Combined Shareholders Meeting. December 9, 2014

Transcription

1 Combined Shareholders Meeting December 9, 2014 This document is a free translation into English of the original French presentation to the Ordinary Shareholders Meeting. In the event of a conflict in interpretation, reference should be made to the French version, which is the authentic text. 1

2 CONTENTS Consolidated financial statements as of June 30, 2014 Review of business groups Christian Dior parent company: - Proposed allocation of net profit - Exceptional distributions in kind of Hermès shares 2

3 Haute Couture Autumn-Winter 2014/2015

4 CONSOLIDATED FINANCIAL HIGHLIGHTS Consolidated revenue (EUR billions) Organic growth +7.2% +2.2 Impact of Currency changes in scope +1.1% impact -5.4% Change at actual exchange rates +2.9% (EUR billions) Revenue June 30, 2014 (12 months) Change * % Profit from recurring operations % Net profit, Group share % Cash from operations before changes in working capital ** % 06/30/2013 (12 months pro forma) 06/30/2014 (12 months) * With respect to the 12-month pro forma figures as of June 30, 2013 ** Before tax and interest paid 4

5 CONSOLIDATED INCOME STATEMENT (EUR millions) Revenue Gross margin Marketing and selling expenses General and administrative expenses 20,377 (11,951) (2,376) Profit from recurring operations 6,050 Other operating income and expenses Operating profit Net financial income (expense) Income taxes Income (loss) from investments in associates Net profit before minority interests Minority interests June 30, 2014 (12 months) 30,984 (161) 5,889 (231) (1,775) 9 3,892 2,467 Net profit, Group share 1,425 5

6 CONSOLIDATED FREE CASH FLOW (EUR millions) June 30, 2014 (12 months) 7,539 Interest Income taxes (160) (2,022) Change in working capital (972) Operating investments (1,959) 2,426 CASH FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL FREE CASH FLOW (*) (*) Before financial investments, transactions relating to equity and financing activities 6

7 CONSOLIDATED FINANCIAL STRUCTURE June 30, bn 61.2 bn Non-current assets 73% 50% Equity 29% Non-current liabilities Inventories Other current assets 16% 11% Assets 21% Liabilities and equity Current liabilities 7

8 CONSOLIDATED EQUITY AND NET FINANCIAL DEBT (EUR billions) APRIL 30, 2013 JUNE 30, 2013 JUNE 30, ,9 28,1 30,3 22% 22% 26% 6,2 6,3 7,9 EQUITY NET FINANCIAL DEBT GEARING RATIO 8

9 Ready-to-Wear Spring-Summer 2015

10 CONSOLIDATED REVENUE BY BUSINESS GROUP June 30, 2014 (12 months) as % of total revenue Fashion and Leather Goods 33% 29% Selective Retailing Christian Dior Couture 5% Perfumes and Cosmetics 12% Watches and Jewelry 9% Wines and Spirits 13% Note: Eliminations and other activities = -1% of revenue 10

11 CONSOLIDATED REVENUE BY GEOGRAPHIC REGION OF DELIVERY June 30, 2014 (12 months) as % of total revenue France 11% Europe (excluding France) 19% United States 22% Japan 7% Other markets 11% Asia (excluding Japan) 30% 11

12 CONSOLIDATED REVENUE BY INVOICING CURRENCY June 30, 2014 (12 months) as % of total revenue Euro 24% US dollar 27% Other currencies 42% Japanese yen 7% 12

13 Archi Dior

14 CHRISTIAN DIOR COUTURE Revenue (EUR millions) 1,324 1,505 Remarkable revenue growth: +19% at constant exchange rates (+20% for revenue from retail) Strong momentum across all product lines and all geographic areas June 30, 2013 (12 months pro forma) June 30, 2014 (12 months) Profit from recurring operations (EUR millions) Appreciable boost in profit from recurring operations Sustained investment policy 139 June 30, 2013 (12 months pro forma) 192 June 30, 2014 (12 months) Prestigious events held throughout the world 14

15 WINES AND SPIRITS Revenue (EUR millions) 4,186 4,064 Organic growth: +3%, in a mixed market across the world Slight decrease in profit from recurring operations (-1%) June 30, 2013 (12 months pro forma) Profit from recurring operations (EUR millions) 1,306 June 30, 2013 (12 months pro forma) June 30, 2014 (12 months) 1,291 June 30, 2014 (12 months) Champagne: - Revenue growth balanced between volume/price/mix - Strong performance in Asia and the United States Cognac: decrease in volumes - Continued destocking of higher-quality cognacs by distributors in China - Strong momentum in the United States Continued strategy of value creation and innovation Acquisition of Clos des Lambrays 15

16 FASHION AND LEATHER GOODS Revenue (EUR millions) 9,981 June 30, 2013 (12 months pro forma) 3,245 10,201 June 30, 2014 (12 months) Profit from recurring operations (EUR millions) 3,133 Organic growth: +5% Louis Vuitton: a strong creative dynamic - Development of fine leather lines - Successful launch of new Monogram models - Nicolas Ghesquière s first show as new Artistic Director very well received Fendi: rapid progress in leather goods Loro Piana: business integrated into the Group under optimal conditions June 30, 2013 (12 months pro forma) June 30, 2014 (12 months) Berluti: Maisons opened in Milan and New York 16

17 PERFUMES AND COSMETICS Revenue (EUR millions) 3,690 3,752 Organic growth: +7% Slight increase in profit from recurring operations despite exchange rate impact June 30, 2013 (12 months pro forma) June 30, 2014 (12 months) Parfums Christian Dior: positions bolstered in all markets Profit from recurring operations (EUR millions) Guerlain: worldwide success of the Abeille Royale skincare line 411 June 30, 2013 (12 months pro forma) 418 June 30, 2014 (12 months) BeneFit Cosmetics: solid growth Fresh: rapid progress in the United States and exceptional development in Asia 17

18 WATCHES AND JEWELRY Revenue (EUR millions) 2,803 June 30, 2013 (12 months pro forma) 331 2,776 June 30, 2014 (12 months) Profit from recurring operations (EUR millions) 331 Organic growth: +5% Stronger performance in own stores than in multi-brand retailers Profit from recurring operations stable Good momentum at Bulgari, which celebrated its 130 th anniversary Continued investment to: - Reinforce Maisons brand image - Optimize manufacturing capacity - Expand network of exclusive brand boutiques Increased selectivity in multi-brand distribution June 30, 2013 (12 months pro forma) June 30, 2014 (12 months) 18

19 SELECTIVE RETAILING Revenue (EUR millions) 8,504 June 30, 2013 (12 months pro forma) 888 9,123 June 30, 2014 (12 months) Profit from recurring operations (EUR millions) 885 Organic growth: +12% DFS: - Continuing development of tourism in Asia, but spending by Japanese travelers impacted by a weak yen - Profitability affected by the expansion and renovation of several airport concessions Sephora: - Excellent momentum in North America, Asia and the Middle East - Rapid growth in online sales June 30, 2013 (12 months pro forma) June 30, 2014 (12 months) - Continued renovation of stores and expansion of the network 19

20 Be Dior handbag

21 APPROPRIATION OF CHRISTIAN DIOR NET PROFIT FOR THE FISCAL YEAR ENDED JUNE 30, 2014 Net profit for the fiscal year ( 575m) + Retained earnings ( 144m) = Distributable earnings ( 719m) Proposed dividend (5 th resolution): - gross dividend: 3.10 per share (up 6.9% from the fiscal year ended April 30, 2013) - final dividend: 1.90 per share (given the interim dividend of 1.20 per share distributed on April 17, 2014) - final dividend payment date: December 15, 2014 Allocation of retained earnings ( 159m*) to Optional Reserves (6 th resolution), which will then total 240m * Amount calculated after taking into account the share of the April 17, 2014 interim dividend corresponding to Christian Dior treasury shares ( 3m) 21

22 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Background and context Settlement agreement entered into by LVMH, Christian Dior and Hermès on September 2, 2014, under the aegis of the President of the Commercial Court of Paris: Distribution by LVMH to its shareholders of all 24,473,545 Hermès shares (i.e. 23.2% of the share capital) that it holds, with the exception of any fractional shares Distribution by Financière Jean Goujon (which holds 40.9% of the share capital of LVMH) and by Christian Dior (which holds 100% of the share capital of Financière Jean Goujon) of all the Hermès shares received, with the exception of any fractional shares Deadline for distribution of Hermès shares: December 20, 2014 Sale on the market by LVMH and Christian Dior of Hermès shares not distributed as a result of the distribution ratios or of any fractional shares, by September 3, 2015 at the latest Agreement by LVMH, Financière Jean Goujon, Christian Dior and the other companies controlled by Bernard Arnault not to acquire any Hermès shares during a five-year period Discontinuation of all ongoing legal proceedings 22

23 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Two distinct transactions First transaction submitted to today s Combined Shareholders Meeting (see 7 th resolution): Distribution in kind (following amendment of the Company s Bylaws, discussed in the 1 st resolution) Second transaction to be decided on by the Board of Directors at its meeting to be held on December 11, 2014: Interim dividend in kind 23

24 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Distribution in kind Transaction put to a vote at today s Combined Shareholders Meeting Total amount of the distribution in kind = (Number of Hermès shares distributed) x (Hermès opening share price on the day of payment) Distribution in kind limited to 2,169m, which corresponds to the amount of the Company s reserves and premiums distributable as of June 30, 2014 Distribution in kind to be allocated (i) first, from the Optional Reserves account in the amount of 240m, and (ii) then, from the Share Premium account for the surplus Number of Christian Dior shares qualifying for the distribution: 178,878,639 Beneficiary in the case of a division of ownership of Christian Dior shares: bare owner Resulting figures assuming (i) a distribution in kind ratio of one (1) Hermès share for every 23 Christian Dior shares, and (ii) a Hermès opening share price of 278 on the day of payment: Number of Hermès shares distributed: 7,777,332 Total amount of the distribution in kind: 2,162m Unit amount of the distribution in kind: per Christian Dior share, of which: 1.34 per share (portion of the dividend allocated from the Optional Reserves ) is taxed as distributed income per share (portion of the dividend allocated from Share Premium ) constitutes a non-taxable return of capital. Where applicable, this non-taxable return of capital will reduce the tax basis of the Dior shares qualifying for it, in the event that these Dior shares are subsequently sold 24

25 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Interim dividend in kind Transaction subject to the approval of the Company s Board of Directors at its meeting to be held on December 11, 2014 Total amount of the interim dividend = (Number of Hermès shares distributed) x (Hermès opening share price on the day of payment) Interim dividend allocated from the Company s distributable earnings as of December 10, 2014 (estimated at 2.9 bn) Number of Christian Dior shares qualifying for the distribution: 178,878,639 Beneficiary in the case of a division of ownership of Christian Dior shares: usufructuary Resulting figures assuming (i) an interim dividend distribution ratio of one (1) Hermès share for every 76 Christian Dior shares, and (ii) a Hermès opening share price of 278 on the day of payment: - Number of Hermès shares distributed: 2,353,666 - Total amount of the interim dividend: 654m - Unit amount of the interim dividend: 3.66 per Christian Dior share Distributed income, fully taxable 25

26 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Common features of the two distribution transactions Ex-dividend and payment: December 17, 2014 Rights forming fractional shares are neither tradable nor assignable - If the distribution ratio does not result in a whole number of Hermès shares, the shareholder shall receive the number of Hermès shares immediately below this amount, together with a cash payment for the balance The Hermès opening share price on the day of payment (December 17, 2014) will be the basis for calculating cash payments for the balance and, where applicable, tax and social charges or withholding tax (for shareholders who are not tax residents of France) 26

27 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Sample calculations of the cash balance payment For the distribution in kind, assuming (i) a distribution in kind ratio of one (1) Hermès share for every 23 Christian Dior shares, and (ii) a Hermès opening share price of 278 on the day of payment: A shareholder with 10 Christian Dior shares would not be entitled to any Hermès shares, but would be entitled to a cash balance payment of a gross amount of (= 10 x (1/23) x 278) A shareholder with 30 Christian Dior shares would be entitled to one (1) Hermès share and to a cash balance payment of a gross amount of (= 7 x (1/23) x 278) 27

28 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Impact on the consolidated financial statements Impact of the distributions of Hermès shares by LVMH, Financière Jean Goujon and Christian Dior (distribution in kind and interim dividend in kind) 2.9 bn decrease in the consolidated equity (Group share) of Christian Dior (based on a Hermès share price of 278) Decrease equal to the value of Hermès shares distributed, adjusted for net tax Net gain of 1.1 bn recognized in net profit - Group share (based on a Hermès share price of 278) Gain equal to the value of Hermès shares distributed minus: (i) the consolidated cost of the Hermès shares and (ii) taxes payable (on capital gains and dividend distributions) No significant impact on consolidated debt 28

29 EXCEPTIONAL DISTRIBUTIONS OF HERMÈS SHARES Potential change in the distribution ratio Two possible causes: - significant change in the distribution ratio for Hermès shares distributed by LVMH - level of the Hermès opening share price on the day of payment resulting in the value of the distribution in kind being higher than the distributable amount (of 2,169m) Powers granted to the Board of Directors of Christian Dior including the capacity to sub-delegate to the Chairman and Chief Executive Officer as well as the Group Managing Director (see powers set out in the 7 th resolution submitted to today s Shareholders Meeting) to: - make any necessary arrangements for the execution of the planned distribution transactions - make the required calculations and adjustments, notably regarding the distribution ratio Given the current level of the Hermès share price, an adjustment will probably be made to the distribution ratio 29

30 TIMETABLE OF THE DISTRIBUTION IN KIND TRANSACTIONS (1/2) Shareholders with shares in bearer form (au porteur) or in administered registered form (au nominatif administré) TIMETABLE OF TRANSACTIONS OF THE DISTRIBUTION IN KIND (1/2) December 16, 2014 Equity positions of Christian Dior shares taken into account after close of trading December 17, 2014 Starting from December 17, 2014 Detachment of non-tradable and non-transferable distribution rights for Hermès shares, automatically allocated by Euroclear to the account custodians (one right per Christian Dior share for each of the two distribution transactions) Distribution rights for each of the two distribution transactions presented by the account custodians to the centralizing bank (BNP Paribas Securities Services) - The centralizing bank will credit each financial institution for the number of Hermès shares and the amount of the cash balance payment corresponding to the rights presented - The account custodians will then credit the Hermès shares and/or the cash balance payment to the account of each beneficiary of the distributions in kind - The beneficiaries of the distributions in kind must pay to their financial intermediary the tax and social charges due under the distributions 30

31 TIMETABLE OF THE DISTRIBUTION IN KIND TRANSACTIONS (2/2) Shareholders with shares in pure registered form (au nominatif pur) Before December 15, 2014 Shareholders must communicate to Christian Dior the details of the securities account and the cash account to which the Hermès shares and the cash balance payment from each of the two distribution transactions should be credited, with the understanding that they have the option of transferring the Hermès shares received to a pure registered account Prior to the delivery of the shares, each shareholder must pay Christian Dior the amount of tax and social charges due for each of the two distribution transactions Alternatively, the shareholder has the possibility of instructing Christian Dior to sell all of his or her Hermès shares, for one or both of the two distribution transactions, so that Christian Dior can pay the tax and social charges on the shareholder s behalf 31

32 FREQUENTLY ASKED QUESTIONS (1/3) I m a shareholder with shares in bearer form (au porteur) or in a registered account (au nominatif administré). What steps do I need to take with my bank to receive the distribution in kind? - No action is necessary - However, the shareholder is required to pay his or her bank the tax and social charges due in respect of each of the two distribution transactions I m a shareholder with shares registered directly with Christian Dior (au nominatif pur). What steps do I need to take? - A letter explaining these steps was sent to you last week - Before December 15, 2014, communicate to Christian Dior the details of the securities account (if you do not wish to register your Hermès shares directly with Hermès) and the cash account to which Christian Dior should credit the Hermès shares from each of the two distribution transactions and, where applicable, any cash balance payments - Before December 15, pay Christian Dior the tax and social charges due in respect of the two distribution transactions 32

33 FREQUENTLY ASKED QUESTIONS (2/3) My tax residence is in France. What kind of tax treatment will apply to the transactions? - Concerning (i) the share of the dividend in kind allocated from the Optional Reserves and (ii) the interim dividend in kind, the tax treatment will be the same as for distributions of cash dividends 21% non-final withholding, where applicable Social charges at an overall rate of 15.5% on the gross amount of the distribution, of which 5.1% is deductible from taxable income Subject to income tax (after 40% deduction) My cash account does not hold sufficient funds to pay the tax and social charges due in respect of the two distributions. What should I do? - If your shares are registered directly with Christian Dior, you can instruct Christian Dior to sell all of your Hermès shares related to one or both of the distribution transactions and to provide you with the proceeds of the sale (and cash balance payments, where applicable), net of selling expenses, tax and social charges - If your shares are in bearer form or in a registered account, you can contact your account holder to request that some or all of the Hermès shares to which you are entitled be sold to finance the tax and social charges due 33

34 FREQUENTLY ASKED QUESTIONS (3/3) What share price will be used to calculate the cash balance payment for each distribution transaction? - Cash balance payments will be calculated in proportion to the Hermès opening share price on December 17, 2014 I hold fewer than 23 or 76 shares. How will the cash balance payments I am entitled to be calculated? - In this case, you will be entitled to a cash balance payment (before tax and social charges) calculated as follows: (Number of Christian Dior shares) x (Distribution ratio of 1/23 [or 1/76]) x (Hermès opening share price on December 17, 2014) If I buy Christian Dior shares today, will I be entitled to receive Hermès shares? - All orders to purchase Christian Dior shares executed up to or on December 16 will entitle holders to Hermès shares 34

35 Combined Shareholders Meeting December 9,