisions.

The ownership of a share shall imply ipso facto the acceptanceof the present Bylaws and of the decisions of the Shareholders’Meetings.

In addition to the right to vote which is attached by law to theshares, each of them carries a right to a share of corporate assets,of profits, and of any liquidation surplus, proportional to thenumber and nominal value of the existing shares.

As the case may be, and subject to any statutory provision, all tax exemptions or charges as well as all taxation which maybe borne by the Company shall be taken into account prior toany reimbursement either within the course of the life of theCompany or upon its liquidation so that, according to theirnominal value, all the existing shares of the same class shallreceive the same net amount irrespective of their origin or theirdate of issuance.

The shareholders shall be responsible for any negative equity ofthe Company up to the nominal value of the shares they hold.

Each time it shall be necessary to hold a certain number ofshares in order to exercise a right, it will be the responsibilityof the shareholder(s) having less than the required number totake the necessary actions to form a group with a sufficient numberof shares.

Article 9 - Form and transfer of the shares

Fully paid up shares are either in the registered or in the bearerform, as the shareholder may decide, subject however to thestatutory provisions relating to the shares held by certainpersons.

The shares are registered in the accounts as provided by lawand regulations in force.

However, certificates, or any other document, representing theshares may be issued when and as provided by law.

The ownership of the shares in the registered form is evidencedby their registration in registered accounts.

When the owner of the shares is not a French resident withinthe meaning applied Article 102 of the French Civil Code, anyintermediary may be registered on behalf of such owner. Suchregistration may be made in the form of a joint account orseveral individual accounts, each corresponding to one owner.

At the time such account is opened through either the issuingCompany or the financial intermediary authorized as accountholder, the registered intermediary shall be required to declarehis capacity as intermediary holding shares on behalf of anotherparty.

The shares registered in accounts are freely transferable bytransfer from one account to another.

Prior approval of the transferee is required only for partly paidup shares.

All costs resulting from the transfer shall be borne by the transferee.Shares with payments in arrears may not be transferred.

Article 10 – Securities

The Company may issue any security authorized by law.

Certificates, or any other document, representing securities maybe issued as and when provided by law.


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Article 11 - Board of Directors

1. Subject to the exceptions provided by law, the Board ofDirectors is composed of three to eighteen members, who maybe individuals or legal entities appointed by the OrdinaryShareholders’ Meeting.

A legal entity must, at the time of its appointment, designatean individual, who will be its permanent representative on the Board of Directors. The term of office of a permanentrepresentative is the same as the legal entity that he represents.When the legal entity dismisses its permanent representative,it must at the same time provide for its replacement. The sameapplies in case of death or resignation of the permanentrepresentative.

2. Each member of the Board of Directors must during itsterm of office own at least five hundred (500) shares of theCompany.

If, at the time of its appointment, a member of the Board of Directors does not own the required number of shares or if,during its term of office, it ceases to be the owner thereof, it shalldispose of a period of six months to purchase such number of shares, in default of which it shall be automatically deemedto have resigned.

3. Nobody being more than seventy years old shall beappointed Director if, as a result of his appointment, the numberof Directors who are more than seventy years old wouldexceed one-third of the members of the Board. The numberof members of the Board of Directors who are more thanseventy years old may not exceed one- third, rounded to thenext higher number if this total is not a whole number, of theDirectors in office. Whenever this limit is exceeded, the termin office of the oldest appointed member shall be deemed tohave expired at the close of the Ordinary Shareholders’ Meetingconvened to approve the financial statements of the fiscal yearduring which the limit was exceeded.

4. Directors are appointed for a term of three years. The dutiesof a Director shall terminate at the close of the OrdinaryShareholders’ Meeting convened to approve the accounts ofthe preceding fiscal year and held in the year during whichthe term of office of said Director comes to an end.

However, in order to allow a renewal of the terms which is asegalitarian as possible and in any case complete for each periodof three years, the Board of Directors will have the option to determine the order of retirement of the Directors by the impartial selection in a Board Meeting of one-third of theDirectors each year. Once the rotation has been established,renewals will take place according to seniority.

The Directors may always be re-elected; they may be revokedat any time by decision of the Shareholders’ Meeting.

In the event of the death or resignation of one or severalDirectors, the Board of Directors may make provisionalappointments between two Shareholders’ Meetings.

Appointments made by the Board of Directors pursuant to theabove paragraph are submitted to the ratification of the nextOrdinary Shareholders’ Meeting. Should the Meeting of the

shareholders fail to ratify these provisional appointments, this shall not affect the validity of prior resolutions and acts ofthe Board of Directors.

When the number of members of the Board of Directors fallsbelow the statutory minimum, the remaining Directors mustimmediately convene an Ordinary Shareholders’ Meeting inorder to supplement the membership of the Board of Directors.

The Director appointed to replace another Director shall remainin office for the remaining term of office of its predecessor only.

5. A salaried employee of the Company may be appointed asa Director provided that his employment contract antedateshis appointment and corresponds to a position actually held.In such case, he shall not lose the benefit of his employmentcontract. The number of Directors bound to the Company byan employment contract may not exceed one-third of theDirectors in office.

Article 12 - Organization and operation of the Board of Directors

The Board of Directors shall elect a Chairman, who must be anindividual, from among its members. It shall determine histerm of office, which cannot exceed that of his office as Directorand may dismiss him at any time.

The Board shall also determine the compensation to be paid tothe Chairman.

The Chairman of the Board of Directors cannot be more thanseventy-five years old. Should the Chairman reach this age limit during his term of office, his appointment shall bedeemed to have expired at the close of the Ordinary Shareholders’Meeting convened to approve the financial statements of thefiscal year during which the limit was reached. Subject to thisprovision, the Chairman of the Board may always be re-elected.

The Board may always elect one or several Vice-Chairman (men).It shall determine their term of office which cannot exceed thatof their respective office as Director.

The officers of the meeting are the Chairman, the Vice-Chairman(men) and the Secretary.

The Secretary may be chosen from outside the Directors or the shareholders. The Board determines its term of office. TheSecretary may always be re-elected.

Article 13 - Meetings of the Board of Directors

1. The Board, convened by its Chairman, meets as often asrequired by the interests of the Company.

Notice is served in the form of a letter sent to each Director, atleast eight days prior to the meeting; it shall mention the agendaof the meeting as set by the person(s) convening the meeting.

However, the Board may meet without notice upon verbal noticeand the agenda may be set at the opening of the meeting:

- all Directors in office are present or represented; or

- when it is convened by the Chairman during a Shareholders’Meeting.


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Moreover a meeting of the Board of Directors may also beconvened by any group of Directors, representing at least one-third of the members of the Board, if the Board has notmet for more than two months. In such case, they shall indicatethe agenda of the meeting.

The meetings of the Board are held at the registered office or atany place, in France or abroad.

2. Any Director may give to another Director, by letter, cable,telex, or fax, a proxy to another Director to be represented at a meeting of the Board. However, each Director may onlydispose of one proxy during the meeting.

The Board may validly act only if at least one-half of its membersare present.

Directors who participate in Board meetings by means ofvideoconferencing or other telecommunication methods underthe conditions defined by the internal rules and regulations of the Board of Directors shall be deemed to be present for the purposes of calculating the quorum and majority. However,actual presence or representation shall be necessary for anyBoard resolutions relating to the preparation of the parentcompany financial statements and consolidated financialstatements, and to the drafting of the Management Report andthe report on the Group’s Management.

Decisions are made by a majority of votes of the memberspresent or represented, each Director being entitled to one votefor himself and one for the Director he represents. In the eventof a tie vote, the Chairman’s vote is the deciding vote.

3. An attendance register shall be kept and signed by all theDirectors attending each meeting of the Board of Directors.

4. To be valid, copies or abstracts of the minutes of themeetings of the Board of Directors shall be certified by the Chairman of the Board of Directors, the Chief ExecutiveOfficer, the Secretary, the Director temporarily delegated toperform the duties of Chairman or by a representative dulyauthorized to that effect.

Article 14 - Powers of the Board of Directors

The Board of Directors sets guidelines for the Company’s activitiesand shall ensure their implementation. Subject to the powersexpressly granted to the Shareholders’ Meetings and within the limits of the corporate purpose, it addresses any issuerelating to the Company’s proper operation and settles the affairsconcerning it through its resolutions.

In its relations with third parties, the Company is bound evenby acts of the Board of Directors falling outside the scope of thecorporate purpose, unless it demonstrates that the third partyknew that the act exceeded such purpose or that it could nothave ignored it given the circumstances, it being specified thatmere publication of the Bylaws is not sufficient proof thereof.

The Board of Directors performs such monitoring andverifications as it deems appropriate. Each Director receives allnecessary information for completing his assignment and mayrequest any documents he deems useful.

Article 15 - Powers of the Chairman of the Board of Directors

1. The Chairman of the Board of Directors chairs the meetingsof the Board, and organizes and directs its work, for which hereports to the Shareholders’ Meeting. He ensures the properoperation of the corporate bodies and verifies, in particular, thatthe Directors are capable of fulfilling their assignments.

2. In case of temporary disability or death of the Chairman,the Board may temporarily delegate a Director to perform theduties of the Chairman.

In case of temporary disability this delegation is granted for a limited duration; it is renewable. In case of death it is granteduntil the election of the new Chairman.

Article 16 - General Management

1. Choice between the two methods of General Management

The Company’s General Management is performed, under hisresponsibility, either by the Chairman of the Board of Directors,or by another individual appointed by the Board of Directorsand bearing the title of Chief Executive Officer, dependingupon the decision of the Board of Directors choosing betweenthe two methods of exercising the General Managementfunction. It shall inform the shareholders thereof in accordancewith the regulatory conditions.

When the Company’s General Management is assumed by theChairman of the Board of Directors, the following provisionsrelating to the Chief Executive Officer shall apply to him.

2. Chief Executive Officer

The Chief Executive Officer may or may not be chosen fromamong the Directors. The Board sets his term of office as wellas his compensation. The age limit for serving as Chief ExecutiveOfficer is seventy-five years. Should the Chief Executive Officerreach this age limit during his term of office, his appointmentshall be deemed to have expired at the close of the OrdinaryShareholders’ Meeting convened to approve the financialstatements of the fiscal year during which the limit was reached.

The Chief Executive Officer may be dismissed at any time bythe Board of Directors. If the dismissal is decided without justcause, it may give rise to damages, unless the Chief ExecutiveOfficer assumes the duties of Chairman of the Board of Directors.

The Chief Executive Officer is vested with the most extensivepowers to act under any circumstances on behalf of the Company.He exercises such powers within the limits of the corporatepurpose, and subject to the powers expressly granted by law tothe Shareholders’ Meeting and to the Board of Directors.

He shall represent the Company in its relations with third parties.The Company is bound even by acts of the Chief ExecutiveOfficer falling outside the scope of the corporate purpose,unless it demonstrates that the third party knew that the actexceeded such purpose or could not have ignored it given the circumstances, it being specified that mere publication ofthe Bylaws is not sufficient to establish such proof.


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The provisions of the Bylaws or decisions of the Board ofDirectors limiting the powers of the Chief Executive Officerare not binding on third parties.

3. Group Managing Directors

Upon the proposal of the Chief Executive Officer, the Board ofDirectors may appoint one or more individuals responsible forassisting the Chief Executive Officer, with the title of GroupManaging Director, for whom it shall set the compensation.

There may not be more than five Group Managing Directorsserving in this capacity at the same time.

Group Managing Directors may be dismissed at any time by the Board of Directors, upon the proposal of the ChiefExecutive Officer. If the dismissal is decided without justcause, it may give rise to damages.

When the Chief Executive Officer ceases to exercise his dutiesor is prevented from doing so, the Group Managing Directorsremain in office with the same powers until the appointment of the new Chief Executive Officer, unless resolved otherwiseby the Board.

In agreement with the Chief Executive Officer, the Board ofDirectors sets the scope and duration of the powers granted toGroup Managing Directors. With regard to third parties, theyshall have the same powers as the Chief Executive Officer.

The age limit for eligibility to perform the duties of ManagingDirector is sixty-five years. Should a Group Managing Directorreach this age limit during his term of office, his appointmentshall be deemed to have expired at the close of the OrdinaryShareholders’ Meeting convened to approve the financialstatements of the fiscal year during which the limit was reached.

Article 17 - Delegation of powers

The Board of Directors may grant one or more Directors, or third parties, whether shareholders or not, with the abilityto replace it, any authority, assignments and special offices forone or more specific purposes.

It may resolve to create committees responsible for studyingsuch issues as it or the Chief Executive Officer submit theretofor examination. Such committees shall perform their duties atthe discretion of the Board, which sets their composition andresponsibilities, as well as the compensation of their members,if any.

The Chief Executive Officer and the Group Managing Directorsmay, at their discretion, consent to partial delegations ofauthority to third parties.

Article 18 - Agreements subject to authorization

1. Any sureties, endorsements and guarantees granted by theCompany must be authorized by the Board of Directors asprovided by law.

2. Any agreement to be entered into between the Companyand one of its Directors or its Chief Executive Officer or oneof its Managing Directors, whether directly or indirectly or

through an intermediary must be submitted to the priorauthorization of the Board of Directors under the conditionsprovided by law.

Such prior authorization is also required for agreementsbetween the Company and another enterprise, should one of the Directors or the Chief Executive Officer or one of theGroup Managing Directors of the Company be the or an owner,partner with unlimited liability, company manager, Director,Chief Executive Officer, member of the Executive Board orSupervisory Board, or in a general sense top-ranking executiveof this other enterprise.

The same shall hold for any agreement entered into with ashareholder holding a proportion of voting rights greater than10% or with any company which controls a company holdingmore than 10% of the Company’s share capital.

The above provisions shall not apply to agreements concludedwithin the normal course of the Company’s operations and atarm’s length.

Article 19 - Prohibited agreements

Directors, other than legal entities, are forbidden to contractloans from the Company in any form whatsoever, to secure anoverdraft from it, on current account or otherwise, or to havethe Company guarantee or secure their undertakings towardthird parties.

The same prohibition applies to the Chief Executive Officer,the Group Managing Directors and to permanent representativesof legal entities which are Directors. It also applies to spouses,ascendants and descendants of the persons referred to in thisarticle as well as to all persons acting as intermediaries.

Article 20 - Remuneration of the Directors

1. The Ordinary Shareholders’ Meeting may allow to theDirectors in remuneration for their services a fixed sum as attendance fees, the amount of which is to be included inthe operating expenses of the Company.

The Board shall divide the amount of these attendance feesamong its members as it deems fit.

2. The Board may also authorize the reimbursement of thetravel fares and expenses and of the expenses incurred by the Directors in the interest of the Company.

3. The Board may allow special payments to Directors for projects assigned or delegated to them pursuant to theprovisions of Article 17 of these Bylaws. These payments, tobe included in the operating expenses of the Company, shallbe subject to the provisions of Article 18 of these Bylaws.

4. Apart from the amounts provided for under the threeparagraphs above as well as from the salaries of the Directorsbeing employees of the Company, and from the compensation,whether fixed or proportional, to be paid to the Chairman, or the Director temporarily delegated in the duties ofChairman, the Chief Executive Officer and, as applicable, theGroup Managing Directors, no other consideration, whetherpermanent or not, may be paid to the Directors.


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Article 21 - Advisory Board

The Shareholders’ Meeting may, upon proposal of the Board of Directors, appoint Advisors the number of whom shall notexceed nine.

In case of death or resignation of one or more Advisors, theBoard of Directors may make provisional appointments subjectto their ratification by the next Ordinary Shareholders’ Meeting.

The Advisors, who are chosen among the shareholders on thestrength of their skills, shall constitute an Advisory Board.

The Advisors are appointed for a term of three years ending at the close of the Ordinary Shareholders’ Meeting convened toapprove the accounts of the preceding fiscal year and held in the year during which their term of office comes to an end.

The Advisors are convened to the meetings of the Board ofDirectors and take part to the deliberations with a consultativevote. Their absence cannot however affect the validity of suchdeliberations.

The Board of Directors may allocate fees to the Advisors the amount of which will be set off from the attendance feesallocated by the Shareholders’ Meeting to the members of theBoard of Directors.

Article 22 - Statutory Auditors

The Company shall be audited, as provided by law, by one ormore Statutory Auditors legally entitled to be elected as such.When the conditions provided by law are met, the Companymust appoint at least two Statutory Auditors.

Each Statutory Auditor is appointed by the OrdinaryShareholders’ Meeting.

One or more supplementary deputy Statutory Auditors, whomay be called to replace the regular Statutory Auditors in theevent of death, disability, resignation or refusal to perform theirduties, are appointed by the Ordinary Shareholders’ Meeting.

Article 23 - Shareholders’ Meetings

1. Shareholders’ Meetings shall be convened and held asprovided by law. The agenda of the Meeting shall be mentionedon the convening notice and letters; it is set by the corporatebody convening the Meeting.

When the Shareholders’ Meeting has not been able to transactbusiness validly due to a lack of quorum, a second Meeting or,as the case may be, a prorogated second Meeting, is convenedin the same way at least ten days prior to the Meeting. Noticeand convening letters relating to such second Meeting reproducethe date and agenda of the first Meeting.

The Meetings are held at the registered office or at any otherplace mentioned in the convening notice.

The right to attend and vote at Shareholders’ Meetings issubject to the registration of the shareholder in the Company’sshare register.

A shareholder is entitled to attend and vote at any Meetingprovided that the shares held are registered in the name of the

shareholder or intermediary authorized to act on his or herbehalf as of the fourth business day preceding the Meeting atmidnight, Paris time, either in the accounts of registered sharesmaintained by the Company or in the accounts of bearer sharesmaintained by the officially authorized financial intermediary.The recording or registration of bearer shares is certified by a statement delivered by the financial intermediary authorizedas account holder.

A shareholder can always be represented in a valid manner at aShareholders’ Meeting by another shareholder, his or herspouse, the partner with whom he or she has entered into a“pacte civil de solidarité” (PACS, the French civil union contract),or any other private individual or legal entity of his or her choice.Written notice must be sent to the Company of the appointmentof any proxy, and where applicable the rescindment of thisappointment.

Shareholders may vote by mail at any Meeting in accordancewith applicable laws and regulations. To be taken into account,the voting form must have been received by the Company atleast three days prior to the date of the Meeting.

Shareholders may address their proxy form and/or their votingform for any Meeting, in accordance with applicable laws and regulations, either by mail or, if decided by the Board ofDirectors, by electronic transmission. Pursuant to the provisionsof Article 1316-4, paragraph 2 of the French Civil Code, in the event of the use of an electronically submitted form, theshareholder’s signature shall make use of a reliable identificationprocess that ensures the link with the document to which it is attached.

A shareholder having voted either by mail or by electronictransmission, having sent a proxy or having requested anadmittance card or certificate stating the ownership of sharesmay not select another means of taking part in the Meeting.

In accordance with the conditions set by applicable legal andregulatory provisions, and pursuant to a decision of the Boardof Directors, Shareholders’ Meetings may also be held by meansof video conference or through the use of any telecommunicationsmedia allowing the identification of shareholders.

Any intermediary who meets the requirements set forth inparagraphs 7 and 8 of Article L. 228-1 of the French CommercialCode may, pursuant to a general securities managementagreement, transmit to a Shareholders’ Meeting the vote or proxyof a shareholder, as defined in paragraph 7 of that same article.

Before transmitting any proxies or votes to a Shareholders’Meeting, the intermediary shall be required, at the request of the issuing corporation or its proxy, to provide a list of thenon-resident owners of the shares to which such voting rightsare attached. Such list shall be supplied as provided by applicableregulations.

A vote or proxy issued by an intermediary who either is notdeclared as such, or does not disclose the identity of theshareholders, may not be counted.

When a Works Council exists within the Company, two of itsmembers, appointed by the Council, may attend Shareholders’


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Meetings. At their request, their opinions must be heard onthe occasion of any vote requiring the unanimous approval ofshareholders.

A Shareholders’ Meeting is chaired by the Chairman of the Boardof Directors or, in his absence, by the oldest Vice-Chairman of the Board of Directors or, in the absence of the latter, by aMember of the Board of Directors appointed by the Board forthat purpose. If no Chairman has been appointed, the Meetingelects its Chairman.

The two Members of the Meeting present, having the greatestnumber of votes, and accepting that role, are appointed asScrutinizers. The Officers of the Meeting appoint a Secretary,who may but need not be a shareholder.

An attendance sheet is drawn up, in accordance with the law.

2. The voting right attached to a share is proportional to theshare of the capital it represents. When having the samenominal value, each share, either in capital or redeemed (“dejouissance”), gives right to one vote.

However a voting right equal to twice the voting right attachedto other shares, with respect to the portion of the share capitalthat they represent, is granted:

- to all fully paid up registered shares for which evidence ofregistration under the name of the same shareholder duringat least three years will be brought;

- to registered shares allocated to a shareholder in case ofincrease of the capital by capitalization of reserves, or of profitscarried forward or of issue premiums due to existing sharesfor which it was entitled to benefit from this right.

This double voting right shall automatically lapse in the caseof registered shares being converted into bearer shares or conveyed in property. However, any transfer by right ofinheritance, by way of liquidation of community property betweenspouses or deed of gift inter vivos to the benefit of a spouse or an heir shall neither cause the acquired right to be lost norinterrupt the abovementioned three-year qualifying period.This is also the case for any transfer due to a merger or spin-offof a shareholding company.

Votes shall be expressed either by raised hands or by standingup or by a roll-call as decided by the officers of the Meeting.

However a secret ballot may be decided:

- either by the Board of Directors;- or by the shareholders representing at least one-fourth of the

capital if their request was made in writing and addressed tothe Board of Directors or the corporate body having convenedthe Meeting, two days at least prior to the Meeting.

3. The Ordinary Shareholders’ Meeting makes decisions whichdo not amend the Bylaws.

It is convened at least once a year, within six months from theend of each fiscal year to vote on the accounts of that fiscal year.

In order to pass valid resolutions, the Ordinary Shareholders’Meeting, convened upon first notice, must consist of shareholders,

present or represented, holding at least one-fifth of total votingshares. The deliberations of an Ordinary Shareholders’ Meeting,convened upon second notice, shall be valid regardless of thenumber of shareholders present or represented.

The resolutions of the Ordinary Shareholders’ Meeting areapproved by a majority of the votes of the shareholders presentor represented.

4. Only the Extraordinary Shareholders’ Meeting may amendthe Bylaws. However, in no event can it increase the duties ofthe shareholders except in the case of transactions resultingfrom a duly completed regrouping of shares.

As to the Extraordinary Shareholders’ Meeting, the quorumnecessary, upon first convening notice, is one-fourth of the votingshares, and one-fifth upon second convening notice or in thecase of prorogation of the second meeting.

The resolutions of the Extraordinary Shareholders’ Meetingshall be carried out at a two-third majority of the votes of theshareholders present or represented.

5. The copies or abstracts of the minutes of the Meetingsshall be validly certified by the Chairman of the Board ofDirectors, the Chief Executive Officer, or the Secretary of theMeeting.

Ordinary and Extraordinary Shareholders’ Meetings shallexercise their respective powers as provided by law.

6. During constitutive Extraordinary Shareholders’ Meetings,which are those called to approve contributions in kind orbenefits in kind, the contributor or the beneficiary cannot voteeither for himself or as a proxy.

7. When there are several classes of shares, the rights attachedto the shares of one class cannot be modified without a propervote of an Extraordinary Shareholders’ Meeting open to all shareholders and without a proper vote of a SpecialShareholders’ Meeting exclusively comprising owners of theshares of the class concerned.

As to the Special Shareholders’ Meeting, the quorum necessary,upon first convening notice, is one-third of the voting shares,and one-fifth upon second convening notice or in the case ofprorogation of the second Meeting.

The resolutions of the Special Shareholders’ Meeting shall becarried by a two-thirds majority vote of the shareholders presentor represented.

Article 24 - Information on shareholdings

Any individual or legal entity who becomes the owner of a fraction of capital of at least one per cent shall notify the totalnumber of shares it holds to the Company. Such notice should begiven within fifteen days from the date at which this percentageis reached.

The same obligation applies whenever the portion of capitalheld increases by at least one per cent. However, it shall ceaseto be applicable when the portion of capital held is equal to orgreater than 60% of the share capital.


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In case of non-compliance with the above obligation and uponthe request of one or several shareholders holding at least 5% ofthe capital and recorded in the minutes of the Shareholders’Meeting, the shares in excess of the percentage to be declaredshall be deprived of their right to vote at any Meeting held untilthe expiration of a period of three months as from the date at which proper notification pursuant to the above paragraph iseventually made.

Article 25 - Identification of the holders of securities

The Company may, at any time, in accordance with the applicablelaws and regulations, request the central depositary of financialinstruments to give it the name, nationality and address ofnatural persons or legal entities holding securities conferringan immediate or deferred right to vote at its own Shareholders’Meetings, as well as the number of securities held by such naturalpersons or legal entities and the restrictions, if any, which mayexist upon the securities.

In light of the list sent by the aforementioned body, the Companyshall be entitled to request information concerning the ownersof the shares listed above, either through the intervention ofthat body, or directly, to the persons appearing on that list andwho might be, in the Company’s opinion, registered on behalfof third parties.

When they act as intermediaries, such persons shall be requiredto disclose the identity of the owners of such shares. The information shall be provided directly to the authorizedfinancial intermediary holding the account, who shall, in turn,be responsible for communicating it to the issuing Companyor the aforementioned body, as applicable.

Article 26 - Fiscal year

Each fiscal year has a duration of one year beginning onJanuary 1 and ending on December 31.

Article 27 - Annual accounts

The Board of Directors shall keep regular accounts of thecorporate operations and shall draw up the annual accounts inconformity with the law and the commercial practice.

Article 28 - Appropriation of results and allocation of profits

From the profit for a fiscal year, minus prior losses, if any, anamount equal to at least 5% must be deducted and allocated to the formation of a “legal reserve” fund. This deduction is nolonger required when the amount of the legal reserve hasreached one-tenth of the share capital of the Company.

Distributable earnings consist of the net profit of the fiscal year,minus prior losses and the deduction described in the previousparagraph, plus profits carried forward.

From these earnings, and subject to the decisions of the Shareholders’ Meeting, an initial deduction is made of theamount required to distribute to shareholders a preliminarydividend, equal to five percent (5%) of the amount paid up on

the shares that has not been repaid to shareholders by theCompany.

Dividends do not accumulate from one fiscal year to the next.

From the remaining amount, the Shareholders’ Meeting maydeduct the amounts it deems appropriate to allocate to alloptional, ordinary or special reserve funds, or retain, in theproportions it shall determine.

The balance, if any, shall be divided among shareholders as a superdividend.

In addition, the Shareholders’ Meeting may decide to distributesums taken from the reserves, either to provide or supplementa dividend, or as an exceptional distribution. In this case, the resolution shall expressly indicate the reserve items againstwhich these amounts are charged. However, dividends shall be paid first from the distributable earnings for the fiscal year.

When a balance sheet, drawn up during, or at the end of thefiscal year, and certified by the Statutory Auditor, shows thatthe Company, since the close of the preceding fiscal year, afterhaving made the necessary depreciations and provisions and after deduction of the prior losses, if any, as well as of theamounts which are to be allocated to the reserves provided bylaw or by the Bylaws, and taking into account profits carriedforward, if any, has available earnings, the Board of Directorsmay resolve the distribution of interim dividends prior to theapproval of the accounts of the fiscal year, and may determinethe amount thereof and the date of such distribution. Theamount of such interim dividends cannot exceed the amount of the profits as defined in this paragraph.

Any dividend distributed in violation of the foregoing rules isa fictitious dividend.

If the result for the year is a loss, after the approval of the annualfinancial statements by the Ordinary Shareholders’ Meeting,such loss is either set off against retained earnings or added to the losses carried forward. If the balance is negative, it iscarried forward again to be charged against the profits ofsubsequent fiscal years until it is extinguished.

Article 29 - Payment of dividends

The dividend payment terms are defined by the Shareholders’Meeting or, if the Meeting fails to do so, by the Board ofDirectors.

However, dividends must be paid within a maximum period of nine months after the fiscal year-end, unless such period isextended by Court order.

The Shareholders’ Meeting convened to approve the fiscal year’sfinancial statements may grant each shareholder the option to receive all or a portion of his or her dividend payment(whether interim or final) either in cash or in shares.

Requests for dividend payments in shares must be receivedwithin a time period to be set by the Shareholders’ Meeting,with the understanding that this period may not be longerthan three months after the date of said Shareholders’ Meeting.


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No repayment of the dividend may be demanded fromshareholders, unless the following two conditions are met:

- the distribution was made in violation of legal requirements;

- the Company has established that the beneficiaries wereaware of the irregularity of the distribution at the time it wasmade, or could not ignore it given the circumstances.

Any recovery of dividends meeting the above conditions mustbe carried out within the time period provided by law.

Dividends not claimed within five years after the date at whichthey became payable shall be void.

Article 30 - Premature dissolution

An Extraordinary Shareholders’ Meeting may at any time declarethe premature dissolution of the Company.

Article 31 - Loss of one-half of the share capital of the Company

If, as a consequence of losses showed by the Company’s accounts,the equity of the Company is reduced to below one-half of theshare capital of the Company, the Board of Directors must,within four months from the approval of the accounts showingsuch loss, convene an Extraordinary Shareholders’ Meeting in order to decide whether the Company ought to be dissolvedbefore its statutory term.

If the dissolution is not resolved, the share capital must, at thelatest by the end of the second fiscal year following the fiscalyear during which the losses were established and subject to the legal provisions concerning the minimum share capitalof “Sociétés anonymes”, be reduced by an amount at least equal tothe losses which could not be charged to reserves, if during thatperiod the net assets have not been replenished to an amount atleast equal to one half of the share capital.

In the absence of Shareholders’ Meeting or in the case where theMeeting has not been able to act in a valid manner, any interestedparty may institute legal proceedings to dissolve the Company.

Article 32 - Effect of dissolution

The Company is deemed to be in liquidation as soon as it is

dissolved for any reason whatsoever. It continues to exist as a legalentity for the needs of this liquidation until the completionthereof.

During the period of the liquidation, the Shareholders’ Meetingshall retain the same powers as it did exercise during the life of the Company.

The shares shall remain transferable until the completion of the liquidation proceedings.

The dissolution of the Company is only valid vis-à-vis thirdparties as from the date at which it has been published at theRegister of Commerce and Companies.

Article 33 - Appointment of liquidators – Powers

Upon the expiration of the term of existence of the Companyor in the case of its premature dissolution, the Shareholders’Meeting shall decide the methods of liquidation and appointone or several liquidators whose powers it will determine, and who will exercise their duties according to the law. Theappointment of the liquidator(s) terminates the office of theDirectors, as well as that of the Advisors, if any.

Article 34 - Liquidation – Termination

After payment of the liabilities, the remaining assets shall beused first for the payment to the shareholders of the amountpaid for their shares and not amortized.

The balance, if any, shall be divided among all the shares.

The shareholders are convened at the end of the liquidation in order to decide on the final accounts, to discharge theliquidators from liability for their acts of management and the performance of their office, and to formally acknowledgethe termination of the liquidation process.

The conclusion of the liquidation shall be published as providedby law.

Article 35 - Litigation

Any dispute between the Company and any of its shareholdersarising directly and/or indirectly from the present Bylaws shallbe settled by the Commercial Court of Paris.

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OTHER INFORMATIONGeneral information regarding the parent company; stock market information

1. INFORMATION REGARDING THE PARENT COMPANY 2381.1. Role of the parent company within the Group 2381.2. General information 2381.3. Additional information 238

2. INFORMATION REGARDING THE CAPITAL 2392.1. Share capital 2392.2. Authorized share capital 2392.3. Status of delegations and authorizations granted to the Board of Directors 2392.4. Shareholders’ identification 2392.5. Non-capital shares 2392.6. Securities giving access to the Company’s capital 2392.7. Three-year summary of changes in the parent company’s share capital 240

3. ANALYSIS OF SHARE CAPITAL AND VOTING RIGHTS 2403.1. Share ownership of the Company 2403.2. Changes in share ownership during the last three fiscal years 2413.3. Pledges of pure registered shares by main shareholders 2413.4. Natural persons or legal entities that may exercise control over the Company 242

4. MARKET FOR FINANCIAL INSTRUMENTS ISSUED BY LVMH 2424.1. Market for LVMH shares 2424.2. Share repurchase program 2434.3. LVMH bond markets 2434.4. Dividend 2434.5. Change in share capital 2444.6. Performance per share 244


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The complete text of the Bylaws is presented in the “Other information– Governance” section of the Reference Document.

Corporate purpose (Article 2 of the Bylaws): any taking ofinterest within any company or grouping of entities primarilyengaged in trade in champagne and other wines, cognac andother spirits or in any perfume and cosmetic products; in themanufacture, sale and promotion of leather goods, clothing,accessories as well as any other high-quality and branded articlesor products; in the operation of vineyards; or in the use of anyintellectual property right.

Fiscal year (Article 26 of the Bylaws): from January 1 untilDecember 31.

Distribution of profits (Article 28 of the Bylaws): an initialdeduction is made from distributable earnings in the amountrequired to distribute to shareholders a preliminary dividend,equal to 5% of the amount paid up on the shares that has notbeen repaid to shareholders by the Company. From the remainingamount, the Shareholders’ Meeting may deduct the amounts itdeems appropriate to allocate to all optional, ordinary or specialreserve funds, or retain. The balance, if any, shall be dividedamong shareholders as a super-dividend.

In addition, the Shareholders’ Meeting may decide to distributeamounts taken from the reserves, either to provide or supplementa dividend, or as an exceptional distribution.

Shareholders’ Meetings (Article 23 of the Bylaws):Shareholders’ Meetings are convened and held under theconditions provided by the laws and decrees in effect.

Rights, preferences and restrictions attached to shares(Articles 6, 8, 23 and 28 of the Bylaws): all shares belong to thesame category, whether issued in registered or bearer form.

Each share gives the right to a proportional stake in the ownershipof the Company’s assets, as well as in the sharing of profits andof any liquidation surplus. Each time it shall be necessary to holda certain number of shares in order to exercise a right, it willbe the responsibility of the shareholder(s) having less than therequired number to take the necessary actions to form a groupwith a sufficient number of shares.

A voting right equal to twice the voting right attached to theother shares is granted to all fully paid-up registered shares for which evidence of registration for at least three years underthe name of the same shareholder may be demonstrated, as wellas to shares issued in the event of a capital increase through theincorporation of reserves, unappropriated retained earnings, orissue premiums, on the basis of existing shares giving theholder such right. This right may be removed by a decision of the Extraordinary Shareholders’ Meeting after ratification bya Special Meeting of beneficiaries of this right.

1.3. Additional information

The complete text of the Bylaws is presented in the “Other information– Governance” section of the Reference Document.

Corporate name (Article 3 of the Bylaws): LVMH MoëtHennessy – Louis Vuitton.

Registered office (Article 4 of the Bylaws): 22, avenue Montaigne,75008 Paris (France). Telephone: +33 (0)1 44 13 22 22.

Legal form (Article 1 of the Bylaws): Société anonyme (limitedLiability Company).

Jurisdiction (Article 1 of the Bylaws): the Company is governedby French law.

Register of Commerce and Companies: the Company isregistered in the Paris Register of Commerce and Companiesunder number 775 670 417. APE code (Company activity code):6420Z.

Date of incorporation - Term (Article 5 of the Bylaws): LVMHwas incorporated on January 1, 1923 for a term of 99 years,which expires on December 31, 2021, unless the Company isdissolved early or extended by a resolution of the ExtraordinaryShareholders’ Meeting.

Location where documents concerning the Company maybe consulted: the Bylaws, financial statements and reports,and the minutes of Shareholders’ Meetings may be consulted atthe registered office at the address indicated above.

1.2. General information

LVMH manages and coordinates the operational activities of allits subsidiaries, and offers them various management assistanceservices, particularly in legal, financial, tax and insurance matters.

All these services are invoiced to the subsidiaries in question, basedon the real cost price or normal market conditions, dependingon the type of service. For fiscal year 2012, LVMH billed itssubsidiaries 124.9 million euros for management assistance.

LVMH also manages the Group’s long term financial debt andthe associated interest rate risk, in addition to foreign exchangetransactions for proprietary foreign exchange transactions.

Since Group brands belong to the various operating subsidiaries,LVMH does not collect any royalties in connection with thesebrands.

1. INFORMATION REGARDING THE PARENT COMPANY

1.1. Role of the parent company within the Group


OTHER INFORMATION

General information regarding the parent company; stock market information

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No securities giving access to the Company’s capital, other thanshare subscription options described in Section 3.4.2 of the“Management Report of the Board of Directors – Parent company:

LVMH Moët Hennessy – Louis Vuitton” section of the ReferenceDocument, were outstanding as of December 31, 2012.

2.6. Securities giving access to the Company’s capital

2.4. Shareholders’ identification

Article 25 of the Bylaws authorizes the Company to set up ashareholder identification procedure.

2.5. Non-capital shares

The Company has not issued any non-capital shares.

This statement is included under paragraph 4.1 “Status of currentdelegations and authorizations” in the “Management Report of

the Board of Directors – Parent company: LVMH Moët Hennessy –Louis Vuitton” section of the Reference Document.

2.3. Status of delegations and authorizations granted to the Board of Directors

As of December 31, 2012, the Company’s authorized share was 199,708,532.10 euros, divided into 665,695,107 shareswith a par value of 0.30 euros each.

The authorized share capital represents the maximum amountthat the share capital could reach should the Board of Directors

make use of all of the authorizations and delegations of authoritygranted by the Shareholders’ Meeting that permit the Companyto increase its amount.

2.2. Authorized share capital

As of December 31, 2012, the Company’s share capital was152,449,004.70 euros, consisting of 508,163,349 fully paid-upshares with a par value of 0.30 euros each.

The Board of Directors, in its meeting of January 31, 2013, notedthe increase in the share capital resulting from the exercise ofoptions to subscribe to shares, then decided to reduce the share

capital by a number equivalent to that of the shares issued. Asof January 31, 2013, the share capital amounted to152,300,959.50 euros divided into 507,669,865 fully paid-upshares with a par value of 0.30 euros each. Of these507,669,865 shares, 224,707,650 shares conferred doublevoting rights.

2. INFORMATION REGARDING THE CAPITAL

2.1. Share capital

Declaration of thresholds (Article 24 of the Bylaws):independently of legal obligations, the Bylaws stipulate that anyindividual or legal entity that becomes the owner of a fractionof capital greater than or equal to 1% shall notify the totalnumber of shares held to the Company. This obligation applieseach time the portion of capital owned increases by at least 1%.It ceases to apply when the shareholder in question reaches thethreshold of 60% of the share capital.

Necessary action to modify the rights of shareholders: theBylaws do not contain any stricter provision governing themodification of shareholders’ rights than those required by the law.

Provisions governing changes in the share capital: the Bylawsdo not contain any stricter provision governing changes in theshare capital than those required by the law.



OTHER INFORMATION

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On the basis of registered shareholders and information as of December 2012 provided by a Euroclear survey of depositaryfinancial institutions with no ownership threshold, the Companyhas about 190,000 shareholders. Resident and non-residentshareholders respectively represent 67.7% and 32.3% of theCompany’s share capital (see 2012 Annual Report, “Ownershipstructure”).

Subject to the provisions of paragraph 3.4 below, to the Company’sknowledge:

- no shareholder held at least 5% of the Company’s share capitaland voting rights as of December 31, 2012;

- no shareholder held 5% or more of the Company’s share capital orvoting rights, either directly, indirectly, or acting in concert;

- no shareholders’ agreement or any other agreement constitutingan action in concert existed involving at least 0.5% of theCompany’s share capital or voting rights.

2.7. Three-year summary of changes in the parent company’s share capital

(EUR thousands) Change in capital Capital after transaction

Type of Number Par value Premium Amount Accumulated transaction of shares number of shares

As of December 31, 2009 147,122 490,405,654

Fiscal year 2010 Issue of shares(a) 1,003,100 300 60,947 147,422 491,408,754” Retirement of shares 1,775,900 (532) (100,522) 146,889 489,632,854” Issue of shares(a) 1,009,378 302 58,434 147,192 490,642,232

Fiscal year 2011 Issue of shares(a) 1,250,076 375 82,908 147,567 491,892,308” Issue of shares(b) 18,037,011 5,411 2,032,773 152,978 509,929,319” Retirement of shares 2,259,454 (678) (105,816) 152,300 507,669,865” Issue of shares(a) 145,759 44 10,623 152,344 507,815,624

Fiscal year 2012 Issue of shares(a) 851,491 255 61,372 152,384 508,667,115“ Retirement of shares 997,250 (299) (46,704) 152,300 507,669,865“ Issue of shares(a) 493,484 148 32,315 152,449 508,163,349

As of December 31, 2012 152,449 508,163,349

(a) In connection with the exercise of share subscription options.(b) In connection with the contribution of Bulgari SpA securities.

3. ANALYSIS OF SHARE CAPITAL AND VOTING RIGHTS

3.1. Share ownership of the Company

As of December 31, 2012, the Company’s share capital comprised 508,163,349 shares:

- 230,269,387 pure registered shares;

- 17,601,993 administered registered shares;

- 260,291,969 bearer shares.

Taking into account treasury shares, 499,995,830 shares carried voting rights, including 224,707,650 shares with double voting rights.

Shareholders Number Number of % of capital % of voting of shares voting rights(b) rights

Arnault family group(a) 235,886,503 453,988,436 46.42 62.65Other shareholders 272,276,846 270,706,743 53.58 37.35

Total as of December 31, 2012 508,163,349 724,695,179 100.00 100.00

(a) Not including the 6,300,000 share purchase options equivalent to shares held by virtue of Article L 233-9-1 4° of the French Commercial Code.(b) Voting rights exercisable in Shareholders’ Meetings.


OTHER INFORMATION


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3.3. Pledges of pure registered shares by main shareholders

The Company is not aware of any pledge of pure registered shares by the main shareholders.

The Arnault family group’s holding was diluted in 2011, mainlydue to the capital increase carried out on June 30, 2011 in order

to remunerate the contribution of Bulgari SpA shares held bythe Bulgari family.

3.2. Changes in share ownership during the last three fiscal years

Shareholders As of December 31, 2012 As of December 31, 2011 As of December 31, 2010

Number % of % of voting Number % of % of voting Number % of % of voting of shares capital rights (a) of shares capital rights (a) of shares capital rights (a)

Arnault family group 235,886,503(b) 46.42 62.65 236,018,646(b) 46.48 62.38 235,840,311 48.07 63.95including: Financière Jean Goujon 207,821,325 40.90 57.35 207,821,325 40.92 57.50 207,821,325 42.36 59.01

Arnault family and 28,065,178 5.52 5.30 28,197,321 5.56 4.88 28,018,986 5.71 4.94other controlled entities

Treasury shares 8,167,519 1.61 - 9,536,678 1.88 - 11,939,973 2.43 -

Public registered 15,397,368 3.03 2.34 20,394,824 4.02 3.04 3,334,178 0.68 0.88

Public bearer 248,711,959 48.94 35.01 241,865,476 47.62 34.58 239,527,770 48.82 35.17

Total 508,163,349 100.00 100.00 507,815,624 100.00 100.00 490,642,232 100.00 100.00

(a) Voting rights exercisable in Shareholders’ Meetings.(b) Not including the 6,300,000 share purchase options deemed equivalent to shares held by virtue of Article L 233-9-1 4° of the French Commercial Code.

As of December 31, 2012, members of the Executive Committeeand of the Board of Directors directly held less than 1% of the Company’s share capital and voting rights, personally andas registered shares.

As of December 31, 2012, the Company held 8,167,519 sharesas treasury shares. Of these shares, 1,667,756 were recognizedas short term investments, with the main objective of coveringcommitments for share purchase option plans and bonus shareplans, while the remaining 6,499,763 shares were recognizedas long term investments, with the main objective of coveringcommitments for existing share subscription option plans. Inaccordance with legal requirements, these shares are stripped oftheir voting rights. As of December 31, 2012, call options to covercommitments for share purchase option plans were all exercised.

As of December 31, 2012, the employees of the Company and of affiliated companies, as defined under Article L. 225-180 ofthe French Commercial Code, held LVMH shares in employeesavings plans equivalent to less than 0.5% of the Company’sshare capital.

During the 2012 fiscal year, companies BNP Paribas SA, BNPParibas Asset Management, Natixis and the Amundi group

informed the Company that on several occasions, they hadexceeded or fallen below statutory shareholding thresholds inthe range between 1% and 3% of the share capital. Accordingto the latest notices received in 2012, the Amundi group held1.99% of the share capital and 1.40% of the voting rights.BNP Paribas SA held 1.34% of the share capital and less than1% of the voting rights, and BNP Paribas Asset Management andNatixis held less than 1% of the share capital and voting rights.

During the fiscal year ended December 31, 2012 and as ofFebruary 15, 2013, no public tender or exchange offer nor priceguarantee was made by a third party involving the Company’sshares.

The Company’s main shareholders have voting rights identicalto those of other shareholders.

In order to protect the rights of each and every shareholder, theCharter of the Board of Directors requires that at least one-thirdof its appointed members be Independent Directors. In addition,at least two-thirds of the members of the Performance AuditCommittee must be Independent Directors. A majority of themembers of the Nominations and Compensation Committeemust also be Independent Directors.



OTHER INFORMATION

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Trading volumes and amounts on Euronext Paris and price trend over the last twelve months

Opening price Closing price Highest(a) Lowest(a) Number Value of first day last day (EUR) (EUR) of shares shares traded (EUR) (EUR) traded (EUR billions)

2012 January 109.85 123.60 124.40 108.00 20,314,251 2.4 February 123.80 126.30 129.60 122.60 17,983,054 2.3 March 126.25 128.85 136.80 124.20 19,569,172 2.5 April 129.30 125.15 132.25 119.10 25,610,423 3.2 May 127.00 119.40 131.30 116.90 20,609,102 2.5 June 119.70 119.85 123.05 111.00 22,238,448 2.6 July 120.90 122.55 126.00 113.85 21,438,344 2.6 August 123.80 129.80 135.00 121.15 16,203,932 2.1 September 129.70 117.00 134.00 117.00 21,825,182 2.7 October 117.40 125.40 129.00 117.00 19,489,695 2.4 November 125.80 134.90 137.60 123.55 16,683,789 2.2 December 135.30 138.80 140.40 135.05 12,013,295 1.7

Source: Euronext.(a) Prices recorded during market trading hours.

The Company’s shares are listed on Euronext Paris (ISIN codeFR0000121014) and are eligible for the deferred settlementservice of Euronext Paris. LVMH shares are used as underlyingassets for negotiable options on NYSE Euronext Liffe.

LVMH is included in the principal French and European indicesused by fund managers: CAC 40, DJ EuroStoXX 50, MSCIEurope, FTSE Eurotop 100.

LVMH’s market capitalization was 70.5 billion euros at year-end2012, making it the third largest on the Paris stock exchange.

233,978,687 LVMH shares were traded in 2012 for a totalamount of 29 billion euros. This corresponds to an average dailyvolume of 913,979 shares.

Since September 23, 2005, LVMH Moët Hennessy – LouisVuitton SA has entrusted a provider of financial services withthe implementation of a liquidity contract in conformity withthe Ethical Charter of AFEI (“Charte de déontologie de l’AFEI”)approved by the Autorité des Marchés Financiers in its decision ofMarch 22, 2005, as published in Bulletin des annonces légalesobligatoires dated April 1, 2005.

4. MARKET FOR FINANCIAL INSTRUMENTS ISSUED BY LVMH

4.1. Market for LVMH shares

As of December 31, 2012, the persons comprising the Arnaultfamily group, together with Groupe Arnault SAS, of whichthey control 93.2% of the share capital (excluding shareswithout voting rights) held directly or indirectly as of that date 47.66% of the company’s capital and 63.51% of thevoting rights, including share equivalents as defined in ArticleL. 233-9 of the French Commercial Code.

As of December 31, 2012, Financière Jean Goujon held207,821,325 shares in the Company representing 40.90%

of the share capital and 57.35% of the voting rights. The principal activity of Financière Jean Goujon is to hold LVMH shares.

Financière Jean Goujon is 100% held by Christian Dior SA,itself controlled by the Arnault family group through directand indirect holdings totaling 70.37% of its share capital.Christian Dior SA, a company listed on Euronext Paris (NYSE Euronext), is the parent company of Christian DiorCouture SA.

3.4. Natural persons or legal entities that may exercise control over the Company


OTHER INFORMATION


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A dividend of 2.90 euros per share is being proposed for fiscalyear 2012, representing an increase of 0.30 euros compared to the dividend paid for fiscal year 2011.

Based on the number of shares of 508,163,349 making up the share capital as of December 31, 2012, the total LVMHMoët Hennessy – Louis Vuitton distribution will amount to1,474 million euros for fiscal year 2012, before the effect oftreasury shares.

Dividend distribution in respect of fiscal years 2008 to 2012

Year Gross dividend Dividend per share(a) distribution (EUR) (EUR millions)

2012(b) 2.90 1,4742011 2.60 1,3202010 2.10 1,0302009 1.65 8092008 1.60 784

(a) Excludes the impact of tax credits applicable to the beneficiary.(b) Proposed to the Shareholders’ Meeting of April 18, 2013.

The Company has a steady dividend distribution policy, designedto ensure a stable return to shareholders, while making thempartners in the growth of the Group.

Pursuant to current laws in France, dividends and interimdividends uncollected within five years become void and arepaid to the French state.

4.3. LVMH bond markets

Among the bonds issued by LVMH Moët Hennessy – Louis Vuitton outstanding on December 31, 2012, the bonds presentedbelow are listed for trading.

Bonds listed in Luxembourg

Currency Amount outstanding Year of issue Year of maturity Coupon (in currency)

USD 125,000,000 2011 2013 floatingUSD 125,000,000 2011 2013 floatingEUR 500,000,000 2011 2018 4%EUR 500,000,000 2011 2015 3.375%EUR 250,000,000 2009 2015 4.5%EUR 1,000,000,000 2009 2014 4.375%

Bonds listed in Zurich

Currency Amount outstanding Year of issue Year of maturity Coupon (in currency)

CHF 200,000,000 2008 2015 4.0%CHF 300,000,000 2007 2013 3.375%

4.4. Dividend

LVMH has implemented a share repurchase program that allowsit to buy back up to 10% of its share capital. This program was approved by the Shareholders’ Meeting of March 31, 2011and April 5, 2012. Within this framework, between January 1and December 31, 2012, stock market purchases of its own

shares by LVMH SA amounted to 1,950,314 shares, or 0.4% of its share capital. LVMH also exercised 100,000 calls on itsown shares in 2012. Disposals of shares, options exercised,bonus share allocations and share cancellations related to theequivalent of 3,419,473 LVMH shares.



OTHER INFORMATION

4.2. Share repurchase program

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4.6. Performance per share

(EUR) 2012 2011 2010

Diluted Group share of net profit 6.82 6.23 6.32

Gross dividend 2.90 2.60 2.10Change compared to previous year 11.5% 23.8% 27.3%

Highest share price (during normal trading hours) 140.40 132.65 129.05Lowest share price (during normal trading hours) 108.00 94.16 74.19

Share price as of December 31 138.80 109.40 123.10Change compared to previous year 26.9% (11.1%) 57.1%

1,344,975 shares were issued during the fiscal year, in connectionwith the exercise of share subscription options. 997,250 shares

were retired, bringing the share capital of the Company to508,163,349 shares as of December 31, 2012.

4.5. Change in share capital


OTHER INFORMATION


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RESOLUTIONS FOR THE APPROVAL OF THE COMBINED SHAREHOLDERS’ MEETINGOF APRIL 18, 2013

1. ORDINARY RESOLUTIONS 246

2. EXTRAORDINARY RESOLUTIONS 248

STATUTORY AUDITORS’ REPORT ON THE PROPOSED DECREASE IN SHARE CAPITAL 254

STATUTORY AUDITORS’ REPORT ON THE ISSUE OF SHARES AND MARKETABLE SECURITIES WITH RETENTION AND/OR WAIVER OF PREFERENTIAL SUBSCRIPTION RIGHTS 255

STATUTORY AUDITORS’ REPORT ON THE ISSUE OF SHARES AND MARKETABLE SECURITIES RESERVED FOR EMPLOYEES WHO ARE MEMBERS OF A COMPANY SAVINGS PLAN 257

STATUTORY AUDITORS’ REPORT ON THE GRANTING OF EXISTING SHARES OR SHARES TO BE ISSUED, FOR NO CONSIDERATION,TO EMPLOYEES AND SENIOR EXECUTIVE OFFICERS 258


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As required by law, the Shareholders’ Meeting observes that the gross dividends per share paid out in respect of the past three fiscalyears were as follows:

Fiscal year Type Payment date Gross dividend Tax deduction(a)

(EUR) (EUR)

2011 Interim December 2, 2011 0.80 0.32 Final April 25, 2012 1.80 0.72 Total 2.60 1.04

2010 Interim December 2, 2010 0.70 0.28 Final May 25, 2011 1.40 0.56 Total 2.10 0.84

2009 Interim December 2, 2009 0.35 0.14 Final May 25, 2010 1.30 0.52 Total 1.65 0.66

(a) For individuals with tax residence in France.

Ordinary resolutions

2012 Reference Document 246

First resolutionApproval of the parent company financial statements

The Shareholders’ Meeting, after examining the reports of theBoard of Directors, the Chairman of the Board of Directors andthe Statutory Auditors, hereby approves the parent companyfinancial statements for the fiscal year ended December 31,2012, including the balance sheet, income statement and notes,as presented to the Meeting, as well as the transactions reflectedin these statements and summarized in these reports.

Second resolutionApproval of the consolidated financial statements

The Shareholders’ Meeting, after examining the reports of theBoard of Directors and the Statutory Auditors, hereby approves the consolidated financial statements for the fiscal yearended December 31, 2012, including the balance sheet, incomestatement and notes, as presented to the Meeting, as well as the transactions reflected in these statements and summarizedin these reports.

Third resolutionApproval of related party agreements

The Shareholders’ Meeting, after examining the special reportof the Statutory Auditors on the related party agreementsdescribed in Article L. 225-38 of the French CommercialCode, hereby declares that it approves said agreements.

Fourth resolutionAllocation of net profit – determination of dividend

The Shareholders’ Meeting, on the recommendation of theBoard of Directors, decides to allocate and appropriate the distributable profit for the fiscal year ended December 31,2012 as follows:

(EUR)

Net profit for the year ended December 31, 2012 1,666,669,490.86Allocation to the legal reserve (10,431.75)Retained earnings 4,937,293,782.41

Amount available for distribution 6,603,952,841.52

Proposed appropriation: Statutory dividend of 5% or EUR 0.015 per share 7,622,450.24Additional dividend of EUR 2.885 per share 1,466,051,261.87Retained earnings 5,130,279,129.41

6,603,952,841.52

For information, as of December 31, 2012, the Company held 8,167,519 of its own shares,corresponding to an amount not available for distribution of 414.2 million euros, equivalentto the acquisition cost of the shares.

Should this appropriation be approved, the total dividendwould be 2.90 euros per share. As an interim dividend of 1.10euros per share was paid on December 4, 2012, the final dividendper share is 1.80 euros; this will be paid as of April 25, 2013.

With respect to this dividend distribution, individuals whosetax residence is in France will be entitled to a 40% tax deductionprovided under Article 158 of the French Tax Code.

Finally, should the Company hold, at the time of payment ofthis balance, any treasury shares under authorizations granted,the corresponding amount of unpaid dividends will be allocatedto retained earnings.

1. ORDINARY RESOLUTIONS

RESOLUTIONS FOR THE APPROVAL OF THE COMBINED SHAREHOLDERS’ MEETING OF APRIL 18, 2013

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Fifth resolutionRenewal of Mr. Bernard Arnault’s appointment as Director

The Shareholders’ Meeting decides to renew Mr. BernardArnault’s appointment as Director for a three-year term thatshall expire at the end of the Ordinary Shareholders’ Meetingconvened in 2016 to approve the financial statements for theprevious fiscal year.

Sixth resolutionRenewal of Mrs. Bernadette Chirac’s appointment as Director

The Shareholders’ Meeting decides to renew Mrs. BernadetteChirac’s appointment as Director for a three-year term thatshall expire at the end of the Ordinary Shareholders’ Meetingconvened in 2016 to approve the financial statements for theprevious fiscal year.

Seventh ResolutionRenewal of Mr. Nicholas Clive Worms’ appointment as Director

The Shareholders’ Meeting decides to renew Mr. Nicholas CliveWorms’ appointment as Director for a three-year term thatshall expire at the end of the Ordinary Shareholders’ Meetingconvened in 2016 to approve the financial statements for theprevious fiscal year.

Eighth resolutionRenewal of Mr. Charles de Croisset’s appointment as Director

The Shareholders’ Meeting decides to renew Mr. Charles deCroisset’s appointment as Director for a three-year term thatshall expire at the end of the Ordinary Shareholders’ Meetingconvened in 2016 to approve the financial statements for theprevious fiscal year.

Ninth resolutionRenewal of Mr. Francesco Trapani’s appointment as Director

The Shareholders’ Meeting decides to renew Mr. FrancescoTrapani’s appointment as Director for a three-year term thatshall expire at the end of the Ordinary Shareholders’ Meetingconvened in 2016 to approve the financial statements for theprevious fiscal year.

Tenth resolutionRenewal of Mr. Hubert Védrine’s appointment as Director

The Shareholders’ Meeting decides to renew Mr. HubertVédrine’s appointment as Director for a three-year term thatshall expire at the end of the Ordinary Shareholders’ Meetingconvened in 2016 to approve the financial statements for theprevious fiscal year.

Eleventh resolutionAuthorization to be given to the Board of Directors to trade in the Company’s shares

The Shareholders’ Meeting, having examined the report of theBoard of Directors, authorizes the latter to acquire Company shares,in accordance with the provisions of Articles L. 225-209 et seq.of the French Commercial Code and of Commission Regulation(EC) 2273/2003 of December 22, 2003.

In particular, the shares may be acquired in order (i) to providemarket liquidity services (purchases/sales) under a liquiditycontract set up by the Company, (ii) to cover stock optionplans, the allotment of bonus shares or any other form of shareallocation or share-based payment, in favor of employees orcompany officers either of the Company or of an affiliatedcompany pursuant to the French Commercial Code, in particularas provided for in its Articles L. 225-180 and L. 225-197-2,(iii) to cover securities giving access to the Company’s shares,notably by way of conversion, tendering of a coupon,reimbursement or exchange, (iv) to be retired subject to theapproval of the twelfth resolution, or (v) to be held so as to beexchanged or presented as consideration at a later date forexternal growth operations.

The purchase price at which the Company may buy its own sharesmay not exceed 250 euros per share. In the event of a capitalincrease through the capitalization of reserves and the allotmentof bonus shares as well as in cases of a stock split or reversestock split, the purchase price indicated above will be adjustedby a multiplying coefficient equal to the ratio of the number ofshares making up the Company’s share capital before and afterthe operation.

The maximum number of shares that may be purchased shall notexceed 10% of the share capital, adjusted to reflect operationsaffecting the share capital occurring after this Meeting, withthe understanding that (i) if this authorization is used, thenumber of treasury shares in the Company’s possession will needto be taken into consideration so that the Company remains atall times within the limit for the number of treasury sharesheld, which must not exceed 10% of the share capital and that(ii) the number of treasury shares provided as consideration orexchanged in the context of a merger, spin-off or contributionoperation may not exceed 5% of the share capital as of the dateof the operation.

As of December 31, 2012, this limit of 10% of the sharecapital corresponded to 50,766,986 shares. The maximumtotal amount dedicated to these purchases may not exceed 12.7 billion euros.

The share acquisition transactions described above, as well asany sale or transfer of these shares, may be carried out by anymethod in compliance with applicable laws and regulations,including through the use of derivatives and through blockpurchases or sales.

All powers are granted to the Board of Directors to implementthis authorization. The Board may delegate said power to theChief Executive Officer, or with the latter’s consent, to a GroupManaging Director, in order to place any stock market orders,enter into any agreements, sign any document, file any declarations,carry out any formalities and generally take any other actionsrequired in the implementation of this authorization.

This authorization, which replaces the authorization conferredby the Combined Shareholders’ Meeting of April 5, 2012, ishereby granted for a term of eighteen months as of the date ofthis Meeting.


Ordinary resolutions


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Twelfth resolutionAuthorization to be granted to the Board of Directors toreduce the share capital through the retirement of shares

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the StatutoryAuditors, hereby:

1. authorizes the Board of Directors to reduce the share capitalof the Company, on one or more occasions, by retiring the sharesacquired pursuant to the provisions of Article L. 225-209 ofthe French Commercial Code;

2. grants this authorization for a period of eighteen months as of the date of this Meeting;

3. sets the maximum amount of the capital reduction that maybe performed under this authorization over a twenty-fourmonth period to 10% of Company’s current capital;

4. grants all powers to the Board of Directors to perform andrecord the capital reduction transactions, carry out all requiredacts and formalities, amend the Bylaws accordingly, and generallytake any and all other actions required in the implementationof this authorization;

5. decides that this authorization shall replace that granted bythe Combined Shareholders’ Meeting of April 5, 2012.

Thirteenth resolutionDelegation of authority to be given to the Board of Directorsto increase the share capital through the capitalization of profit, reserves, additional paid-in capital, or other items

The Shareholders’ Meeting, having examined the report of theBoard of Directors and in accordance with the provisions of the French Commercial Code, in particular its Articles L. 225-129,L. 225-129-2 and L. 225-130, and having met the conditions of quorum and majority required for Ordinary Shareholders’Meetings, hereby:

1. delegates its authority to the Board of Directors to carry out,in such amounts and at such times as it may deem fit, one ormore capital increases through the capitalization of all or a portionof profit, reserves, additional paid-in capital, or other items as permitted by law and the Bylaws, through the issue of newshares, or through an increase in the par value of existing shares;

2. determines that this delegation of authority shall be validfor a period of twenty-six months as of the date of this Meeting;

3. decides, should the Board of Directors use the authority thusdelegated, that the total nominal amount of capital increasesthat may be carried out shall not exceed fifty (50) million euros,subject to the provisions of the twenty-second resolution;

4. takes note that this delegation of authority entails thegranting to the Board of Directors of all necessary powers,including the option to sub-delegate said powers to the ChiefExecutive Officer or, if deemed necessary and with the latter’sconsent, to a Group Managing Director, in order to implementthis delegation, under the terms and conditions set forth by law,

and in particular in order to:

- determine the amount and nature of the items to be capitalized,determine the number of new shares to be issued and/or the new par value of the shares comprising the share capital,set the date, even with retroactive effect, from which the newshares shall have dividend rights or the date on which theincrease in the par value shall take effect,

- decide that fractional rights may not be traded, that thecorresponding shares shall be sold and that the proceeds ofthe sale shall be allotted to the holders of the rights,

- execute any agreement, take any action, and complete anyformalities required for the issue;

5. decides that this delegation of authority shall replace thatgiven by the Combined Shareholders’ Meeting of March 31, 2011.

Fourteenth resolutionDelegation of authority to be given to the Board of Directors toincrease the share capital with preferential subscription rights

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the StatutoryAuditors and in accordance with the provisions of the FrenchCommercial Code, in particular its Articles L. 225-129,L. 225-129-2 and L. 228-92, hereby:

1. delegates its authority to the Board of Directors to proceedwith the issue, on one or more occasions, in such amountsand at such times as it may deem fit, on the French and/orinternational market, by way of a public offering, whetherdenominated in euros or in any other currency or accounting unitbased on a basket of currencies, with preferential subscriptionrights for existing shareholders, of ordinary shares and moregenerally of any other investment securities, composite or not,including subscription or acquisition warrants issued on astandalone basis, giving either immediate or future access, at anytime or on a predetermined date, to the Company’s share capitalor conferring entitlement to debt securities, by subscription,whether in cash or by offsetting receivables, through conversion,exchange, repayment, tendering of a coupon or in any othermanner, with the understanding that debt securities may be issued with or without guarantees, in forms, at rates andunder terms and conditions that the Board of Directors shalldeem appropriate, and that the issuance of preference sharesis excluded from the scope of this delegation;


3. decides, should the Board of Directors use the authoritythus delegated, that the total nominal amount of capitalincreases that may be carried out, whether immediately or overtime, shall not exceed fifty (50) million euros, subject to theprovisions of the twenty-second resolution. To this ceiling shallbe added, where applicable, the nominal amount of any sharesto be issued in the event of further financial transactionscarried out, as provided by law, to protect the rights of holders

2. EXTRAORDINARY RESOLUTIONS



Extraordinary resolutions

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of investment securities giving access to the Company’s sharecapital and the rights of beneficiaries of options to subscribefor or purchase shares;

4. decides, should the Board of Directors use the authority thusdelegated, that if subscriptions in respect of pro rata entitlementsand, where applicable, subscriptions in respect of applicationsby shareholders that may be reduced, do not absorb theentirety of an issue of securities, the Board of Directors mayhave recourse, subject to the terms and conditions set forthby law and in the order it shall determine, to any of the optionsprovided for by Article L. 225-134 of the French CommercialCode, and in particular may offer to the general public all or aportion of the unsubscribed shares and/or investment securities;

5. takes note that, should the Board of Directors use theauthority thus delegated, the decision to issue investmentsecurities giving access to the Company’s share capital shallentail, in favor of the holders of the issued securities, theexpress waiver by shareholders of their preferential right tosubscribe for the shares to which the investment securities so issued shall give access;

6. grants all necessary powers to the Board of Directors,including the option to sub-delegate said powers to the ChiefExecutive Officer or, if deemed necessary and with the latter’sconsent, to a Group Managing Director, in order to:

- implement this delegation of authority, under the terms andconditions set forth by law,

- apply the expenses of the share capital increases against theamount of the corresponding premiums and deduct from thatamount any sums necessary in order to bring the legal reserveto one-tenth of the new capital following each increase,

- make all adjustments required in accordance with applicablelaws and regulations and determine the terms and conditionsensuring, where applicable, the protection of the rights ofholders of investment securities giving future access to theCompany’s share capital;

7. decides that this delegation of authority shall replace thatgiven by the Combined Shareholders’ Meeting of March 31,2011.

Fifteenth resolutionDelegation of authority to be given to the Board of Directorsto increase the share capital without preferential subscriptionrights through a public offering

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the Statutory Auditorsand in accordance with the provisions of the French CommercialCode, in particular its Articles L. 225-129, L. 225-129-2,L. 225-135, L. 225-136 et seq. and L. 228-92, hereby:

1. delegates its authority to the Board of Directors to proceed withthe issue, on one or more occasions, in such amounts and at suchtimes as it may deem fit, on the French and/or internationalmarket, by way of a public offering, either in euros or in anyother currency or accounting unit based on a basket of currencies,of ordinary shares and more generally of any other investmentsecurities, composite or not, including subscription or acquisition

warrants issued on a standalone basis, giving either immediateor future access, at any time or on a predetermined date, to theCompany’s share capital or conferring entitlement to debtsecurities, by subscription, whether in cash or by offsettingreceivables, through conversion, exchange, repayment, tenderingof a coupon or in any other manner, with the understandingthat debt securities may be issued with or without guarantees,in forms, at rates and under terms and conditions that the Boardof Directors shall deem appropriate, and that the issuance ofpreference shares is excluded from the scope of this delegation;

2. determines that this delegation of authority shall be valid fora period of twenty-six months as of the date of this Meeting;

3. decides, should the Board of Directors use the authority thusdelegated, that the total nominal amount represented by anycapital increases that may be carried out, whether immediatelyor over time, shall not exceed fifty (50) million euros, subjectto the provisions of the twenty-second resolution. To this ceilingshall be added, where applicable, the nominal amount of anyshares to be issued in the event of further financial transactionscarried out, as provided by law, to protect the rights of holders ofinvestment securities giving access to the Company’s share capital;

4. decides to exclude the preferential right of shareholders tosubscribe for any shares or other investment securities that maybe issued under this resolution, while leaving the Boardof Directors free to grant to shareholders, for such period andunder such terms as it shall determine in accordance with theprovisions of Article L. 225-135 of the French Commercial Codeand for all or part of any issue made, a non-negotiable prioritysubscription right that shall be exercised in proportion to the number of shares held by each shareholder, and that may besupplemented by subscriptions in respect of applications byshareholders that may be reduced;

5. takes note that, should the Board of Directors use theauthority thus delegated, the decision to issue investmentsecurities giving access to the Company’s share capital shallentail, in favor of the holders of the issued securities, the expresswaiver by shareholders of their preferential right to subscribefor the shares to which the investment securities so issued shallgive access;

6. decides, in accordance with Article L. 225-136 1°subparagraph 1 of the French Commercial Code, that theamount of the consideration accruing and/or to accrue at a laterdate to the Company for each of the shares issued or to be issuedunder this delegation of authority, taking into account, in theevent of the issue of standalone share subscription warrants, the issue price of such warrants, shall be at least equal to theminimum price set forth in legislative and regulatory provisionsin force at the time of the issue (equivalent as of the date of thisMeeting to the weighted average of the share price over the lastthree trading days on the regulated market of Euronext Parispreceding the determination of the subscription price for thecapital increase, less a maximum discount of 5%, afteradjustment of such average for any difference in the dates fromwhich the shares in question shall have dividend rights);

7. grants the same powers to the Board of Directors, includingthe option to sub-delegate said powers to the Chief Executive




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Officer or, if deemed necessary and with the latter’s consent, toa Group Managing Director, as those specified under point 6 of the fourteenth resolution;

8. decides that this delegation of authority shall replace that givenby the Combined Shareholders’ Meeting of March 31, 2011.

Sixteenth resolutionDelegation of authority to be given to the Board of Directorsto increase the share capital without preferentialsubscription rights through a private placement reserved for qualified investors or a restricted group of investors

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the Statutory Auditorsand in accordance with the provisions of the French CommercialCode, in particular its Articles L. 225-129, L. 225-129-2,L. 225-135, L. 225-136 et seq. and L. 228-92, hereby:

1. delegates its authority to the Board of Directors to proceedwith the issue, on one or more occasions, in such amounts and atsuch times as it may deem fit, on the French and/or internationalmarket, by way of an offering provided for in Article L. 411-2 IIof the French Monetary and Financial Code, either in euros or in any other currency or accounting unit based on a basket ofcurrencies, of ordinary shares and more generally of any otherinvestment securities, composite or not, including subscriptionor acquisition warrants issued on a standalone basis, giving eitherimmediate or future access, at any time or on a predetermineddate, to the Company’s share capital or conferring entitlement todebt securities, by subscription, whether in cash or by offsettingreceivables, through conversion, exchange, repayment, tenderingof a coupon or in any other manner, with the understandingthat debt securities may be issued with or without guarantees,in forms, at rates and under terms and conditions that the Boardof Directors shall deem appropriate, and that the issuance ofpreference shares is excluded from the scope of this delegation;


3. decides, should the Board of Directors use the authority thusdelegated, that the total nominal amount represented by anycapital increases that may be carried out, whether immediatelyor over time, shall not exceed fifty (50) million euros, subject tothe provisions of the twenty-second resolution. To this ceilingshall be added, where applicable, the aggregate nominal amountof any shares to be issued in the event of further financialtransactions carried out, as provided by law, to protect the rightsof holders of investment securities giving access to the Company’sshare capital. Furthermore, in accordance with the provisionsof Article L. 225-136 of the French Commercial Code, theamount of shares that may be issued per year shall not exceed20% of the Company’s share capital as of the date of the issue;

4. decides, in accordance with Article L. 225-135 of theFrench Commercial Code, to exclude the preferential right ofshareholders to subscribe for any investment securities thatmay be issued under this resolution;

5. takes note that, should the Board of Directors use the authoritythus delegated, the decision to issue investment securitiesgiving access to the Company’s share capital shall automaticallyentail, in favor of the holders of the issued securities, the express

waiver by shareholders of their preferential right to subscribe forthe shares to which the investment securities so issued shall giveaccess;

6. decides, in accordance with Article L. 225-136 1°subparagraph 1 of the French Commercial Code, that theamount of the consideration accruing and/or to accrue at a laterdate to the Company for each of the shares issued or to be issuedunder this delegation of authority, taking into account, in theevent of the issue of standalone share subscription warrants, theissue price of such warrants, shall be at least equal to the minimumprice set forth in legislative and regulatory provisions in forceat the time of the issue (equivalent as of the date of this Meetingto the weighted average of the share price over the last threetrading days on the regulated market of Euronext Paris precedingthe determination of the subscription price for the capitalincrease, less a maximum discount of 5%, after adjustment ofsuch average for any difference in the dates as of which theshares in question shall have dividend rights);

7. grants the same powers to the Board of Directors, includingthe option to sub-delegate said powers to the Chief ExecutiveOfficer or, if deemed necessary and with the latter’s consent, toa Group Managing Director, as those specified under point 6 ofthe fourteenth resolution;


Seventeenth resolutionAuthorization to be given to the Board of Directors to set the issue price of shares and/or other investment securitiesgiving access to the Company’s share capital under certainconditions, in a total issue amount not to exceed 10% of theshare capital per year, in connection with a capital increasethrough the issue of shares and/or other investment securitieswithout preferential subscription rights

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the Statutory Auditorsand in accordance with the provisions of Article L. 225-136 1°subparagraph 2 of the French Commercial Code, herebyauthorizes the Board of Directors, with the option to delegatethis authority as provided by law, for issues decided under thefifteenth and sixteenth resolutions and in a total issue amountnot to exceed 10% of the share capital per year as of the date ofthe issue, to depart from rules for the determination of the issueprice of shares to be issued under the aforementioned resolutionsby applying a maximum discount of 10% to the weightedaverage of the share price over the last three trading days on theregulated market of Euronext Paris preceding the determinationof the subscription price for the capital increase.

Eighteenth resolutionDelegation of authority to be given to the Board of Directorsto increase the number of shares to be issued for issues that are oversubscribed

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the StatutoryAuditors, hereby decides that in the event of an issue approvedin application of the delegations of authority given to the Board




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of Directors under the fifteenth, sixteenth and/or seventeenthresolutions, the number of shares to be issued may be increased,if an issue is oversubscribed, under the conditions and within thelimits provided under Articles L. 225-135-1 and R. 225-118of the French Commercial Code, subject to the maximumnominal amount set forth in the aforementioned resolutions.

Nineteenth resolutionDelegation of authority to be given to the Board of Directorsto increase the share capital in connection with a publicexchange offer

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the Statutory Auditorsand in accordance with the provisions of the French CommercialCode, in particular its Articles L. 225-129, L. 225-129-2,L. 225-148 and L. 228-92, hereby:

1. delegates its authority to the Board of Directors to proceedwith the issue, on one or more occasions, and at such times as itmay deem fit, of shares and more generally of any other investmentsecurities giving access to the Company’s share capital or conferringentitlement to debt securities provided the underlying securitiesare shares, as consideration for shares contributed to a publicexchange offer for the shares of another company admitted totrading on a regulated market, as defined under Article L. 225-148of the French Commercial Code;


3. decides that the total nominal amount represented by anycapital increases that may be carried out under this resolutionshall not exceed fifty (50) million euros, subject to the provisionsof the twenty-second resolution. To this ceiling shall be added,where applicable, the aggregate nominal amount of any sharesto be issued in the event of further financial transactions carried out,as provided by law, to protect the rights of holders of investmentsecurities giving access to the Company’s share capital;

4. decides, should the Board of Directors use the authoritythus delegated, including its use of the option to sub-delegatethis authority within the limits set forth by law, that the Boardor its sub-delegatee shall have full powers to carry out all necessarymeasures, particularly in order to:

- approve the list of securities tendered in the exchange, approvethe terms of the issue, the exchange ratio and where applicablethe amount of the residual cash balance to be paid as well asto determine the terms and conditions of the issue, whether inconnection with a public exchange offer, an alternative takeoverbid or exchange offer, a public offering covering the acquisitionor exchange of the relevant securities against settlement insecurities and cash, or a public tender offer (OPA) or exchangeoffer (OPE) combined with a subsidiary OPE or OPA,

- determine the date from which the new shares shall havedividend rights,

- apply where applicable any expenses arising in connectionwith capital increases against the amount of the contributionpremiums and deduct from such amount the sum required in

order to bring the legal reserve to one-tenth of the new capitalafter each increase,

- amend the Bylaws accordingly;


Twentieth resolutionDelegation of authority to be given to the Board of Directorsto increase the share capital in connection with contributionsin kind

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the StatutoryAuditors and in accordance with the provisions of the FrenchCommercial Code, in particular its Articles L. 225-147 andL. 225-147-1, hereby:

1. delegates to the Board of Directors such powers as are necessaryin order to proceed with the issue, on one or more occasions, at such times as it may deem fit, of shares and more generally ofany other investment securities giving access to the Company’sshare capital or conferring entitlement to debt securities providedthat the underlying securities are shares, as consideration forcontributions in kind granted to the Company and consistingof shares or investment securities giving access to the Company’sshare capital, in cases where the provisions of Article L. 225-148of the French Commercial Code do not apply;


3. decides that the total number of shares to be issued under thisresolution may not exceed 10% of the Company’s share capitalas of the date of issue, subject to the provisions of the twenty-secondresolution. To this ceiling shall be added, where applicable, thenominal amount of the shares to be issued in the event of furtherfinancial transactions carried out, as provided by law, to protectthe rights of holders of investment securities giving access tothe Company’s share capital;

4. decides, should the Board of Directors use the authority thusdelegated, that it shall have full powers to carry out all necessarymeasures, particularly in order to:

- approve the report of the asset transfer auditor(s) (commissaire(s)aux apports) and the valuation of the contribution,

- determine the date from which the new shares shall havedividend rights,

- apply where applicable any expenses arising in connectionwith capital increases against the amount of the contributionpremiums and deduct from such amount the sum required inorder to bring the legal reserve to one-tenth of the new capitalafter each increase,

- amend the Bylaws accordingly;

5. decides that this authorization shall replace that given bythe Combined Shareholders’ Meeting of March 31, 2011.




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Twenty-first resolutionDelegation of authority to be given to the Board of Directorsto carry out capital increases, with preferential subscriptionrights excluded, reserved for Group employees

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the StatutoryAuditors and acting in accordance with the provisions of ArticlesL. 225-129-2, L. 225-138 and L. 225138-1 of the FrenchCommercial Code and in accordance with the provisions ofArticles L. 3332-1 et seq. of the French Labor Code, while alsosatisfying the requirements of Article L. 225-129-6 of theFrench Commercial Code, hereby:

1. delegates its authority to the Board of Directors (i) to increasethe Company’s share capital through the issue of shares or moregenerally of any other investment securities, on one or moreoccasions, as provided by Articles L. 3332-18 et seq. of the FrenchLabor Code, that would be reserved for employees of the Companyand of any other affiliated companies within the meaning ofArticle L. 3344-1 of the French Labor Code, who have enrolled ina company savings plan (Plan d’Épargne Entreprise – PEE) and (ii)to allot, where applicable, performance shares or investmentsecurities giving access to the Company’s share capital as areplacement, in full or in part, for the discount set forth inpoint 4 below, under the conditions and within the limitsprovided by Article L. 3332-21 of the French Labor Code, withthe understanding that, as necessary, the Board of Directorsmay substitute for all or a portion of this capital increase, thetransfer, under the same conditions, of securities already issuedby the Company;


3. decides, subject to the provisions of the twenty-secondresolution, that the total number of shares issued under thisdelegation, including those resulting from shares or investmentsecurities giving access to the Company’s share capital thatmay be allotted as bonus shares as a full or partial replacementfor the discount as provided by Articles L. 3332-18 et seq. ofthe French Labor Code, may not exceed 1% of the Company’sshare capital as of the date of this Meeting. To this total numbershall be added, where applicable, the additional number of shares to be issued, as provided by law, to protect the rights ofholders of investment securities giving access to the Company’sshare capital;

4. decides that (i) the subscription price of newly issued sharesmay neither be greater than the average of the opening pricefor existing shares on the regulated market of Euronext Parisduring the twenty trading sessions preceding the day of thedecision by the Board of Directors or the Chief Executive Officersetting the opening date for the subscription period nor morethan 20% lower than this average, with the understanding thatthe Board of Directors or the Chief Executive Officer may,where applicable, reduce or eliminate the discount which mightotherwise apply, in order to take into account, in particular,legal frameworks or tax regimes applicable outside France ordecide to fully or partially replace this maximum discount of20% with the allotment of bonus shares and/or of securitiesgiving access to the Company’s share capital and that (ii) the

issue price for investment securities giving access to the Company’sshare capital shall be determined as provided by Article L. 3332-21of the French Labor Code;

5. decides to exclude the preferential right of shareholders tosubscribe for any shares or any investment securities givingaccess to the Company’s share capital that may be issued under thisdelegation and reserved for employees as set forth above and torequire the waiver of any rights to receive shares or investmentsecurities giving access to the Company’s share capital thatmight be allotted free of charge under the terms of this resolution;

6. grants full powers to the Board of Directors, including theoption to sub-delegate said powers as provided by law, toimplement this delegation and in particular to:

- determine the length of service requirements that must be metin order to participate in the operation, within any limits setforth by law, and, where applicable, the maximum number ofshares that may be subscribed for by each employee,

- decide whether shares must be subscribed for directly byemployees enrolled in one of the Group’s company savingsplans (PEEs) or whether they must be subscribed for via a corporate investment fund (FCPE) or via a mutual fundavailable exclusively to employee shareholders (SICAVAS),

- draw up the list of companies whose employees may benefitfrom the subscription offer,

- determine whether a specific time limit should be granted to employees in order to pay up their securities,

- set the conditions for enrollment in the Group’s companysavings plan(s) (PEE(s)) and draw up or amend their regulations,

- set the opening and closing dates for the subscription periodand the issue price for securities,

- proceed with the allotment of bonus shares or of investmentsecurities giving access to the Company’s share capital, withinthe limits set forth by Articles L. 3332-18 et seq. of the FrenchLabor Code, and set the type and amount of reserves, profit,or additional paid-in capital to be capitalized,

- approve the number of new shares to be issued and the reductionrules applicable in the event that an issued is oversubscribed,

- apply the expenses of the share capital increases and of theissue of other securities giving access to the Company’s sharecapital against the amount of the corresponding premiumsand deduct from that amount any sums necessary in order tobring the legal reserve to one-tenth of the new capital followingeach increase;

7. decides that this authorization shall replace that given bythe Combined Shareholders’ Meeting of April 5, 2012.

Twenty-second resolutionDetermination of an overall ceiling for all capital increasesdecided in application of delegations of authority

The Shareholders’ Meeting, having examined the report of theBoard of Directors and in accordance with the provisions ofArticle L. 225-129-2 of the French Commercial Code, decidesthat the cumulative nominal amount of all issues that may




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be decided in application of the delegations of authority givento the Board of Directors under the preceding resolutions shallnot exceed fifty (50) million euros. It is to be understood thatthis amount shall be augmented by the nominal amount of anycapital increases to be carried out, as provided by law, to protectthe rights of holders of the securities issued previously. In theevent of a capital increase by way of the capitalization ofadditional paid-in capital, reserves, profit or other items in theform of an allotment of bonus shares during the validity periodof such delegations of authority, the aforementioned maximumnominal amount (excluding issue premiums) shall be adjustedby a multiplying coefficient equal to the ratio of the number ofshares making up the Company’s share capital before and afterthe operation.

Twenty-third resolutionAuthorization to be given to the Board of Directors to allotbonus shares to Group employees and senior executive officers

The Shareholders’ Meeting, having examined the report of theBoard of Directors and the special report of the Statutory Auditorsand in accordance with the provisions of Articles L. 225-197-1et seq. of the French Commercial Code, hereby:

1. authorizes the Board of Directors, at its sole discretion, to allotexisting or newly issued shares as bonus shares, on one or moreoccasions, to employees or senior executive officers of the Companyor of any affiliated entities within the meaning of ArticleL. 225-197-2 of the French Commercial Code, or to certaincategories of employees or senior executive officers, with theunderstanding that the total amount of bonus shares allottedmay not exceed 1% of the Company’s share capital as of the dateof this Meeting, it being specified that the amount of this capitalincrease shall be offset against the overall ceiling of 50 millioneuros defined in the twenty-second resolution above;

2. determines that this authorization shall be valid for a periodof twenty-six months as of the date of this Meeting;

3. decides that the allotment of shares to their beneficiaries shallbecome definitive either (i) after a minimum vesting period oftwo years, the beneficiaries being required in this case to hold theshares for a minimum of two more years once fully vested or (ii)after a minimum vesting period of four years, without anyrequirement to hold the shares once fully vested. The Board ofDirectors shall be entitled to choose between these two options,making use of them either alternately or concurrently and may,in the first case, extend the vesting period and/or the holdingperiod and, in the second case, extend the vesting period and/orset a holding period.

However, the allotment of shares to beneficiaries with a disabilitycorresponding to a classification in the second or third categoryset forth in Article L. 341-4 of the French Social Security Codeshall become definitive before the end of the applicable vestingperiod. Moreover, in this case, the shares in question shall befreely transferable;

4. authorizes the Board of Directors to make, where applicableduring the vesting period, any adjustments to the number ofshares in connection with any transactions involving the Company’sshare capital, in order to protect the rights of beneficiaries;

5. takes note that if the allotment involves an issue of new shares,this authorization entails the automatic waiver by shareholders,in favor of the beneficiaries of bonus shares, of their preferentialright to subscribe for the new shares to be issued;

6. decides, should the Board of Directors use this authorization,including its use of the option to delegate its authority withinthe limits set forth by law, that the Board or its delegatee shallhave full powers to carry out all necessary measures, particularlyin order to:

- draw up the lists of bonus share beneficiaries,- set the terms and conditions for the allotment of bonus shares

and, where applicable, the allotment criteria,- make the vesting of any portion or all of the shares subject to one

or more performance conditions that it shall determine,- set the dates from which shares shall have dividend rights,- where applicable, record the completion of each capital

increase, amend the Bylaws accordingly, and more generallytake any and all actions required in the implementation of thisauthorization;

7. decides that this authorization shall replace that given bythe Combined Shareholders’ Meeting of March 31, 2011.

Twenty-fourth resolutionAmendment of the Bylaws

The Shareholders’ Meeting, having examined the report of theBoard of Directors, hereby decides to amend the Company’sBylaws (i) to take into account the provisions of Law 2011-525of May 17, 2011 relating to the simplification and improvementof the quality of law by eliminating all references in the Bylawsto significant related-party agreements concluded within thenormal course of operations and at arm’s length and (ii) to offerthe Shareholders’ Meeting the ability to grant each shareholderthe option to receive all or a portion of his or her dividendpayment in the form of shares.

Consequently, the Bylaws shall be amended as follows:

Article 18 – Agreements subject to authorizationPoint 2 subparagraph 4:

This shall read as follows:

“The above provisions shall not apply to agreements concludedwithin the normal course of the Company’s operations and atarm’s length.”

Article 29 – Payment of dividendsSubparagraphs 3 and 4 inserted after subparagraph 2:

“The Shareholders’ Meeting convened to approve the fiscalyear’s financial statements may grant each shareholder theoption to receive all or a portion of his or her dividend payment(whether interim or final) either in cash or in shares.

Requests for dividend payments in shares must be receivedwithin a time period to be set by the Shareholders’ Meeting,with the understanding that this period may not be longer thanthree months after the date of said Shareholders’ Meeting”.

The rest of the article remains unchanged.




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STATUTORY AUDITORS’ REPORT ON THE PROPOSED DECREASE IN SHARE CAPITAL

(Twelfth resolution)


In our capacity as Statutory Auditors of LVMH Moët Hennessy – Louis Vuitton and in accordance with the procedures provided for in Article L. 225-209 of the French Commercial Code (Code de commerce) on the decrease in share capital by the cancellation ofshares purchased, we hereby report to you on our assessment of the reasons for and the terms and conditions of the proposed decreasein share capital.

Shareholders are requested to confer all necessary powers on the Board of Directors, during a period of eighteen months startingfrom the day of this Meeting, to cancel, up to a maximum of 10% of its share capital by 24-months period, the shares purchased by the Company pursuant to the authorization to purchase its own shares under the provisions of the above-mentioned Article.

We performed the procedures that we considered necessary in accordance with the professional guidelines of the French NationalInstitute of Statutory Auditors (Compagnie Nationale des Commissaires aux comptes) applicable to this engagement. Our proceduresconsisted, in particular, in verifying the fairness of the reasons for and the terms and conditions of the proposed decrease in sharecapital, which does not interfere with the equal treatment of shareholders.

We have no comments on the reasons for and the terms and conditions of the proposed decrease in share capital.






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STATUTORY AUDITORS’ REPORT ON THE ISSUE OF SHARES AND MARKETABLE SECURITIES WITH RETENTION AND/OR WAIVER OF PREFERENTIAL SUBSCRIPTION RIGHTS

(Fourteenth, fifteenth, sixteenth, seventeenth, nineteenth and twentieth resolutions)


In our capacity as Statutory Auditors of LVMH Moët Hennessy – Louis Vuitton and pursuant to the procedures set forth in the FrenchCommercial Code (Code de commerce) and in particular Articles L. 228-92, L. 225-135 et seq., we hereby present to you our report onthe proposed delegations of authority to the Board of Directors to carry out various issues of shares and marketable securities,transactions on which you are being asked to vote.

Your Board of Directors proposes, based on its report:

• that shareholders delegate to it for a period of 26 months, the authority to decide on the following transactions and to set the finalterms and conditions of these issues and proposes, when necessary, that you waive your preferential subscription rights:

- issue, on one or several occasions, through a public offering, ordinary shares and more generally all marketable securities, whetheror not composite securities, including subscription or purchase warrants issued independently, conferring entitlement, immediatelyor in the future, at any time or on a fixed date, to the share capital or conferring entitlement to debt securities, with retention of preferential subscription rights (14th resolution);

- issue, on one or several occasions, through a public offering, ordinary shares and more generally all marketable securities, whetheror not composite securities, including subscription or purchase warrants issued independently, conferring entitlement, immediatelyor in the future, at any time or on a fixed date, to the share capital or conferring entitlement to debt securities, with waiver ofpreferential subscription rights (15th resolution);

- issue, on one or several occasions, by an offering referred to in Article L. 411-2 II of the French Monetary and Financial Code(Code monétaire et financier), ordinary shares and shares and more generally all marketable securities, whether or not compositesecurities, including subscription or purchase warrants issued independently, conferring entitlement, immediately or in thefuture, at any time or on a fixed date, to the share capital or conferring entitlement to debt securities, with waiver of preferentialsubscription rights, and for up to a maximum of 20% of the share capital per year (16th resolution);

- issue, on one or several occasions, shares and more generally all marketable securities conferring entitlement to the share capitalor debt securities provided that the first security be a share issued in consideration for the securities transferred to the Companyas part of a public exchange bid on the shares of another company whose shares are listed for trading on one of the regulatedmarkets referred to in Article L.225-148 of the French Commercial Code (19th resolution);

• to authorize it, pursuant to the 17th resolution and as part of the implementation of the delegations referred to in the 15th and16th resolutions, to set the issue price up to the legal maximum of 10% of the share capital per year determined as of the issue date(Article L.225-136 paragraph 1 of the French Commercial Code);

• to delegate to it, for a period of 26 months, the power to set the terms and conditions of an issue of shares or marketable securitiesconferring entitlement to the share capital or debt securities provided that the first security be a share issued in consideration forin-kind contributions granted to the Company (Article L.225-147 of the French Commercial Code granted to the Company and comprised of equity securities or marketable securities conferring entitlement to the share capital, for up to a maximum of10% of the share capital determined as of the issue date (20th resolution).

The total nominal amount of capital increases likely to be carried out pursuant to the delegations of authority granted to the Boardof Directors, may not exceed 50 million euros in accordance with the 22nd resolution; it being specified that this ceiling applies to capital increases resulting from the issues decided pursuant to the 14th, 15th, 16th, 19th, 20th and 21st resolutions submitted toyour approval at this Meeting.

These ceilings include the additional number of securities to be created as part of the implementation of the delegations referred to in the 14th, 15th and 16th resolutions, under the conditions set forth in Article L. 225-135-1 of the French Commercial Code,should you adopt the 18th resolution.

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It is the responsibility of the Board of Directors to prepare a report in accordance with Articles R. 225-113 et seq., of the French CommercialCode. Our role is to express an opinion on the fair presentation of the quantified information extracted from the accounts, on theproposed waiver of preferential subscription rights and on certain other information concerning these transactions, contained in this report.

We performed the procedures that we deemed necessary in accordance with the professional guidelines of the French Institute of Statutory Auditors (Compagnie Nationale des Commissaires aux comptes) relating to this type of engagement. These proceduresconsisted in verifying the content of the Board of Directors’ report in respect of these transactions and the terms and conditionsgoverning the determination of the issue price of equity securities to be issued.

Subject to a subsequent review of the terms and conditions of proposed issues, we have no comments on the terms and conditionsgoverning the determination of the issue price of equity securities to be issued presented in the Board of Directors’ report inconnection with the 15th, 16th and 17th resolutions.

Furthermore, as the report does not include information on the terms and conditions governing the determination of the issue priceof equity securities to be issued pursuant to the 14th, 19th and 20th resolutions, we cannot express an opinion on the issue pricecalculation inputs.

As the final terms and conditions under which the issues will be performed have not yet been decided, we do not express an opinionon the final terms and conditions under which the issues will be performed and, as such, on the proposed waiver of preferentialsubscription rights submitted for your approval in the 15th, 16th and 17th resolutions.

In accordance with Article R. 225-116 of the French Commercial Code, we shall issue an additional report, if necessary, on theperformance by your Board of Directors of any issues with waiver of preferential subscription rights or of any issues of securitiesconferring entitlement to the Company’s share capital and/or debt securities.






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STATUTORY AUDITORS’ REPORT ON THE ISSUE OF SHARES AND MARKETABLE SECURITIES RESERVED FOR EMPLOYEES WHO ARE MEMBERS OF A COMPANY SAVINGS PLAN

(Twenty-first resolution)


In our capacity as Statutory Auditors of LVMH Moët Hennessy – Louis Vuitton and in accordance with the procedures provided for in Articles L. 228-92 and L. 225-135 L. 225-135 et seq. of the French Commercial Code (Code de commerce), we hereby report toyou on the proposed delegation to the Board of Directors of the authority to decide on the issue of shares or more generally allmarketable securities conferring entitlement to the share capital of the Company, with waiver of preferential subscription rights,reserved to employees of the Company and its affiliated companies within the meaning set forth in Article L. 3344-1 of the FrenchLabor Code (Code du travail), who are members of a company savings plan, a transaction on which you are being asked to vote.

Subject to the maximum nominal amount of 50 million euros set forth in the 22nd resolution for all the delegations of authoritygranted to the Board of Directors pursuant to the resolutions of this Meeting, the total number of shares likely to be created from allof the shares issued under this delegation, including those resulting from shares or marketable securities conferring entitlement toshare capital of the Company potentially granted for no consideration to fully or partially offset the discount under the terms andconditions set forth in Articles L.3332-18 et seq. of the French Labor Code, may not exceed 1% of the share capital of the Companyas of the date of this Meeting.

This transaction is submitted to you for your approval pursuant to Articles L. 225-129-6 of the French Commercial Code andL. 3332-18 et seq. of the French Labor Code.

Based on its report, your Board of Directors recommends that you confer on it, for a period of 26 months, the authority to decide onan issue and waive your preferential subscription rights to the marketable securities to be issued. If applicable, it will be responsiblefor determining the final issuance terms and conditions of this transaction.

It is the Board of Directors’ responsibility to prepare a report in accordance with Articles R. 225-113 et seq. of the French CommercialCode. Our role is to express an opinion on the fairness of the quantified data extracted from the financial statements, on the proposedwaiver of preferential subscription rights and on certain other information pertaining to the issuance as presented in this report.

We performed the procedures that we considered necessary in accordance with the professional guidelines of the French NationalInstitute of Statutory Auditors (Compagnie Nationale des Commissaires aux comptes) applicable to this engagement. Such proceduresconsisted in verifying the content of the Board of Directors’ report as it relates to this transaction and the terms and conditions in which the issue price of the equity securities to be issued was determined.

Subject to our review in due course of the terms and conditions of the proposed issues, we have no comments to make on the proceduresfor determining the issue price of the equity securities to be issued presented in the Board of Directors’ report.

As the final terms and conditions under which the issues will be carried out have not yet been set, we express no opinion on themand, consequently, on the proposed waiver of the preferential subscription rights on which you are being asked to vote.

In accordance with Article R. 225-116 of the French Commercial Code, we will issue a supplementary report, where necessary,when this delegation of authority is utilized by your Board of Directors.






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STATUTORY AUDITORS’ REPORT ON THE GRANTING OF EXISTING SHARES OR SHARES TO BE ISSUED, FOR NO CONSIDERATION, TO EMPLOYEES AND SENIOR EXECUTIVE OFFICERS

(Twenty-third resolution)


In our capacity as Statutory Auditors of LVMH Moët Hennessy – Louis Vuitton, and in accordance with the procedures provided forin Article L. 225-197-1 of the French Commercial Code (Code de commerce), we have prepared this report on the project to grantexisting shares or shares to be issued for no consideration to employees and senior executive officers of the Company and affiliatedcompanies within the meaning of Article L.225-197-2 of the French Commercial Code, or to certain categories of employees andsenior executive officers, a transaction on which you are being asked to vote.

The total amount of shares issued for no consideration cannot exceed 1% of the Company’s share capital as of the date of thisMeeting; it being specified that this capital increase will be deducted from the overall amount of 50 million euros set forth in the22nd resolution of this Meeting.

Based on its report, your Board of Directors proposes that you confer on it the authority to grant existing or shares to be issued forno consideration for a period of 26 months.

The Board of Directors is responsible for preparing a report on the transaction that it wishes to carry out. Our role is to inform youof our comments, if any, on the information thus given to you on the proposed transaction.

We performed the procedures that we considered necessary in accordance with the professional guidelines of the French NationalInstitute of Statutory Auditors (Compagnie Nationale des Commissaires aux comptes) applicable to this engagement. Our work consistedin verifying more specifically that the proposed procedures and data presented in the Board of Directors’ report comply with thelegal provisions.

We have no comments on the information given in the Board of Directors’ report in connection with the proposed granting ofshares for no consideration.






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RESPONSIBLE COMPANY OFFICER; FINANCIAL INFORMATION

1. STATEMENT BY THE COMPANY OFFICER RESPONSIBLE FOR THE REFERENCE DOCUMENT 260

2. INFORMATION INCORPORATED BY REFERENCE 261

3. DOCUMENTS ON DISPLAY 261

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1. STATEMENT BY THE COMPANY OFFICER RESPONSIBLE FOR THE REFERENCE DOCUMENT

We declare, having taken all reasonable care to ensure that such is the case, that the information contained in this ReferenceDocument is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import.

We declare that, to the best of our knowledge, the financial statements have been prepared in accordance with applicable accountingstandards and provide a true and fair view of the assets, liabilities, financial position and profit or loss of the parent company and ofall consolidated companies, and that the Management Report presented on page 24 gives a true and fair picture of the businessperformance, profit or loss and financial position of the parent company and of all consolidated companies as well as a description of the main risks and uncertainties faced by all of these entities.

We have obtained a letter from the Statutory Auditors certifying that they have verified, in accordance with professional standardsand doctrine applicable in France, the financial and accounting information provided in this Reference Document and that theyhave read the document as a whole.

In their report on the 2011 parent company financial statements, the Statutory Auditors highlighted the change in presentation ofthe income statement described in Note 2.1 of the notes to the financial statements.

Paris, March 27, 2013

Under delegation from the Chairman and Chief Executive Officer

Jean-Jacques GUIONY

Chief Financial Officer, Member of the Executive Committee



Statement by the company officer responsible

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3. DOCUMENTS ON DISPLAY

The Bylaws of the company LVMH Moët Hennessy – Louis Vuitton are incorporated within this Reference Document. Other legaldocuments pertaining to the Company may be consulted at its headquarters under the conditions provided by law.

The Company’s Reference Document filed by LVMH with the Autorité des Marchés Financiers (AMF), the press releases relating torevenue and earnings, as well as the annual and interim reports and the consolidated and parent company financial statements maybe consulted on the Company’s web site at the following address: www.lvmh.com.

2. INFORMATION INCORPORATED BY REFERENCE

In application of Article 28 of European Commission Regulation (EC) No. 809/2004, the following information is incorporated byreference in this Reference Document:

- the 2011 consolidated financial statements, prepared in accordance with IFRS, accompanied by the report of the StatutoryAuditors on these statements, included on pages 114-176 and 177, respectively, of the 2011 Reference Document, filed with theAMF on March 14, 2012 under the number D. 12-0159;

- the 2010 consolidated financial statements, prepared in accordance with IFRS, accompanied by the report of the StatutoryAuditors on these statements, included on pages 116-182 and 183-184, respectively, of the 2010 Reference Document, filed withthe AMF on March 9, 2011 under the number D. 11-0109;

- the developments in the Group’s financial situation and in the results of its operations between the 2011 and 2010 fiscal years,presented on pages 26-49 of the 2011 Reference Document, filed with the AMF on March 14, 2012 under the number D. 12-0159;

- the developments in the Group’s financial situation and in the results of its operations between the 2010 and 2009 fiscal years,presented on pages 24-50 of the 2010 Reference Document, filed with the AMF on March 9, 2011 under the number D. 11-0109;

- the 2011 parent company financial statements, prepared in accordance with French GAAP, accompanied by the report of theStatutory Auditors on these statements, included on pages 180-204 and 205-206, respectively, of the 2011 Reference Document,filed with the AMF on March 14, 2012 under the number D. 12-0159;

- the 2010 parent company financial statements, prepared in accordance with French GAAP, accompanied by the report of theStatutory Auditors on these statements, included on pages 186-205 and 206-207, respectively, of the 2010 Reference Document,filed with the AMF on March 9, 2011 under the number D. 11-0109;

- the Statutory Auditors’ special report on related party agreements and commitments of the 2011 fiscal year, included on pages207-208 of the 2011 Reference Document, filed with the AMF on March 14, 2012 under the number D. 12-0159;

- the Statutory Auditors’ special report on related party agreements and commitments of the 2010 fiscal year, included on pages208-209 of the 2010 Reference Document, filed with the AMF on March 9, 2011 under the number D. 11-0109;

The sections of the 2011 and 2010 reference documents that are not incorporated are either not relevant to investors or are includedin the present document.


Information incorporated by reference - Documents on display


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TABLES OF CONCORDANCE

1. TABLE OF CONCORDANCE WITH HEADINGS PRESENTED IN ANNEX 1 OF COMMISSION REGULATION (EC) 809/2004 264

2. TABLE OF CONCORDANCE WITH THE ANNUAL FINANCIAL REPORT 266

263

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1. Persons responsible 260

2. Statutory Auditors 223

3. Selected financial information3.1. Historical information 2-3; 2043.2. Interim information N/A

4. Risk factors 37-42; 153-158

5. Information about the Company5.1. History and development

of the Company 1; 10-22; 2385.2. Investments 43-44; 158-161; 170

6. Business overview 10-22

7. Organizational structure 7.1. Brief description 6-77.2. List of significant subsidiaries 174-178

8. Real estate property, property,plant and equipment 44-46

9. Operating and financial review 24-36

10. Capital resources 10.1. Capital resources of the issuer 42-4310.2. Sources and amounts of cash flows 34-3610.3. Borrowing requirements 35; 42-43; 48;

and funding structure 143-144; 148-151; 198-199; 243

10.4. Restrictions on the use of capital resources that have affected, or could affect, the issuer’s operations N/A

10.5. Anticipated sources of financing 35; 42-43; 143-144;151

11. Research and development, patents and licenses 18-19; 43

12. Trend information 46

13. Profit forecasts or estimates N/A

14. Administrative, management, and supervisorybodies and senior management

14.1. Administrative, management, and supervisory bodies and senior management 5

14.2. Administrative, management, and supervisory bodies and senior management conflicts of interest 100; 225

15. Remuneration and benefits 62-64; 173

16. Board practices 16.1. Date of expiration

of the current term of office 210-22216.2. Members of the administrative,

management or supervisory bodies’ service contracts 62-64; 103-104

16.3. Information about the audit Committee and remuneration Committee 101-102; 225-228

16.4. Corporate government 100-104; 224-228

17. Employees 17.1. Number of employees 68-6917.2. Shareholdings and stock options 50-5617.3. Arrangements for involving

the employees in the capital of the issuer 58-59

18. Major shareholders 18.1. Shareholders having

an interest in the capital of voting rights of over 5% 240-242

18.2. Existence of different voting rights 234; 238-24118.3. Control of the issuer 24218.4. Arrangements known to the issuer,

the operation of which may at a subsequent date result in a change in control of the issuer 240-241

19. Related party transactions 172-173; 201; 207-208

20. Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses

20.1. Historical financial information 114-173; 26120.2. Pro forma financial information N/A20.3. Individual company financial

statements of LVMH Moët Hennessy-Louis Vuitton 182-204; 261

20.4. Auditing of historical annual financial information 179-180; 205-206; 261

Headings Pages Headings Pages

1. TABLE OF CONCORDANCE WITH HEADINGS PRESENTED IN ANNEX 1 OF COMMISSION REGULATION (EC) 809/2004



N/A : not applicable

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20.5. Age of latest financial information December 31, 2012

20.6. Interim and other financial information N/A

20.7. Dividend policy 235-236; 243-24420.8. Legal and arbitration proceedings 45-4620.9. Significant change in the issuer’s

financial or trading position N/A

21. Additional information 21.1. Share capital

21.1.1. Issued capital, and information for each class of share capital 141; 239-241

21.1.2. Shares not representing capital 23921.1.3. Shares held by or on behalf

of the issuer 142; 193-19421.1.4. Convertible, exchangeable securities

or securities with warrants 23921.1.5. Acquisition rights and/or obligations

over authorized but unissued capital or an undertaking to increase the capital N/A

21.1.6. Options on the capital and agreements to put 50-56; 144-147;the capital under option 194-195

21.1.7. History of share capital 141; 240

21.2. Memorandum and Articles of Association

21.2.1. Corporate purpose 228; 23821.2.2. Provisions with respect to the members

of the administrative, management and supervisory bodies 230-233

21.2.3. Rights, preferences and restrictions attaching to each class of the existing shares 229; 238

21.2.4. Necessary action to modify the rights of sharesholders 239

21.2.5. Conditions governing annual general meetings 233-234; 238

21.2.6. Provision that would have an effect of delaying, deferring or preventing a change in control of the issuer N/A

21.2.7. Ownership threshold above which shareholder ownership must be disclosed 234-235; 239

21.2.8. Conditions governing changes in the capital 239

22. Material contracts N/A

23. Third party information and statement by experts and declarations of interest N/A

24. Documents on display 238; 261

25. Information on holdings 135-137



Headings Pages Headings Pages

N/A : not applicable

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2. TABLE OF CONCORDANCE WITH THE ANNUAL FINANCIAL REPORT (a)

Informations Pages

1. Parent company financial statements 182-204

2. Consolidated financial statements 114-173

3. Statutory Auditors’ report on the parent company financial statements 179-180

4. Statutory Auditors’ report on the consolidated financial statements 205-206

5. Management report 5.1. Analysis of the change in revenue, results and financial position, principal risks

and contingencies, financial risk management policy 24-46; 48-495.2. Summary table of valid delegations of authority granted by the Shareholders’ Meeting

to the Board of Directors regarding capital increases 57-585.3. Factors liable to have an impact in the event of a public takeover offer 655.4. Purchases of treasury shares 60-615.5. Statement by the Company Officer responsible for the management report 260

6. Statutory Auditors’ fees 223

7. Report of the Chairman of the Board of Director 100-111

8. Statutory Auditors’ report of the Report of the Chairman of the Board of Directors 112

(a) In application of Articles L. 451-1-2 of the Monetary and Financial Code (Code monétaire et financier) and 222-3 of the General Rules and Regulation of the AMF.

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The original French version of this document was submitted to the Autorité des Marchés Financiers on March 27,2013 pursuant to Article 212-13 of its General Rules and Regulations. The original French version of this documentmay be used for the purposes of public capital and financial operations if it is supplemented by a transaction noteapproved by the Autorité des Marchés Financiers. The original French version of this document was prepared by theissuer, and its signatories are responsible for its content.

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Design and production: Agence Marc Praquin

For any information:LVMH, 22 avenue Montaigne - 75008 Paris

Tel. +33 1 44 13 22 22 - Fax +33 1 44 13 21 19

www.lvmh.com

TRANSLATION OF THE FRENCH DOCUMENT DE ......SID Editions Connaissance des Arts Investir Le Journal...

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Transcript of TRANSLATION OF THE FRENCH DOCUMENT DE ......SID Editions Connaissance des Arts Investir Le Journal...