LVMH

Passionate about creativity

First half 2010 interim report

BOARD OF DIRECTORS
Bernard Arnault Chairman & Chief Executive Officer Antoine Bernheim (1) (2) (3) Vice Chairman Pierre God Vice Chairman Antonio Belloni Group Managing Director Antoine Arnault Delphine Arnault Nicolas Bazire Bernadette Chirac (1) Nicholas Clive Worms (1) (2) Charles de Croisset (1) (3) Diego Della Valle (1) Albert Frre (3) Gilles Hennessy (2) Patrick Houl Lord Powell of Bayswater Felix G. Rohatyn Yves-Thibault de Silguy (1) Hubert Vdrine (1)

EXECUTIVE COMMITTEE
Bernard Arnault Chairman & Chief Executive Officer Antonio Belloni Group Managing Director Pierre God Vice Chairman Nicolas Bazire Development & Acquisitions Ed Brennan Travel retail Yves Carcelle Fashion & Leather Goods Chantal Gaemperle Human Resources Jean-Jacques Guiony Finance Christophe Navarre Wines & Spirits Patrick Ouart Advisor to the Chairman Philippe Pascal Watches & Jewelry Daniel Piette Investment funds Pierre-Yves Roussel Fashion Mark Weber Donna Karan, LVMH Inc.

Contents
01 Chairmans Message
03 Financial Highlights 05 The LVMH Share 16 Wines & Spirits 32 Perfumes & Cosmetics 40 Watches & Jewelry 46 Selective Retailing 06 08 09 10 24 Fashion & Leather Goods 07

ADVISORY BOARD MEMBER

Kilian Hennessy (1)

11 Consolidated Income Statement 12 Comments on the Consolidated Income Statement 13 Consolidated Statement of changes in equity 14 Consolidated Balance Sheet 16 Consolidated Cash Flow Statement 17 Comments on the Consolidated Cash Flow Statement

(1) Independent Director (2) Member of the Performance Audit Committee (3) Member of the Nominations and Compensation Committee

General Secretary
Marc-Antoine Jamet

FOCUSING ON EXCELLENCE
The first half of 2010 has confirmed the rebound seen at the end of last year, leading to double-digit organic revenue growth at all our business groups and a strong improvement in our results. As we anticipated, having demonstrated its resilience and responsiveness even amid the most turbulent moments of the financial crisis, LVMH rapidly took advantage of the first signs of economic improvement.

QUALITY AND CREATIVITY: SOLID, RELIABLE AND POWERFUL FOUNDATIONS

We were pleased to see that in an environment which encourages increased selectivity, with the onus being placed on the true intrinsic value of goods, our customers have demonstrated their loyalty to our brands and star products in all our business groups. Monogram and Damier, Louis Vuittons signature creations, Miss Dior, Eau Sauvage and Jadore, Dom Prignon, Guerlains Shalimar, TAG Heuers Monaco and Carrera are still, as ever, in the limelight. There have been some exceptional new products too. These include Hennessys Paradis Horus, Hublots King Power watch, the Josphine jewelry collection at Chaumet and Orchide Impriale New Generation at Guerlain More than ever, in periods of uncertainty, quality and creativity the intrinsic values of luxury are solid, reliable and powerful foundations. At the heart of our Maisons, our creative and commercial teams highlighted our brands heritage of excellence to meet these expectations throughout the global marketplace. Harnessing the exceptional savoir-faire of our artisans, proposing powerful, genuine innovations, creating an emotional buzz at our stores, providing our customers with a truly unique experience of luxury and devoting the attention needed; all of these make a difference.

The strategy of value creation, to which we remained firmly committed during the significant challenges of the global economic climate, has borne fruit. By focusing on excellence, our Group has strengthened its leadership position and continues to invest selectively in its key growth drivers.

A GEOGRAPHICAL FOOTPRINT THAT FACILITATES THE TAKING OF GROWTH OPPORTUNITIES

Global economies may have emerged from their contraction phase, but factors of instability still exist and the timescale of a solid and durable recovery is uncertain. We will continue to be rigorous and selective, notions which continue to be needed in this context, especially since the basis of comparison will be more challenging in the second half of the year. However, we are approaching the coming months calmly. Calmly because LVMH is fundamentally a solid group and because such an unusually severe crisis has further strengthened us. Calmly because our global presence enables us to take every appropriate growth opportunity: major, developed economies where, over time, our brands have built leadership positions, continue to hold considerable potential for true luxury products. Elsewhere, demand is extremely dynamic and will continue to expand in the emerging markets where we have established solid foundations, and we will accelerate this growth when the timing is right. We continue to invest selectively in key performance drivers. Firstly, we are developing our production capacity in order to support our growth. For example, Louis Vuitton, which recently completed its Fiesso dArtico footwear production facility in Italy, is building a new center of excellence where the highest-end

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01

leather used in its products will be tanned and is preparing to open a new leather goods workshop. In the world of watch movements, TAG Heuer and Hublot are carrying out similar projects. Enhancing the quality of our distribution networks is also a priority. Louis Vuitton, which recently inaugurated magnificent new stores in Shanghai, Kobe and London, will open in two new countries during the second half of the year. Sephora has established a bridgehead in Brazil, a market where the distribution of beauty products holds considerable potential.

CONFIDENCE SHARED WITH INVESTORS

Finally, an array of innovations and substantial marketing efforts will be directed towards the most profitable projects in our business lines. Our Wines & Spirits brands will implement ambitious programs to stimulate sales at the end of the year, our Perfumes & Cosmetics product ranges are being strengthened, Louis Vuitton will launch new products, in particular a very promising supple leather range. These are just a few examples. As the world leader in a growing market, this year LVMH has once again set itself the objective of improving its performance and strengthening market share. This will be driven by its highlymotivated, talented teams across the world who share the Groups culture of excellence and give us the sense of confidence that inspires us. And we are pleased to see that the financial markets share our confidence, as can be seen in the performance of the LVMH share price over the last six months. I would like to thank the Groups shareholders who have placed their support in the management of our businesses and in our long-term strategy.

July 27, 2010

Bernard Arnault Chairman & Chief Executive Officer

02

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FINANCIAL HIGHLIGHTS

Revenue
EUR million
June 30, 2010 June 30, 2009 June 30, 2008

Group share of net profit

EUR million 9,099 7,811 7,799
June 30, 2010 June 30, 2009

1,050 687 891

June 30, 2008

Revenue by business group

EUR million
June 30, 2008 June 30, 2009 June 30, 2010

Basic Group share of net profit per share

EUR
June 30, 2010 June 30, 2009

2.21 1.45 1.88

WINES AND SPIRITS FASHION AND LEATHER GOODS PERFUMES AND COSMETICS WATCHES AND JEWELRY SELECTIVE RETAILING OTHER ACTIVITIES AND ELIMINATIONS TOTAL

1,292 2,768 1,362 417 1,990 (30) 7,799

1,079 2,988 1,285 346 2,127 (14) 7,811

1,302 3,516 1,441 443 2,419 (22) 9,099

June 30, 2008

Cash flow from operations before changes in working capital

EUR million
June 30, 2010 June 30, 2009 June 30, 2008

2,022 1,566 1,701

Profit from recurring operations

EUR million
June 30, 2010 June 30, 2009 June 30, 2008

Operating investments (1)

EUR million 435 349 490

1,816 1,363 1,541

June 30, 2010 June 30, 2009 June 30, 2008 (1) Acquisitions of tangible and intangible fixed assets.

Profit from recurring operations by business group

EUR million
June 30, 2008 June 30, 2009 June 30, 2010

WINES AND SPIRITS FASHION AND LEATHER GOODS PERFUMES AND COSMETICS WATCHES AND JEWELRY SELECTIVE RETAILING OTHER ACTIVITIES AND ELIMINATIONS TOTAL

409 858 132 74 151 (83)

241 919 121 20 129 (67)

326 1,179 181 49 176 (95)

1,541

1,363

1,816

TOTAL EQUITY (2) (3) EUR million NET FINANCIAL DEBT TO EQUITY RATIO

June 30, 2010 June 30, 2009 June 30, 2008

16% 32% 34%

16,491 13,835 12,284

(2) Includes minority interest before appropriation of net profit. (3) Total equity as of June 30, 2008 has been restated to reflect the retrospective application as of January 1, 2007 of IAS 38 intangible assets as amended.

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Revenue by geographic region of delivery

in %

JUNE 30, 2009 FRANCE REST OF EUROPE UNITED STATES JAPAN REST OF ASIA

14% 20% 23% 11% 24% 8%

JUNE 30, 2010 FRANCE REST OF EUROPE UNITED STATES JAPAN REST OF ASIA

14% 19% 23% 9% 26% 9%

OTHER MARKETS

OTHER MARKETS

Store network
at June 30, 2010 FRANCE

353 stores
REST OF EUROPE

REST OF ASIA

495 stores

629 stores

UNITED STATES

546 stores

305 stores

JAPAN

OTHER MARKETS

140 stores

Number of stores
June 30, 2010 June 30, 2009 June 30, 2008

2,468 2,370 2,150

04

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THE LVMH SHARE

Comparison between the LVMH share price and the CAC 40 since July 1, 2007
Trading volume
100 90 80 70 60 50 40 30 20 10 0 0 4,000,000 6,000,000 10,000,000

LVMH

CAC 40

Average monthly volume

12,000,000

new index composed of the most innovative, dynamic and influential companies, and in the FTSE4Good, the main European index that measures the performance of companies which meet criteria for social and environmental responsibility. LVMH shares are listed for trading on the Euronext Paris Eurolist (Reuters Code: LVMH.PA, Bloomberg Code: MC FP, ISIN Code: FR0000121014). In addition, options based on LVMH shares are traded on Euronext.liffe.

8,000,000

MARKET CAPITALIZATION
Millions of euros

June 30, 2008 June 30, 2009 June 30, 2010

32,622 26,653 43,989

INTERIM DIVIDEND
2,000,000

The Board of Directors approved the payment of an interim dividend of 0.70 as of December 2, 2010.

J A S O N D J F MA M J J A S O N D J F M A M J J A S O N D J F M A M J
2007 2008 2009 2010

CHANGES IN THE LVMH SHARE PRICE

In the first half of 2010, stock markets recorded very high volatility as in 2009. The leading markets fluctuated according to investor expectations about the speed and permanence of the economic recovery. Questions focused primarily on changes in the job market and the real estate market in the United States and on the sustainability of the level of public debt, particularly in the countries in Southern Europe. After establishing a support plan for Greece, the euro zone countries were forced, because of the problems some countries had in refinancing their debt, to establish a much more extensive mutual guarantee plan and, one after another, to announce tighter budget policies. These various measures did not, however, completely reassure the markets which are concerned both about the ability of the countries to contain their debt and about the impact of more restrictive budget policies

on growth, which remains fragile. In this still uncertain environment, the leading market indices ended the first half of the year on a decline. Benefiting from the solid performance of its business, particularly in the emerging markets, and from a favorable trend in exchange rates, the LVMH share price nevertheless continued to rise in the first half of 2010. The LVMH share price rose nearly 15% over the period. At the same time, the European CAC 40 and Eurostoxx 50 indices were down 13% over the first six months of the year, and the Dow Jones US Industrials index dropped 6%. The LVMH share closed at 89.81 on June 30. On that date LVMHs market capitalization amounted to 44 billion, making LVMH the 7th largest company on the Paris stock exchange. LVMH is included in the major French and European indices used by fund managers: CAC 40, DJ-Eurostoxx 50, MSCI Europe, FTSE-Eurotop 100. LVMH is also included in the Global Dow, a

Contacts
Investor and Shareholder Relations

+ 33 1 44 13 27 27 Fax : + 33 1 44 13 21 19
Shareholders Club

+ 33 1 44 13 21 50

www.lvmh.com

AGENDA
Tuesday, July 27, 2010 Publication of 2010 half-year revenue and results October 2010 Publication of 2010 third quarter revenue February 2011 Publication of 2010 annual revenue and results March 2011 Annual Shareholders Meeting

BREAKDOWN OF CAPITAL AND VOTING RIGHTS AS AT JUNE 30, 2010

Number of shares Arnault Group Other Total Number of voting rights (1) % of capital % of voting rights

232,345,436 257,636,771 489,982,207

446,935,826 256,753,870 703,689,696

47.42% 52.58% 100.00%

63.51% 36.49% 100.00%

(1) Total number of voting rights exercisable at Shareholders Meetings.

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WINES & SPIRITS

Yellow Label was extremely promising. Hennessy was remarkable in terms of its many innovations which included the introduction of Hennessy Paradis Horus in Asia, the creation of a special edition to celebrate the 140th anniversary of X.O, and the inauguration of a limited series of the Hennessy V.S flask with a flexible package available in a broad range of colors. Glenmorangie, Ardbeg and Belvedere also launched new products. The LVMH brands supported the promotion of their international image in line with their value strategy and their specific communications area: Mot & Chandon, through its association with major film events; Dom Prignon with the personal involvement of its cellarmaster in the global markets to mark a period when many vintage wines were launched; Krug by organizing very exclusive experiences and events for its ambassadors; Ruinart with its presence in the contemporary art world and the various designs assigned to artists; Hennessy through the international development of the Hennessy Artistry concerts, the specific programs initiated to roll out Hennessy Black in the United States, and the France-Russia year; and the luxury Belvedere vodka with the contribution of a new promotional campaign.

OUTLOOK
In an economic environment in which it is still difficult to forecast the trend in consumption between now and the end of 2010, the Wines and Spirits business group brands are in an excellent position to continue to reap the benefits of the vitality of the Asian markets and to rebound strongly when a solid recovery begins in the traditional major markets. The continuation of their policy of innovation and their intense sales efforts in the field, the emphasis placed on their values of excellence and their premium positioning, and the promotions and special events intended to strengthen their visibility worldwide will help support their business, particularly year-end sales.

HIGHLIGHTS
In the first half of 2010, the Wines and Spirits business group recorded organic revenue growth of 18%. This change reflects both the end of the inventory reductions made by distributors, a phenomenon that penalized the first half of 2009, and the ability of the Group's brands to take advantage of the beginning of a recovery in consumption. Their ability to maintain their premium positioning in the difficult environment of 2009 has proved to be the decisive factor. Hennessy's presence in the Asian countries, where demand is extremely dynamic, made a particularly strong contribution to the overall improvement. Profit from recurring operations for the business group was up 35%. Revenue for Champagne and Wines amounted to 581 million euros, generating profit from recurring operations of 119 million euros, a 53% increase over the first half of 2009. All the champagne brands recorded a significant rebound. The sparkling wines developed by Estates & Wines under the Chandon brand have benefited from steady demand since the beginning of the year. Still wines recorded solid growth in their key markets. Revenue for Cognac and Spirits totaled 721 million euros, generating profit from recurring operations of 207 million euros, an increase of 27% over the first half of 2009. Hennessy, which held up extremely well during the crisis period, continued to record an excellent performance with growth in all its cognac qualities. The Asian markets were the most dynamic. Hennessy Black cognac has been extremely successful in the United States. The trend in revenue for the Glenmorangie and Ardbeg whiskies and Belvedere vodka is also encouraging, both in their key countries and in the markets they are beginning to enter.
06

PRINCIPAL DEVELOPMENTS
The Wines and Spirits brands continued to rely on their creative ability in terms of products, packaging, and even methods of consumption. After the success of the offers designed by Mot & Chandon for Saint Valentine's Day, the company created an Ice Imprial edition for summer, to be served chilled; after launching the Sakura collection (cherry blossom in Japanese) for its Ros, Veuve Clicquots launch of the Fridge for its Brut

Revenue
EUR million
June 30, 2010 June 30, 2009

Profit from recurring operations

EUR million 1,302 1,079 1,292
June 30, 2010 June 30, 2009

326 241 409

June 30, 2008

June 30, 2008

Sales volumes
Millions of bottles Champagne
June 30, 2010 June 30, 2009

Revenue at June 30, 2010

by geographic region of delivery 19.3 15.7 21.9 27.7 23.9 28.1 UNITED STATES JAPAN REST OF ASIA 42 58 77 LVMH FIRST
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June 30, 2008

FRANCE REST OF EUROPE

8% 20% 27% 6% 27% 12%

Cognac
June 30, 2010 June 30, 2009

June 30, 2008

Investments
June 30, 2010 June 30, 2009

EUR million

OTHER MARKETS

June 30, 2008

FASHION & LEATHER GOODS

PRINCIPAL DEVELOPMENTS
Louis Vuitton launched the construction of the Tanneries de la Comte, its future development and excellence center for leather tanned with vegetable extracts, while putting the final touches on the construction of its Fiesso dArtico site for footwear in Italy. The brand continued to enhance its product lines, particularly the Damier line, which achieved a very strong performance in its three colors of Ebene, Azur and Graphite. The launch of a new Monogram Idylle collection should also be noted. In addition to this creative momentum, Louis Vuitton intensified its communications policy by expanding its presence in the media, with strong campaigns and by illustrating its ties to the world of art. The other brands of the business group added a number of creative innovations to their product offers: Loewe launched a collection of iconic ready-to-wear items in leather, Berluti presented new collections of shoes and leather goods, while Thomas Pink rolled out a line of shirts that have been highly successful. Givenchy expanded its concept of capsule collections On the retailing side, two Louis Vuitton stores were simultaneously opened in Shanghai while the brand participated in the World Expo, and the Maison Louis Vuitton opened its doors in Londons New Bond Street. Fendi opened a flagship store in Las Vegas, and Marc Jacobs opened two boutiques in Milan and Macao.

HIGHLIGHTS
In the first half of 2010, the Fashion and Leather Goods business group generated organic revenue growth of 14%. Profit from recurring operations rose 28%. Louis Vuitton confirmed its extraordinary appeal and again recorded double-digit revenue growth, achieving remarkable performances in Europe, Asia and the Americas. All its businesses contributed to the solid vitality overall. The continuous growth recorded by the worlds leading luxury brand, again coupled with exceptional profitability, was driven both by the expansion of its local customer bases and by the success of its products. Fendi demonstrated excellent vitality with a strong and rapid recovery in its revenue, which generated growth in all its businesses and all its geographic regions, particularly Europe and Asia. The Romebased brand also improved its operating margin, showing evidence of its growing appeal. After closing 2009 with a solid performance, Donna Karan recorded a very sound first half. Driven by the success of its fashion shows, its style and the way its collections are structured around its strong points and its iconic creations, the brand recorded robust growth in its revenue and profitability. In a context of improved trends in their different markets, the Fashion division brands continued to focus on their priority objectives. After a difficult start to the year, growth in business became stronger with each passing month. One of the most advanced brands in terms of its roadmap, Marc Jacobs, which earns an outstanding response with its fashion shows, continued its rapid deveLVMH FIRST
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lopment, driven in particular by the outstanding success of the Marc by Marc Jacobs lines. Loewe successfully applied its strategy of focusing on leather goods, the core of its business. Berluti confirmed the success of its Venezia line of leather products. Givenchy and Pucci were well-received by the media and earned a strong commercial response with their new creative strategies. Cline, which began its creative transition more recently, is showing initial positive signs.

OUTLOOK
In the second half of 2010, Louis Vuitton will roll out a dynamic and ambitious program of new products, including the launch of a flexible leather line, and will continue the high quality expansion of its store network. All of these developments will expand the brands lead in the global luxury market. Boosted by the sharp recovery in orders, the effects of which will be felt in the second half, the Fashion division brands look forward to the coming months with confidence and will continue to focus on the different steps involved in optimizing their growth model.

Revenue
EUR million
June 30, 2010 June 30, 2009

Profit from recurring operations

EUR million 3,516 2,988 2,768
June 30, 2010 June 30, 2009

1,179 919 858

June 30, 2008

June 30, 2008

Investments
June 30, 2010 June 30, 2009

EUR million 170 111 137

Revenue at June 30, 2010

by geographic region of delivery

June 30, 2008

FRANCE REST OF EUROPE UNITED STATES

8% 19% 18% 16% 31% 8%

Number of stores
June 30, 2010 June 30, 2009

JAPAN 1,167 1,102 1,025 OTHER MARKETS REST OF ASIA

June 30, 2008

07

PERFUMES & COSMETICS

the international success of Miss Dior Chrie, the press campaign for which was renewed; the new film produced for Hypnotic Poison and the film dedicated to Eau Sauvage, unveiled in June, which uses excerpts from La Piscine, a cult French movie; the launch of a new addition to the Escales collection from Christian Dior; the successes achieved by the new mascara Diorshow Extase, Dior Addict Ultra Gloss, and the Capture Totale One Essential serum. The launch of the Orchide Impriale New Generation skincare line and the Terracotta 4 Seasons powder, both highly successful, were highlights of the first six months of the year for Guerlain. Make Up For Ever expanded its Make Up School concept in Europe and successfully developed its Aqua line. Benefit opened its first boutique in China. Acqua di Parma rolled out a new fragrance in its Blu Mediterraneo collection.

OUTLOOK
The second half of the year will be rich in events and launches for all the Perfumes and Cosmetics brands. Parfums Christian Dior will continue to focus on creating value for its star products, particularly Jadore, Eau Sauvage, Dior Homme and Fahrenheit in perfume, Rouge Dior in make-up and Capture Totale in skincare. Guerlain will strengthen its selective retailing with the renovation of two of its own boutiques in Paris and Tokyo, enhance its Idylle line with a cologne version and expand its cosmetics offer with the Abeille Royale skincare line and the Lingerie de Peau foundation. Parfums Givenchy will introduce a version of the perfume Play for women and Parfums Kenzo will launch a new mens fragrance. A new line of lipstick will make its appearance at Make Up For Ever. Fendi will return to the perfume segment with Fan di Fendi. A new fragrance will be added to the recently designed line of perfumes from Pucci. These many initiatives will include major media investments in order to support the new products launched to anticipate the end of the year sales and, generally, to prepare and strengthen the long-term growth of the brands.

HIGHLIGHTS
The Perfumes and Cosmetics business group recorded organic revenue growth of 10%. Its profit from recurring operations was up 50%. In the first half of 2010, LVMHs Perfumes and Cosmetics business benefited from the joint impact of the turnaround in orders from distributors, who had cut their inventories extensively in 2009, and the growth of sales to end consumers. This rebound confirms the effectiveness of the value strategy firmly maintained by the Groups brands against the background of competitive tensions generated in the markets by the economic crisis. Parfums Christian Dior achieved an excellent performance in the first half, built on the development of its emblematic product lines and the focus placed on its image of excellence and refinement anchored in the world of high fashion. Among other highlights, the brand confirmed its leadership position in Europe and the Middle East and stepped up the pace of its growth in the make-up segment in the United States. Thanks to new gains in productivity coupled with good cost control, it improved its profitability with steady media investments. Guerlain also achieved solid performance with growth in revenues and profitability. By strengthening its strategic pillars of perfume, make-up and skincare, the brand reinforced its positions in two of its major markets France and China. Parfums Givenchy grew significantly over the first six months of the year. This vitality was linked in particular to the successful recent launch of the perfumes Ange ou Dmon Le Secret, embodied in promotional campaigns by Uma Thurman, and Play, represented by Justin Timberlake. Parfums Kenzo maintained solid results in its main product line, FlowerbyKenzo. Benefit continued its rapid
08

and highly profitable expansion. Make Up For Ever, which has recorded exceptional growth in all its markets, particularly the United States, Europe and China, resumed direct distribution of its products in South Korea.

PRINCIPAL DEVELOPMENTS
Parfums Christian Dior devoted a new promotional campaign to its star perfume Jadore which continued its remarkable performance. Other highlights in recent months included: confirmation of

Revenue
EUR million
June 30, 2010 June 30, 2009

Profit from recurring operations

EUR million 1,441 1,285 1,362
June 30, 2010 June 30, 2009

181 121 132

June 30, 2008

June 30, 2008

Investments
June 30, 2010 June 30, 2009

EUR million 41 50 58

Revenue at June 30, 2010

by geographic region of delivery

June 30, 2008

FRANCE REST OF EUROPE UNITED STATES

16% 37% 8% 6% 19% 14%

Breakdown of revenue
by product category FRAGRANCES COSMETICS

43% 35%

JAPAN REST OF ASIA OTHER MARKETS

SKINCARE PRODUCTS 22%

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WATCHES & JEWELRY

its capacity, particularly for watch complications thanks to the integration of the "Confrrie Horlogre", a team with advanced expertise. The brand has become the official timekeeper of the World Cup until 2014. Zenith benefited from the reworking of its collection and the presentation of its new classic models at the Basel trade show. The brand is experiencing a very steady recovery, driven in particular by the El Primero Striking 10th chronograph which measures tenths of a second. Montres Dior enhanced the Mini D and Christal lines by adding new jeweled models. In June, Chaumet launched Josphine, a new jewelry collection inspired by the tiaras designed by the brand since its was founded. While improving the productivity of its existing stores, Chaumet also strengthened its distribution in Shanghai and Singapore. Fred primarily enhanced its Force 10 line, while De Beers improved store productivity by streamlining its collections and developing engagement rings. The brand benefited from the sale of high-end jewelry pieces in Asia.

OUTLOOK
In the second half of 2010, the Watches and Jewelry brands will continue to grow. This growth will be more modest than in the first half, which benefited from retail restocking, but will benefit from the delivery of a larger number of new products presented at the Basel trade show. The business group will continue to develop its various manufacturing units with added capacity and expertise. Steady marketing investments will be planned and organized around the pairing of brands and priority markets. The highly selective opening of a few new stores is also planned: TAG Heuer notably in Paris and China; Hublot, in the place Vendme in Paris and on Madison Avenue in New York. TAG Heuer, Hublot, Chaumet and De Beers will expand their presence in Singapore with a new boutique in Marina Bay Sands.

HIGHLIGHTS
The Watches and Jewelry business group generated organic revenue growth of 24% in the first half of 2010. Profit from recurring operations rose 145%. In the first half of 2010, the business group consolidated the improvement that began in the final quarter of 2009, and recorded strong revenue growth for watches and jewelry. After the reductions in inventory made by multi-brand watch retailers in 2009, the period benefited from the dual impact of retail restocking for the most dynamic brands and a turnaround in customer demand, which grew fairly steadily for the LVMH watch brands. The business group also recorded double-digit revenue growth for the jewelry brands, primarily made in their own boutiques, without a significant scope of consolidation effect. Asia is currently the most dynamic region for all the brands. The measures taken in 2009 to reduce costs and adapt to an uncertain environment led to improved first-half operating profitability, which rose from 6% to 11%, against a background of larger marketing investments and a very selective resumption of new store openings.

the world of auto racing. It enhanced its offer of automatic models and continued its manufacturing investments in research and development and movement production capacity. Examples of this were the launch of the Calibre 1887 chronograph and the presentation of the Pendulum, with its magnetic regulator concept. TAG Heuer reinforced its presence in China. Hublot grew strongly and continued to develop and upscale its product offer with the introduction of the King Power line. Distribution remains very selective with limited inventories at retail points of sale. The Nyon manufacturing facility increased

Revenue
EUR million
June 30, 2010 June 30, 2009

Profit from recurring operations

EUR million 443 346 417
June 30, 2010 June 30, 2009

49 20 74

June 30, 2008

June 30, 2008

Investments
June 30, 2010 June 30, 2009

EUR million 16 14 15

Revenue at June 30, 2010

by geographic region of delivery

June 30, 2008

FRANCE REST OF EUROPE

8% 24% 18% 12% 19% 19%

PRINCIPAL DEVELOPMENTS
TAG Heuer, which has a solid presence in the United States and Asia-Pacific, recorded substantial growth in China. The brand intensified its communications strategy with the celebration of its 150th anniversary and a number of initiatives in
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SELECTIVE RETAILING

ning of a second location in Macao, in the City of Dreams, in the second half of 2009. As of June 30, 2010, Sephoras global network totaled 1,020 stores. A net total of nine new stores were opened in Europe (including a flagship store in Milan) during the first half, increasing the European network to 648 stores. Thirteen new stores were opened in North America where the network now totals 267 stores. A third store was opened in Singapore. China had 83 stores and the Middle East 19, as of June 30, 2010. Le Bon March successfully inaugurated its "Maison dEdition". Lit by the original magnificent glass canopies revealed by the recent work, this space dedicated to the art of living uses its unique concept to enhance the remarkable and inspired nature of the department store.

OUTLOOK
DFS will continue to expand its presence with its Asian customers. Completion of the renovation of the Galleria at Hong Kong Sun Plaza and the full opening of City of Dreams in Macao will help drive revenues. Work will begin on the Galleria in Singapore. Miami Cruiseline should benefit from the launch of several new ships in the second half of the year, including another ship the size of the Oasis of the Seas. Sephora will continue its international expansion, the highlight being its entry into Latin America, thanks to the acquisition of Sacks, the leading online seller of selective perfumes and cosmetics in Brazil, a high-potential market. In order to support its remarkable momentum, the brand will continue to invest in the key components of its differentiation strategy. Efforts will be focused in particular on the attractiveness of the stores, with the deployment of new presentation furnishings in Europe and the United States, an ongoing search for excellence in its offer, the service and experience provided to customers, and intensified promotional campaigns. Le Bon March begins the second half of the year with confidence. Its business will benefit from the new vitality generated by the expansion in the fall of the "Balthazar" men's department, which will include a footwear department unique in Paris. Commercial innovations and image-making events will help enhance customer interest in the historic department store on the Left Bank.

HIGHLIGHTS
In the first half of 2010, Selective Retailing recorded 13% organic revenue growth. Profit from recurring operations was up 36%. DFS achieved solid growth, driven primarily by the continued expansion of Chinese tourism. The travel retail specialist is generating the results of its steady investments and the work performed to continue to provide better service to this customer segment. The destinations of Hong Kong, Macao and Singapore recorded strong growth. The business also benefited from the regular improvement in the concessions recently opened in the airports of Abu Dhabi (United Arab Emirates) and Mumbai (India), two high-potential markets. The company actively continued its efforts to upgrade the offer for all destinations. Against a background of continued caution in terms of passenger expenditures, Miami Cruiseline was nevertheless able to increase revenue, largely thanks to the contribution of the new Oasis of the Seas vessel operated by Royal Caribbean. This super-size ship is an ideal showcase for Miami Cruiselines expertise. Sephora achieved a remarkable performance, and won market shares in all its operating regions. The brand continued to rely on the aspects driving its international success: a strong and differentiating concept, an extremely complete product offer that combines a unique range of major selective brands, new exclusive brands and the Sephora product lines, along with the contribution of increasingly successful customer loyalty programs. On the European continent, Sephora strengthened its leadership in France and expanded its lead in the other key countries. The excellent dynamic performance of the brand in the United States was coupled with solid success in Canada. Development continued in China and stepped up its pace
10

in the Middle East. The online sales sites recorded significant increases in their business. Building on its unique identity among the Paris department stores, Le Bon March posted steady activity in the first six months of the year, combining revenue growth with an improved operating margin.

PRINCIPAL DEVELOPMENTS
DFS continued work on its Galleria in Hong Kong Sun Plaza, which saw completion of the renovation of the beauty and watch spaces, and is reaping the benefits of sales generated thanks to the ope-

Revenue
EUR million
June 30, 2010 June 30, 2009

Profit from recurring operations

EUR million 2,419 2,127 1,990
June 30, 2010 June 30, 2009

176 129 151

June 30, 2008

June 30, 2008

Investments
June 30, 2010 June 30, 2009

EUR million 93 102 115

Revenue at June 30, 2010

by geographic region of delivery

June 30, 2008

FRANCE REST OF EUROPE UNITED STATES

22% 8% 38% 2% 24% 6%

LVMH FIRST
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Number of stores
JAPAN
June 30, 2010 June 30, 2009

1,104 1,095 968 OTHER MARKETS REST OF ASIA

June 30, 2008

Consolidated Income Statement

(EUR millions, except for earnings per share) REVENUE Cost of sales GROSS MARGIN Marketing and selling expenses General and administrative expenses PROFIT FROM RECURRING OPERATIONS Other operating income and expenses OPERATING PROFIT Cost of net financial debt Other financial income and expenses NET FINANCIAL INCOME (EXPENSE) Income taxes Income (loss) from investments in associates NET PROFIT BEFORE MINORITY INTERESTS Minority interests NET PROFIT, GROUP SHARE June 30, 2010 9,099 (3,192) 5,907 (3,275) (816) 1,816 (63) 1,753 (77) (73) (150) (463) 4 1,144 (94) 1,050 Dec. 31, 2009 17,053 (6,164) 10,889 (6,051) (1,486) 3,352 (191) 3,161 (187) (155) (342) (849) 3 1,973 (218) 1,755 June 30, 2009 7,811 (2,830) 4,981 (2,902) (716) 1,363 (113) 1,250 (102) (34) (136) (358) 1 757 (70) 687

BASIC GROUP SHARE OF NET EARNINGS PER SHARE (In euros) Number of shares on which the calculation is based DILUTED GROUP SHARE OF NET EARNINGS PER SHARE (In euros) Number of shares on which the calculation is based

2.21 475,907,142 2.19 479,078,515

3.71 473,597,075 3.70 474,838,025

1.45 473,238,611 1.45 473,911,591

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Comments on the Consolidated Income Statement

Consolidated revenue for the period ended June 30, 2010 was 9,099 million euros, up 16% over the same period in 2009. Between first half 2009 and first half 2010, there were no significant changes in the Groups scope of consolidation. On a constant consolidation scope and currency basis, revenue increased by 14%. The breakdown of revenue by invoicing currency changed as follows: the contribution of both the euro and the yen fell by 2 points to 27% and 9%, respectively, that of the US dollar rose by 1 point to 28%, while the contribution of all other currencies rose by 3 points to 36%. By geographic region of delivery, the period saw a drop in the relative contribution of both Europe (excluding France) and Japan to Group revenue, falling from 20% to 19% and 11% to 9%, respectively. The relative contributions of France and the United States to Group revenue remained stable at 14% and 23%, whereas those of Asia (excluding Japan) and other markets rose 2 points to 26% and 1 point to 9%, respectively. By business group, the breakdown of Group revenue changed little, with Wines and Spirits at 14%, Perfumes and Cosmetics at 16%, and Watches and Jewelry at 5%. The contribution of Fashion and Leather Goods rose by 1 point to 39%, while that of Selective Retailing fell by 1 point to 26%. Wines and Spirits saw an increase in revenue of 21% based on published figures. On a constant consolidation scope and currency basis, revenue increased by 18%, with the favorable impact of exchange rate fluctuations raising revenue by 3 points. With distributors no longer destocking, the prowess demonstrated by the Groups brands in taking advantage of the first signs of a recovery in consumer spending has delivered stronger sales, particularly in the Asian countries, where demand is robust. China is still the second largest market for the Wines and Spirits business group. Fashion and Leather Goods posted organic revenue growth of 14%, and 18% based on published figures. This business groups performance continues to be driven by the exceptional momentum achieved by Louis Vuitton, which again recorded double-digit revenue growth. Marc Jacobs, Fendi and Donna Karan also confirmed their potential, with double-digit growth in revenue. Revenue for the Perfumes and Cosmetics business group increased by 10% on a constant consolidation scope and currency basis, and by 12% based on published figures. All of this business groups brands turned in good results. This rebound illustrates the effectiveness of the value strategy resolutely pursued by all of the Groups brands in the face of competitive pressures spawned by the economic crisis. During the period ended June 30, 2010, Perfumes and Cosmetics posted revenue growth in the United States, Europe and Asia, especially in China. Revenue for the Watches and Jewelry business group increased by 24% on a constant consolidation scope and currency basis, and by 28% based on published figures. The first half of 2010 was notable for a strong increase in both watches and jewelry revenue. Increases in inventory by retailers and the recovery in consumer demand helped to drive stronger sales. For all of this business groups brands, Asia is the most dynamic region. Based on published figures, revenue for the Selective Retailing business group increased by 14%, and by 13% on a constant consolidation scope and currency basis. The main drivers of this performance were Sephora, which saw considerable growth in sales in Europe, the United States and Asia, and DFS, which made excellent advances, spurred especially by the continuing development of Chinese tourism boosting business at its stores in Hong Kong and Macao. The Group posted a gross margin of 5,907 million euros, an increase of 19% compared to June 30, 2009. The gross margin as a percentage of revenue was 65%, an increase of 1 point over the same period in 2009, particularly thanks to tighter control over the costs of products sold. Marketing and selling expenses totaled 3,275 million euros, up 13% based on published figures, amounting to a 11% increase at constant exchange rates. This increase is mainly due to greater communications expenditures by the Groups main brands, but also to the development of retail networks. Nevertheless, the level of these marketing and selling expenses fell by 1 point as a percentage of revenue, amounting to 36%. Among these marketing and selling expenses, advertising and promotion represented 11% of revenue, an increase of 16% at constant exchange rates. General and administrative expenses totaled 816 million euros, up 14% based on published figures, and up 13% on a constant currency basis. They represented 9% of revenue, a level identical to that recorded in the first half of 2009. The Groups profit from recurring operations was 1,816 million euros, up 33% compared to the first half of 2009. The operating margin as a percentage of revenue increased by 2.5 points to 20%. This change stems from a combination of factors: a rise in marketing and selling expenses outpaced by revenue growth and better control of both general and administrative expenses and the costs of products sold. It also reflects the strong profitability gains posted by Watches and Jewelry (up 5 points to 11%), Perfumes and Cosmetics (up 3 points to 13%), Fashion and Leather Goods (up 2.8 points to 34%), Wines and Spirits (up 2.7 points to 25%), and to a lesser extent by Selective Retailing (up 1 point to 7%). Exchange rate fluctuations had a positive net impact on the Groups profit from recurring operations of 116 million euros compared with the first half of 2009. This total comprises the following three items: the impact of changes in exchange rate parities on export and import sales and purchases by Group companies, the change in the net impact of the Groups policy of hedging its commercial exposure to various currencies, and the impact of exchange rate fluctuations on the consolidation of profit from recurring operations of subsidiaries outside the euro zone. Profit from recurring operations for Wines and Spirits was 326 million euros, up 35% compared to the first half of 2009. This performance is primarily the result of sales volume growth. Tighter control of costs, together with the positive impact of exchange rate fluctuations, offset the rise in advertising and promotional expenditure focused on strategic markets. Operating margin as a percentage of revenue for this business group increased by nearly 3 points to 25%. Fashion and Leather Goods posted profit from recurring operations of 1,179 million euros, up 28% compared to the first half of 2009. Exchange rate fluctuations had a positive impact on this business groups profit in the amount of 76 million euros. Profit from recurring operations for Louis Vuitton increased sharply, while Fendi and Donna Karan confirmed their profitable growth momentum. Operating margin as a percentage of revenue for this business group also increased by nearly 3 points to 34%. Profit from recurring operations for Perfumes and Cosmetics was 181 million euros, up 50% compared to the first half of 2009. This growth was driven by Parfums Christian Dior, Guerlain, and Parfums Givenchy, which all posted significantly improved performance and profitability, thanks to the success of their market-leading product lines and strong innovative momentum. Operating margin as a percentage of revenue for this business group increased by more than 3 points to 13%. Profit from recurring operations for Watches and Jewelry increased to 49 million euros. This business group significantly improved its profitability and posted an operating margin as a percentage of revenue of 11%, representing an increase of more than 5 points. Profit from recurring operations for Selective Retailing was 176 million euros, 36% higher than the same period in 2009. This business group raised its profitability to 7%. The net result from recurring operations of Other activities and eliminations was a loss of 95 million euros, compared to a loss of 67 million euros for the period ended June 30, 2009. In addition to headquarters expenses, Other activities includes the Media division and the yacht builder Royal Van Lent, acquired in 2008. Other operating income and expenses represented a net expense of 63 million euros as of June 30, 2010. This total mainly includes accelerated depreciation and asset impairment, corresponding to a net expense of 35 million euros, together with the costs of various restructuring efforts. For the period ended June 30, 2010, the Group posted an operating profit of 1,753 million euros, compared to 1,250 million euros for the same period the previous year, representing an increase of 40%.

12

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The net financial expense was 150 million euros, compared to a net financial expense of 136 million euros for the first half of 2009. The cost of financial debt was significantly lower as of June 30, 2010, amounting to 77 million euros, compared to 102 million euros a year earlier. This change mainly reflects the continued decline in the Groups average financial debt over the period combined with the favorable impact of lower interest rates. Other financial income and expenses amounted to a net expense of 73 million euros, compared to a net expense of 34 million euros a year earlier. The financial cost of foreign exchange operations was 100 million euros in the first half of 2010 while it was 19 million

euros in the same period the previous year. The result related to available for sale financial assets and dividends received from investments in non-consolidated entities amounted to a net income of 27 million euros as of June 30, 2010, compared with a net loss of 15 million euros a year earlier. The Groups effective tax rate, which was 32.1% as of June 30, 2009, was 28.9% for the first half of 2010. In 2009, the effective tax rate was primarily attributable to the non-utilization, in certain countries, of tax losses resulting from lower revenue. After taking into account income from investments in associates, which amounted to 4 million euros as of June 30, 2010, compared to 1 million euros for the

first half of 2009, the total net profit for the six-month period was 1,144 million euros, whereas it was 757 million euros for the first half of 2009. Profit attributable to minority interests was 94 million euros, compared to 70 million euros for the first half of 2009. This mainly includes minority interests in Mot Hennessy and DFS. For the six-month period ended June 30, 2010, the Groups share of net profit was 1,050 million euros, compared to 687 million euros for the same period the previous year. Taking into account this 53% increase, it corresponds to 11.5% of revenue for the period.

Consolidated Statement of Changes in Equity

EUR millions

Number of shares

Share Share capital premium account

Treasury shares and LVMH-share settled derivatives

Cumulative translation adjustment

Revaluation reserve for:

Available for sale financial assets

Hedges of future foreign currency cash flows

Vineyard land

Net profit and other reserves

Total equity

Group Minority share interests

Total

AS OF DEC 31, 2009 Gains and losses recognized in equity Net profit COMPREHENSIVE GAINS AND LOSSES Stock option plan and similar expenses (Acquisition)/disposal of treasury shares and LVMH-share settled derivatives Exercise of share subscription options Retirement of LVMH shares Capital increase in subsidiaries Interim and final dividends paid Changes in consolidation scope Effects of purchase commitments for minority interests

490,405,654

147 1,763

(929)

(495) 944

213 118

63 (90)

595 1

12,439

13,796 989 14,785 973 128 94 1,101 1,144

1,050 944 118 (90) 1 1,050 20

1,050 2,023 20

222 2,245 2 22

115 630,098 (1,053,545) 36 (67) 67

(4)

111 36 1

111 36 1 (742) -

(618)

(618) (124) -

147 1,732 (747) 449 331 (27) 596

33

33

AS OF JUNE 30, 2010 489,982,207

12,887 15,368 1,123 16,491

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13

Consolidated Balance Sheet

ASSETS
(EUR millions) Brands and other intangible assets - net Goodwill - net Property, plant and equipment - net Investments in associates Non-current available for sale financial assets Other non-current assets Deferred tax NON-CURRENT ASSETS June 30, 2010 9,247 4,408 6,498 228 569 806 633 22,389 Dec. 31, 2009 8,697 4,270 6,140 213 540 750 521 21,131 June 30, 2009 8,449 4,509 6,049 214 490 876 559 21,146

Inventories and work in progress Trade accounts receivable Income taxes Other current assets Cash and cash equivalents CURRENT ASSETS

6,172 1,164 197 1,410 1,897 10,840

5,644 1,455 217 1,213 2,446 10,975

5,944 1,130 112 1,435 956 9,577

TOTAL ASSETS

33,229

32,106

30,723

LVMHs consolidated balance sheet totaled 33.2 billion euros as of June 30, 2010, representing a 3.5% increase over its level as of December 31, 2009. Non-current assets amounted to 22.4 billion euros, compared to 21.1 billion at year-end 2009, representing 67% of total assets, compared with 66% six months earlier.

assets recognized in US dollars, such as the Donna Karan brand and the DFS trade name, or in Swiss francs, such as the TAG Heuer brand. Goodwill increased slightly, to 4.4 billion euros from 4.3 billion euros six months earlier, notably due to the effect of the changes in exchange rate parities mentioned above. Property, plant and equipment amounted to 6.5 billion euros, up from 6.1 billion euros at year-end 2009. This growth is mainly attributable to the impact of exchange rate fluctuations. The level of operating investments was broadly in line with depreciation charges during the period. Investments in associates, non-current available for sale financial assets, other non-current assets and deferred tax amounted to 2.2 billion euros as of June

30, 2010, up from 2.0 billion euros six months earlier.

Inventories amounted to 6.2 billion euros, compared with 5.6 billion euros as of December 31, 2009, due to the impact of changes in exchange rate parities, the strong momentum in business activity, seasonal variations affecting most of the Groups operations, and a moderate replenishment of distilled alcohol inventories for cognac. Trade accounts receivable were reduced to 1.2 billion euros, from 1.5 billion euros at year-end 2009, despite the appreciation of the US dollar and the yen against the euro. Cash and cash equivalents, excluding current available for sale financial assets, came to 1.9 billion euros.

Tangible and intangible fixed assets (including goodwill) increased to 20.2 billion euros from 19.1 billion euros at year-end 2009. Brands and other intangible assets came to 9.2 billion euros, up from 8.7 billion euros as of December 31, 2009. This increase chiefly reflects the strengthening of currencies against the euro and its impact on brands and other intangible

14

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LIABILITIES AND EQUITY

(EUR millions) Share capital Share premium account Treasury shares and LVMH-share settled derivatives Revaluation reserves Other reserves Cumulative translation adjustment Net profit, Group share Equity, Group share Minority interests TOTAL EQUITY Long term borrowings Provisions Deferred tax Other non-current liabilities NON-CURRENT LIABILITIES Short term borrowings Trade accounts payable Income taxes Provisions Other current liabilities CURRENT LIABILITIES TOTAL LIABILITIES AND EQUITY June 30, 2010 147 1,732 (747) 900 11,837 449 1,050 15,368 1,123 16,491 4,144 1,006 3,283 3,146 11,579 694 1,880 262 348 1,975 5,159 33,229 Dec. 31, 2009 147 1,763 (929) 871 10,684 (495) 1,755 13,796 989 14,785 4,077 990 3,117 3,089 11,273 1,708 1,911 221 334 1,874 6,048 32,106 June 30, 2009 147 1,739 (963) 839 10,853 (448) 687 12,854 981 13,835 4,048 972 3,068 3,242 11,330 1,859 1,507 279 315 1,598 5,558 30,723

The Group share of equity was 15.4 billion euros, compared to 13.8 billion euros at year-end 2009. This is due to the fact that the amount of the Group share of net profit for the period was higher than the final dividend on 2009 profit, an effect magnified by the markedly positive change in the cumulative translation adjustment resulting from the strengthening of most currencies against the euro since December 31, 2009. Minority interests advanced, from 1.0 billion euros as of December 31, 2009 to 1.1 billion euros, as a result of exchange rate fluctuations, and the share of minority interests in gains and losses and in the net profit for the half-year period after the distribution of their dividends. Total equity thus amounted to 16.5 billion euros and represented 50% of the balance sheet total, compared to 46% six months earlier.

As of June 30, 2010, non-current liabilities amounted to 11.6 billion euros, including 4.1 billion euros in longterm borrowings. This compares to 11.3 billion euros at year-end 2009, including 4.1 billion euros in longterm borrowings. Growth in non-current liabilities is mainly attributable to the increase in deferred taxes. The proportion of non-current liabilities in the balance sheet total remained stable at 35%. Equity and non-current liabilities thus amounted to 28.1 billion euros, and exceeded total non-current assets.

Borrowings, including the market value of interest rate derivatives, and net of cash, cash equivalents and current available for sale financial assets, amounted to 2.6 billion euros as of June 30, 2010, compared to 3.0 billion euros six months earlier, representing 16% of equity, compared to 20% as of December 31, 2009. Cash and cash equivalents exceeded short-term borrowings.

Current liabilities amounted to 5.2 billion euros as of June 30, 2010, compared to 6.0 billion euros six months earlier, primarily as a result of the significant reduction in short-term borrowings. Their relative weight in the balance sheet total decreased to 16%, from 19% six months earlier.

As of June 30, 2010, confirmed credit facilities exceeded 3.9 billion euros, of which less than 0.1 billion euros were drawn, which means that the undrawn amount available was 3.8 billion euros. The outstanding portion of the Groups commercial paper program was nil as of June 30, 2010.

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15

Consolidated Cash Flow Statement

(EUR millions) I. OPERATING ACTIVITIES AND INVESTMENTS Operating profit Net increase in depreciation, amortization and provisions, excluding tax and financial items Other computed expenses, excluding financial items Dividends received Other adjustments CASH FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL Cost of net financial debt: interest paid Income taxes paid NET CASH FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL Change in inventories and work in progress Change in trade accounts receivable Change in trade accounts payable Change in other receivables and payables TOTAL CHANGE IN WORKING CAPITAL NET CASH FROM OPERATING ACTIVITIES Purchase of tangible and intangible fixed assets Proceeds from sale of tangible and intangible fixed assets Guarantee deposits paid and other operating investments OPERATING INVESTMENTS NET CASH FROM (USED IN) OPERATING ACTIVITIES AND INVESTMENTS II. FINANCIAL INVESTMENTS Purchase of non-current available for sale financial assets Proceeds from sale of non-current available for sale financial assets Impact of purchase and sale of consolidated investments NET CASH FROM (USED IN) FINANCIAL INVESTMENTS III. TRANSACTIONS RELATING TO EQUITY Capital increases of LVMH Capital increases of subsidiaries subscribed by minority interests Acquisition and disposals of treasury shares and LVMH-share settled derivatives Interim and final dividends paid by LVMH Interim and final dividends paid to minority interests in consolidated subsidiaries NET CASH FROM (USED IN) TRANSACTIONS RELATING TO EQUITY IV. FINANCING ACTIVITIES Proceeds from borrowings Repayment of borrowings Purchase and proceeds from sale of current available for sale financial assets NET CASH FROM (USED IN) FINANCING ACTIVITIES V. EFFECT OF EXCHANGE RATE CHANGES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (I+II+III+IV+V) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD Transactions included in the table above, generating no change in cash: - acquisition of assets by means of finance leases June 30, 2010 Dec. 31, 2009 June 30, 2009

1,753 350 (76) 12 (17) 2,022 (89) (282) 1,651 (156) 426 (159) (191) (80) 1,571 (435) 12 (3) (426) 1,145

3,161 826 (37) 21 (43) 3,928 (185) (900) 2,843 69 206 (362) 178 91 2,934 (748) 26 (7) (729) 2,205

1,250 377 (57) 15 (19) 1,566 (115) (245) 1,206 (199) 537 (794) (62) (518) 688 (349) 3 (6) (352) 336

(7) 18 (16) (5)

(93) 49 (278) (322)

(66) 36 (5) (35)

36 1 89 (618) (121) (613)

30 11 34 (758) (175) (858)

2 3 5 (592) (151) (733)

102 (1,296) (120) (1,314) 263 (524) 2,274 1,750 4

2,442 (2,112) 321 651 (120) 1,556 718 2,274 12

2,255 (1,773) 90 572 (49) 91 718 809 5

16

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Comments on the Consolidated Cash Flow Statement

The consolidated cash flow statement, which is shown on the opposite page, details the main cash flows for the first half of the year. Overall, net cash from operating activities posted a surplus of 1,571 million euros, compared to 688 million euros a year earlier. In the first half of 2010, LVMH SA paid 618 million euros in dividends, excluding the amount attributable to treasury shares, in respect of the final 2009 dividend. Furthermore, the minority shareholders of consolidated subsidiaries received 121 million euros in dividends, mainly corresponding to dividends paid to Diageo with respect to its 34% stake in Mot Hennessy and to minority interests in DFS.

Cash from operations before changes in working capital increased by 29%, to 2,022 million euros as of June 30, 2010, from 1,566 million euros a year earlier. Net cash from operations before changes in working capital (i.e. after interest and income tax) amounted to 1,651 million euros, an increase of 37% compared to the first half of 2009. Interest paid in the first half of 2010 amounted to 89 million euros, down from 115 million euros a year earlier, a decrease due to both lower average interest rates and a decline in the average outstanding financial debt. Income tax paid came to 282 million euros as of June 30, 2010, as against 245 million euros a year earlier.

Group operating investments for the period, net of disposals, resulted in net cash outflows of 426 million euros. This amount reflects the Groups growth momentum and that of its flagship brands, including Louis Vuitton, Sephora and Parfums Christian Dior. Net cash from operating activities and operating investments thus amounted to 1,145 million euros for the first half of 2010, compared to 336 million euros for the same period in 2009.

After all operating, investment and equity-related activities, including the final dividend payment in respect of 2009 fiscal year, the total cash surplus amounted to 527 million euros as of June 30, 2010.

Acquisitions of non-current available for sale financial assets, net of disposals, together with the net impact of the purchase and sale of consolidated investments, resulted in an outflow of 5 million euros over the period, compared to 35 million euros a year earlier.

Accordingly, very little funds were raised. Bond issues and new borrowings provided a cash inflow of 102 million euros. LVMH SA did not issue any public bonds during the period, nor did it conclude any long-term private placements through its Euro Medium Term Notes program. In the first half of 2010, the resources described above, in addition to the Groups existing cash, were used to pay down borrowings for an amount of 1,296 million euros. Furthermore, 120 million euros were used for the acquisition of current available for sale financial assets and the Group decreased its recourse to its commercial paper program by 200 million euros. As of June 30, 2010, cash and cash equivalents net of bank overdrafts amounted to 1,750 million euros.

Working capital requirements increased by 80 million euros. Changes in inventories increased cash requirements by 156 million euros, less than their impact in the first half of 2009, despite the return to the replenishment of distilled alcohol inventories for cognac. The change in trade accounts receivable, mainly relating to the Wines and Spirits brands and Louis Vuitton, generated 426 million euros in cash, while reduced trade accounts payable balances consumed 159 million euros, especially at the Champagne houses, Sephora, and Parfums Christian Dior. These shifts reflect the seasonal nature of the Groups working capital requirements.

Transactions relating to equity generated an outflow of 613 million euros over the period. Share subscription options exercised by employees during the first half of 2010 raised a total of 36 million euros. The Company proceeded with the cancellation of a number of shares equivalent to the total issued. Disposals of LVMH shares and LVMH-share settled derivatives by the Group, net of acquisitions, generated an inflow of 89 million euros, compared to an inflow of 5 million euros over the same period the previous year.

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For information, contact LVMH 22, avenue Montaigne - 75008 Paris - France - Tel + 33 1 44 13 22 22 - Fax + 33 1 44 13 21 19

www. lvmh.com

Photographs Cover photo : Carter Smith Karl Lagerfeld, Jean-Charles Recht, Daniel Schweizer, photographer Steven Meisel / models: Natalia Vodianova, Karen Elson, Christy Turlington, DR, photo archives LVMH and Group Companies. Design and Production Phnix - Tel + 33 6 08 16 62 86 ISSN: 1292-3737

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