Ladies and gentlemen, I'd like to welcome you to your shareholders meeting in order to review the accounts for the year 2012. Let me remind you that the agenda is as follows. We have all the legal documents required to hold this meeting that have been made available on the desk and we will review all the financial statements for 2012, the outlook for 2013. And I'll say a few words about that before answering the questions from our shareholders. Jean Gougeon represented by Mr.
Pierre Godet will be appointed as directors and as tellers. I propose that we appoint Mr. Bernard Huynh who is Group Legal Counsel. We have the quorum. So the meeting can validly proceed with its deliberations and the detailed agenda is to be found in the documents you have received.
And before giving the floor to Jean Jacques Guillenie who will set out in greater detail all the figures for the year, let's see a short film that we have prepared to present the special days. This is an event that we organized for the group LVMH in 2011, which was very successful because over a weekend over 100,000 people visited a number of the group's premises open especially on that occasion and we're repeating this event this year 15th 16th June and shareholders are naturally cordially invited to attend that event by further premises of the group, 40 throughout France, in Paris and in the Bordeaux region and all regions where we are present, but also abroad the U. K, Italy, Spain and all the details can be supplied. So this is just a brief presentation or film on that event and you're all invited to take part. And I'd now like to give the floor to Jean Jacques Guillenie for the 2012 financials.
Good morning. Let me give you a few figures for 2012. Let's start with the sales. We can see that sales have grown to €28,000,000,000 in 2012. This is significant 19% including 9% in organic growth 7% to do with the 3% in scope because of the acquisition of Bulgarian Ile de Boute.
Even though this happened in 2011, the scope effect took effect last year in 2012, but there's also an exchange foreign exchange effect 7%, which needs to be emphasized. So all in all, 90% increase in revenue. If we look at the Q1 2013 on a like for like basis, we can see that organic growth is 7%, which is similar to what we had last year for the year as a whole, which is in line with the organic growth of the second half of 2012. We did not note any scope effect in 2013 and the exchange effect is slightly negative to minus 1%. Dollar has stabilized, but the yen degraded sharply.
Regarding sales, we can see this distribution hasn't changed, doesn't change much from year to year. You can see that Asia accounts for 28% of our overall revenue, up 2% compared to the previous year. France and Japan had to suffer from this increase in Asia of 2%. If we look at the sales on a regional basis, of course, with an international group, only 10% of our revenue is generated. In France, let's look at the various regions of the world.
United States, significant growth 12% in sales, not much change at the end of the year, so sustained business throughout the year. Japan was a mixed figure. We had, of course, compared to 2011, which had, of course, the dramatic events of 2011. So the first half was significantly better. The second half, not so good.
But Japan was seen to be as a sick man of the luxury market. And still, we find that business was up 6% in Japan, not bad at all. Asia as a whole 10% without Japan, 10% that is a sustainable source of growth. And Europe still up 7%, in line with what we had in 2011. And so a perfectly acceptable performance and so a fairly homogeneous and favorable picture throughout the world.
If we look at the various lines of business, let's look at the picture on the right hand side organic growth. We have 2 businesses that stand out, Wines and Spirits and DS, so retail selected retail is 14% and one is for 11%. If we look at the income statement per se that is how we have performed. We see the overall picture. We can see that the gross margin up 17% as a percentage of sales.
Well, we had a scope effect and other factors that mean that they're not quite as high as last year. Selling expenses seem like awfully high, but that's because of the foreign exchange effect. If you take that up, it's only 11% and not 21%, 10% for A and P and 11% for selling expenses. And likewise, overheads, general SBA SG, I beg your pardon, only 11% up, but that also includes a foreign exchange effect. The other extent exchange other charges and expenses, there's slightly negative, but that includes both tangibles and intangibles.
The profits from recurring operations, but we have to remember that we had a one off income which is due to our 22% stake in Hermes. So that improved our financial result. The income tax 32%, slightly higher than last year because of the deferred tax credit that we had last year. We have some minority interest with NC and DFS. And all in all, the net profit up 12% compared to last year.
If you look at the profits from recurring operations, the main indicator, up 13% compared to last year per line of business. We let not go through the entire figures, but they're all very good, except for fashion and leather. All the lines of businesses have of business have enjoyed double digit growth regarding fashion and leather goods. It's because of specific capital expenditure. But in spite of it all, we have a very healthy growth nonetheless.
Now the financial structure is very sound. You can see that equity accounts for about slightly about half our liabilities. So that means that we have a strong financial structure, which means that we're in a position to invest in our workshops, in our stocks and in other operations that enable us to allow for growth. If you look at the net debt and the cash flow picture, you have it here. The net debt at the end of 2012 stood at €4,261,000,000 down about €400,000,000 compared to 2011, because the free cash flow on the right hand side, EUR 2.474,000,000 so up almost 14% compared to 20 11.
The $2.474 was pretty much used by dividends and some small acquisitions including the 20% stake in Benefit that we acquired in 2012. And so all in all, we were able to bring debt down by about €400,000,000 You can still see that the debt to equity ratio, which is of course the standard measurement of the debt ratio, is standard 17%, a very good ratio. Indeed, the dividend we are offering is €2.90 per share. We there was a first settlement of €1.1 paid out in December. So the balance is €1.8, up 12% over compared to last year.
And over 5 years, as you have on the screen, the dividend has grown 13%. So this is annually 13% annually, which is pretty good, especially if you take well, you have 2 years of recession in the intervening period. And let me complete this overall presentation with the share price compared to CAC Carant. The picture speaks for itself. CAC Caronde was stagnated, was slightly down whereas our own share price was up 67% over the period.
Thank you.
Ladies and gentlemen, as is customary for a number of years now, we will have polled our shareholders, several 1000 shareholders asking them what they view as the most appropriate questions to address today. So before giving you a brief presentations on the results and the outlook of the group and its strategy, I'd like to show you some of these questions summarized in this short video clip. I won't return if only briefly to the results of 2012 presented by Jean Jacques Guiony just to say that the increase of our activities continued that our operating profit is now close to €6,000,000,000 and that thanks to our outstanding brands, we are gaining market share in all parts of the world where we are present. Of course, we are influenced by the general economic climate. And in 2012, this may seem somewhat paradoxical to you because we're in Paris and Europe at the present time is not in a hugely buoyant economic situation.
But the post the world is posting sound growth and that's continuing into 2013. All the developing countries or emerging countries as we say as well as a number of countries in traditional Western areas. What is actually striking for 2013 is that this global growth trend is expected to continue at around 3% across the world. And in developed countries, we are witnessing 2 types of growth: Europe on the one hand, which unfortunately is expected to slow this year with the relevant impact on economic consequences and other countries including the U. S.
Expected to grow by some 2% where we have strong presence. And there are a number of signs that confirm that general trend in terms of our activities. You ask us about our strategy how against such a backdrop, how can we adapt our strategy, what strategy should we follow in order to ensure that the group continues to grow to expand to be successful and increase market share. What's key to realize and at the risk of repeating myself because we define this strategy with members of the company some years back and we're trying to follow it consistently. This strategy is based on 2 key aspects.
Firstly, in your group, we are aiming for the long term. So the short term results are interesting. Of course, something that needs to be taken into account. The teams in the group are of course highly focused on the results of the quarter of the year and many employees of the group attending today's meeting because in the group we have a great many shareholders thanks to the share plan that was made available to a number of employees in the company. So results are a key component of what is followed in the way our businesses are run.
But what's essential is the long term position of the group and its brands. And what I'm interested in and what is of interest to the managers who are here is how the Dior brand, the Bulgari, the Louis Vuitton brands will look in 15 years' time and not so much what they will look like in 6 months' time. I often explain that in in house meetings. The financial results that are quite remarkable were that financial result must in fact be a consequence of our strategy aimed at building our brands, but it must not be the sole driver in motivating our teams. And that really is one of the reasons for the success of our strategy.
We want our businesses, our brands to be developed by all their teams, all their management teams, but as well as all by all the employees who would take part as family companies, companies whose very soul is the brand like these companies for the most part are companies that were founded by families. These companies must preserve the same essence, the same mindset. And that's one of the key success drivers. The other important factor is continuity. Continuity in this strategy, but also continuity in the teams that we have put in place and in some case many years ago.
And we've all been working together for a number of years now which deliver this long term strategy across our brands. And I see here in the front row many members of the Executive Committee and also in the other rows employees who sit on the management committees in many of our companies. On behalf of all shareholders, I'd like to thank them and congratulate them because it's thanks to them that we've achieved this performance in 2012. And I believe we will continue in 2013 to achieve these impressive results. And you'll have the opportunity of seeing later on, you'll see all the members of the Executive Committee who will join me in answering your questions.
If we now go into further detail of the various strategies of the various business areas. Let's start with Wines and Spirits. LVMH is Louis Vuitton Muetten NC. We have about 60 brands, but there are 2 pillars Muetten NC and Louis Vuitton. These are the 2 founding defining brands to which we have added other items of varying size that are indeed growing.
But if we start with Wines and Spirits that's an activity that enjoyed tremendous success in 2012. And that success is both based on the quality of the products, but also on the entrepreneurship that is present in that company that has led to strong market share gains be it in the United States or in emerging markets. And we can underscore that the finest products the most iconic, but as well as the most expensive are those which have increased the most. Dom Perignon in particular, Dom Perignon invented champagne back in the days of Louis 14. And we launched 2 vintages last year, the 2,003 and the Rose 2,001, which enjoyed considerable success.
Mr. Navarre, who's here, has great difficulty in meeting demand. It's a great business Wines and Spirits because at the end of it but you'll see that there is innovation. There's a fair amount of innovation, but the products are products of the soil. And these are products on which currently in a number of countries of the world demand outstrips supply.
And so if figures are growing well, they could grow even faster if we had the grapes, the wine, cognac in order to meet that demand. Other area of activity that held up very well in 2012 in particular perfumes and cosmetics. We enjoyed a very good year with perfumes and cosmetics, very good year in particular with Christian Dior and the iconic perfumes grew substantially. It's interesting, but for the 4th year in succession, the perfume J'adore is number 1 in France as well as number 1 in a number of other countries and now it's one of the most widely sold perfumes worldwide. So Christian Dior has developed its perfumes considerably and also developed very successfully its makeup range and skincare products, but more about that in a moment.
In the watches and jewelry, there again business developed very well. Thanks to the team that joined the group a few years ago headed by Francesco Trapani. Well, Francesco hasn't been with us for very long only 2 years, but I've known him for a very long time. And we in fact tried to sign a transaction with him a while back, but in fact it was sealed 2 years ago. So our Watches and Jewelry business enjoyed considerable success in 2012.
And I'll explain how we plan to continue that trend into 2013. Selective retailing very strong growth of our companies. DFS which in 2012 delivered excellent performance, thanks to the increase in the number of Chinese tourists. That's an interesting development given the rise in living standards in China and given the propensity of Chinese visitors to travel more widely, I believe the future of the company is very promising. And what's more in 2012, they were able to establish new premises in Hong Kong Airport, which is one of the most widely visited and one of the most dynamic airports in the world today in selective retailing.
The Sephora of course, Sephora a very dynamic company far and away market leader in the selective retailing of perfume. Thanks to the efforts put in by the team. So Christophe Della Puente joined us not so long ago, but he's now fully safforized as it were and is spending all his time in the stores. And I very often come across him offering a perfume to be tested by a customer. And so we are here in a business that offers great potential.
Saw one of our Chinese partners yesterday who said, well, Sephora you can increase tenfold your activities in China very swiftly. Perhaps we won't do that. It would require too much investment, but it would mean finding a lot of employees. And in countries that expand very swiftly, it's not always easy. Let me just end this brief presentation with us.
Well, the Sephora strategy is well rehearsed. Its innovation more about that and service. Sephora made it possible to deliver to a number of markets new brands, brands that were small to begin with, but attract customers that can't find those brands elsewhere. And the result is that Sephora is it's probably better to buy a perfume or a cream, a skincare cream in at Sephora than in a large department store you get better service at Sephora. Before coming to the final pillar, I started with the first pillar and I'll end on the 2nd pillar the arc that supports the group fashion and leather goods before discussing Vuitton.
Let's discuss some of the smaller brands, but nevertheless posting high growth. And since we've managed this with Pierre Yves Roussel, here again, we have experienced quite a remarkable development. I'll just take one example. It would be too would take too long to go through all the brands. But if we just focus perhaps on the most spectacular example which is Celine.
Celine is a it's a long standing brand, but that was perhaps not asleep. But it was not, shall we say, on the radar screen of the most cutting edge brands with the greatest potential. And just over 5 years ago, we relaunched this company with the arrival of Phoebe Filho. We've totally changed the positioning of this brand, which is now viewed across the range of fashion brands as one of the cutting edge brands. But that's not enough because sometimes brands are too cutting edge and there are no customers.
This is both a cutting edge brand, but is of considerable interest to women and we see a greater number of women who buy these clothes. I see Delphine who works at Dior on Toledaino who says, well she's wearing Celine clothes. What's happening? So there's a new designer at Dior that's changed somewhat. But young women these days buy their clothes at Celine and acquire and buy their leather goods.
And we're building on this global brand on this network to develop this business and here it's difficult to meet demand. Turning now to Vuitton Vuitton, which is a tremendous company. We published the sales figures for the Q1, which we see that the group is in great shape. We have growth in all our business areas of the order of 7%. Wines and Spirits continue to post strong growth rates.
Watches and Jewelry doing very well. Just an example at Bulgari today, we have growth in stores in Bulgari stores close on 20%. Why is the headline Bulgari figure not as exciting as we might have expected, because we've decided to reduce wholesaling and to promote selling in our own stores to really focus on offering the goods in our own stores, so that customers can enjoy better service in our stores rather than some other retailer where we don't have full control over the way in which our products are presented. Perfumes and cosmetics have done very well since the start of the year. Won't mention selective retailing where growth rates are close to 20% doing very well.
So a question I'd like to preempt here is that why leather fashion and leather goods only posting 3% whereas generally we're 10% or even higher. I'll answer you very simply by saying that it's the result of a deliberate strategy. What is happening? What is our objective? I said earlier that we wish to favor and I always repeat this when we hold brand meetings and on Vuitton in particular.
What I'm interested in is what will be the position of Vuitton in 15 years' time. Vuitton is today the world's leading luxury brand. And what I'm interested in is that it should remain so and that it should increase its lead over the longer term that its image should be further burnished and that the quality of its products be maintained at that level. Now at Vuitton, we have a very considerable side and we have very outstanding products. It's the monogram product at Vuitton.
Everyone knows the monogram from Vuitton. And it's an extraordinary product. As compared to its peers. It's a bit like Chateau d'Yquemes compared to the other sautienes wines. Of course, it's a Sauternes, but there's no comparison possible.
And it's the same for the Vuitton monogram. But what is the problem? The problem is the following. The problem is that we wish to demonstrate to what extent the offering of Rui DuPont is diversified because Vuitton is of course this outstanding product, but it's also many other things too many other things many other leather goods and products of outstanding quality. I can say to all our shareholders here that the quality of Louis Vuitton leather goods is without a doubt the finest in the world.
There may be other brands, other products of excellent quantity, but Vuitton is the finest in the world and we wish to demonstrate that. We wish to show that to our customers. And in order to do that given that in the image that our customers have of Vuitton, the brand is inevitably linked to this amazing monogram canvas. And we decided with Michael Berg who's also displaying continuity because he's been at my side for 30 years and took over from Yves Carcelle who had expanded the Bouffitin business for over 20 years and is now holding another position in the group. We've decided to show to our customers all the products and the result is outstanding because when you enter a Vuitton store, you see not just this outstanding canvas, but you see all the other Vuitton products.
What's the result? Well, the result of leather goods have sold, have increased their sales spectacularly and it's difficult for us to keep pace and to deliver because manufacturing these products takes a very long time. We've hired craftsmen and craftswomen to produce these goods and it takes a while. The second difficulty is that we don't wish to expand to grow too far. We'll even slow the pace of store openings.
So these two factors combined explain why the growth figure shown here is very encouraging to my mind. It's not a sign that it attests to Vuitton being less appealing, but it's the deliberate result of a strategy that I in fact discussed with the analysts when we presented the results at the start of the year, it's the result of a deliberate strategy and the fact that sales figures are growing. I'll say that perhaps at the risk of shocking a number of analysts or investors, but that's not the problem. The problem for Louis Vuitton is to remain ahead in the lead in terms of the quality of its products and to offer the widest diversity of leather goods. And the sales figures are a consequence of that and we'll see what happens once again.
The objective is what will Vuitton look like in 10 or 15 years because make no mistake I recall when I joined the company the end of the 80s, so that was some time ago, people would say, well, be careful in this group. Beware there's Rivuitton great, but we're already seeing too many products. So there's a risk. And since whilst having an image that has increased considerably whilst being far and away the leading brand of high quality goods, leather goods thanks to the work of Yves Carcelonetti. The size of Vuitton has been increased tenfold.
That's not bad. I'm not saying that we're going to increase it further by tenfold in the next 20 years. That wasn't the goal. The goal was it's an emblem of France craftsmanship and to continue to make sure that this iconic brand remains at the forefront of the world's luxury brands. That's what I wish to say about the strategy at this stage.
And we now have a short film clip, which presents some other questions. Let's take a look.
No, regarding innovation, innovation and creativity, well, this, of course, is one of the key drivers of the group's success and the group's future. I'll say a few words about the position of the group and what innovation has brought to the group in 2012, 2013. We start off with Wines and Spirits. And so you might say, well, look, Wines and Spirits are forever. I mean, it's always the same thing, isn't it?
And what I would qualify this and say and like others, I would say that well, it is the future of tradition. There is tradition, but we are successful in wine and spirits precisely because we have been investing in quality. And in 2012, we've made a significant investment in the making of champagne. We have ultra modern vats for champagne that have consumed that have actually improved the quality of our champagne. We have Cheval Blanc that's an entirely new champagne factory and with, of course, technological innovation.
But we've also innovated in terms of products. In China, we launched a very unique type of cognac and it's called Clasium and that happens to be highly successful in China. And that sets us completely apart from our competitors. And so you could say, well, look, well, being in Wines and Spirits, you may feel that creativity is an easy game in as much as you're looking at timeless products, but still investment in quality is essential for the future. Now that goes for Wines and Spirits, but of course, it goes even more for Perfumes and Cosmetics where year on year we are constantly innovating.
And we've had meetings with Mr. Martinez and his teams about what kind of new perfume shall we develop. Are there new directions we should follow for cosmetics? And it should be pointed out that when I visit the workshops at Saint Jean de Breve where they make Christian Dior perfumes and indeed most of the perfumes, believe you me, it's highly impressive. We can see our scientists and craftsmen working very hard not just on perfumes, but even the color of the perfumes Dior is the number one brand in cosmetics around the world, but especially in France and color is essential.
And when you look at the new colors being developed in Christian Dior's development centers, it is quite exciting. But likewise, Guerlain Guerlain, I don't know, you may have seen that new advertising campaign for the new perfume that was launched last year called La Petite Robe Noir. You may have seen a picture of this right behind me. Well, that particular advertising campaign is highly innovative. It is the first time something like this was ever brought to the fore.
It was our people who came up with this concept. And so J'adore and La Petit Trebnoir must be numbers 12 respectively on the French market. But now we have to look forward to doing the same thing internationally. Same applies to Cream's L'ordeville, which is a fantastic innovation at Dior. You have this product made of excerpts from the vine stems of EQuem, you can mix this in the ingredients of the cream and it is quite special.
I don't know if this is part of the presence we have for you after this session. But ladies, believe you me it's worth trying it. You shouldn't put it on your face when you have to wait until you're 40 before you start using this sort of thing, not when you're 20. And we have another similar cosmetic product that is made based on orchid essence and it is quite remarkable. And so there's lots of innovation.
In fact, there's technology involved in many things, of course, in jewels and in watches and jewelry. It is not so much the technology as the manufacturing processes. And there again, we had been making a lot of capital expenditure in making in developing our processes so as to be completely independent, self standing in terms of in our watchmaking processes so that we do not need to rely on anyone else but us. We develop our own movements. And so it's not just technological not just technology, but but manufacturing as a whole.
Likewise, for other products that we in leather goods and shoes and leather goods, we've bought plants and tanneries and we've acquired one of the main global suppliers. Would you believe we now have crocodile farms? So we breed crocodiles. And as you know, crocodiles have all have an intrinsic value added. And these, of course, are an endangered species.
So we decided to grow more of them. And with that well, by having a crocodile farm, we know that we will not deplete the natural supply. There's a growing demand for crocodile leather, and we have made sure that this will happen. So we don't want to find ourselves in the situations where we are short of supply. And so whether it be for watches or shoes, we want to be able to produce our own.
Now we work with a number of innovative partners, but what we do, we bring them in. So in cosmetics, we either bring them in the fold at Sephora or we have crossed shareholding. And so there's another cosmetics brand that is in the pipeline. We might actually become we might become partners or we're still in the making. But any case, fashion, leather goods, cosmetics, these are 2 of the main drivers of the group.
But we are fortunate enough to have great people working for us. And it should be pointed out that we have outstanding teams working for us, not just the executive people, but all our employees are highly motivated because, of course, it is a privilege to be able to work in this group. And I do hope and I do think that our people are proud of working for us. And it is and that's and we've been nurturing sort of a corporate spirit, but also a spirit of teamwork. And we're very careful at looking at career management, career planning to make sure our employees have a promising career.
And we are the only ones to do this because when a young person freshly graduated from university joins a single brand group, well, so very well. But joining LVMH means that you can move on. You can grow from one area to another, move from Paris to the rest of the world and then back to Paris and you can do all sorts of things. And this is why we are in a position to attract the best people. And we have been also working hard on diversity.
And let me emphasize this. 76% of our staff are women and a large number of our executives are women. So we're very careful, but of course in a group like this, we need to have women on board. Mean women are our customers, but women know women better than anyone else. So we need women in our executive committees because of course when it comes to choosing products, this feminine touch is quintessential.
And so that's why we're keen on having not just a multicultural staff, but lots of women on board. Now for the 3rd or 4th year running, I believe we are probably the number one company amongst students seeking jobs in a company. I mean, we are the most sought after company by people looking for employees looking for jobs, students looking for careers. And we have received the trophy of the citizen company because we have developed employment in this country. I think our shareholders can be proud of this.
We have created many jobs. When we started the company in the 80s, we had maybe 10,000 people worldwide. Today, we have upwards of 100,000. So we've grown tenfold. And so the societal role played by the company is outstanding.
We are, of course, one of the iconic companies in French and indeed European know how. But more than that, we provide products of exceptional quality and this is why we have been able to grow year on year. And Nordli has our headcount multiplied 10 fold, but likewise our revenue has grown by a factor of 10 over the same period. So this is something that is definitely worth mentioning, but it is highly satisfying for shareholders of which I am. And indeed the executives of this group many of whom as I said are here today.
Now let me just wind up with something that should also be emphasized and that is our environmental policy. 2012 marked 20 years of our environmental department. And so it means that the environmental dimension has become part and parcel of our work for a good 20 years. For the past 2 decades, we were able to appreciate the significance of environmental challenges and we were able to develop innovative solutions to address these challenges. And we have developed these policies with all our partners, our suppliers, our distributors.
This is a pervasive policy, and we were able to demonstrate to all our teams that especially the people that have to integrate the environmental dimensions. We have been looking at the way in which innovation, creativity, how all this could be compatible with an environmental policy. I will not get in the details, but you have an entire chapter of our report on our environmental policies. And one of our key projects we have been we have official recognition by the Ministry of the Environment to look at the effect of biodiversity. We have a tool that can measure the environmental footprint of all our packaging or wrapping materials.
We have the Montague vats and that site has been classified to high environmental quality. And throughout our stores, we have been using green lighting. And so this is another corporate society corporate responsibility, corporate social responsibility that we have been we'd have been implementing, especially on the environmental front. And I'm very confident. I am very confident The world as a whole is enjoying economic growth.
The United States has renewed growth. We have we're looking at a 2% growth in the United States. Now of course, Europe, because of the sovereign debt problem and the deficit problem means that growth in Europe will be close to 0, slightly more, slightly less, but basically basic fact. But the silver lining is that if you look at our own market, especially here in Paris, while we have tourists from the rest of the world. And tourists come here and they purchase our goods.
And if you look at our revenue in France, well, a good portion is also attributable to the rest of the world. But of course, there's a limit to that and that is the strength of our currency. And we in our analyst meeting, we've discussed this. This is something of a challenge because a number of countries have been applying a monetary dumping. If you look at Japan for the past few months, the Japanese currency has deteriorated, which means that we have a choice between increasing our prices or finding other solutions because, of course, when the yen is too low, well, that means our exports suffer.
Right. Well, ladies and gentlemen, that is it. But the time has come for questions and answers if you have any. Sorry, and I had left out the auditors. Auditors, if you would give us your report.
Ladies and gentlemen, shareholders, on behalf of the auditors, it is my pleasure to introduce our report. The report was made available at the company headquarters, and you should find it in the reference documents that were given out at the beginning of at the entrance of the hall. I will not read them throughout, but there are resolutions which you're supposed to vote on. And I will look at these. There are 7 reports, 2 on the accounts, 1 on regulated party agreements and one on conventions regarding share capital.
Let me start with the annual financials and the parent company and consolidated financial statements, which you will find on pages 281 of the documents. We look at the specificities of the company, the accounting standards and internal audits. This work has what we have reported, we have sent regular reports to the Board of Directors and the Executive Committee. The work on the consolidated financial statements are based on reports carried out by auditors in 56 business units in 44 countries. We believe that the statements are to present a given true and fair view of the financial position.
We also look at the related party agreements. These are on pages 2 0 7, 208 of the translation of the French document, document de reference. This is looking at companies that have come joint directors. There are provisions. There are an amendment to the service agreement with the group, Arnaud SAS.
There's an amendment to the supplementary pension scheme, which benefits a number of directors and the renewal of the joint venture agreement between Dior Couture SA and VLM8 regarding related to the production and distribution of Dior watches. The agreements that were approved in previous years were extended in 2012, and these are also listed in this report, the special report on related party agreements. Regarding the extraordinary part of this general annual meeting, we have set special reports on the resolutions, which may have an effect on the share capital. You will find this on pages 256, 260 of the main document regarding the issue of shares, amortization of share capital, issue of shares and marketable securities for employees who are members of the company savings plan and then the granting of existing shares or shares to be issued for no consideration to employees and senior executive officers. Now our reports find no comments on these items, which are consistent with the provisions of the Code of Commerce.
Thank you very much. And now, I will call on members of the executive committee to join me and take questions from the audience. Now we are at your disposal to take questions from the audience. Please introduce yourselves when putting the question. Any questions from the audience?
I'm from PAI, the Association For Individual Shareholders. Thank you so much. This is the first annual meeting where you were able to give us a you were able to keep some disruptions under control. And we have to recognize that these disruptions are not directed at individual shareholders who are used to sharing out and do not want to make a fuss. Talking about the policy of not opening too many new stores, you said that you have a long term view on the positioning of your brands.
But in this respect, can you tell us what countries would sustain good? What are the countries where you propose to open the largest number of shops? Do you propose to open a corner in the International Space Station to have to receive customers from outer space. Another question about culture. There are countries where things can vary, but you used to have a clip showing a member of the Club of Economists not this year, why not?
And then or are you going to change this next year? And then a question about the dividend, the compensation of shareholders. We'd like to thank you for this sustained policy and you've actually embellished this with the first installment. Would it be possible in the future? And it is possible legally for companies to pay you can either pay a dividend or a share at a discounted rate.
And then you wetted our appetite about a little present. Can you tell us more about this?
So on the store openings, on the moon are you saying or on Mars the stores? In the space station, I hear you. We've always been pioneers. We'll see how things look. I don't know if the profitability of the store will be sufficient, but it will be a showcase opportunity as the Zenith watch.
On the Sky Diver from what 30 kilometers without a difficulty and landed safely thanks to the watch. Without a doubt. Well, The Economists. I think you're right there. I don't organize that in the in every detail.
I think it's interesting to have an economist. So I promise you next year we'll have an economist from the circle of economists because it's always interesting to hear. We had Christian Saint Etienne last year. It's always very interesting to have the view of the economy. And dividend in shares, well that question has been put several times.
As things stand, I mean it's not really been looked into. But you see note the dividend increases year on year. So that's a good development, good increase over the past 10 years. And the gift well for that over to Jean Jacques Guilherme he pays for the gift. So it might not really be up to par.
I hope there's cream in the gift pack. Well, it's a surprise. It's a surprise. Okay. Here I'm going to have to let the cat out of the bag.
It's this bottle of champagne. And next year, it will be skin cream. Next question please.
I'm a small individual shareholder. I have three questions for you. You are spending €27,000,000 fighting counterfeits. Is it China making counterfeit goods? Is it like for instance luggage?
Is it the main culprit? And I would like to know regarding you've been building boats more than 50 meters long. Are there still people who can afford these boats? And then a question regarding the Saint Martin department stores. I believe that you're going to turn this into a hotel or in the museum in the Bois de Boulogne.
Is this going to happen? Can you tell us about this? And will could you have a Cheval Blanc bottle next year as of present?
Well, answer to that, I mean, earnings will have to increase significantly to deliver a bottle of Cheval Blanc as we're not producing very much. Before handing over to Jean Jacques to tell you about the Saint Martin, the foundation is expected to open during the course of next year in La Saint Martin. Well, La Saint Martin, we can expect it to open towards the end of 2015 or even 2016. We're not too sure about the time line here given that the building permits given by the city is being appealed. So there's an uncertainty.
But end of 2015 early 2016, it's a shame that we have those appeals because it's a great project. We're going to be creating over 1,000 close on 2,000 jobs in that location. And France being what it is, you have a number of community associations criticizing filing appeals etcetera. We had the same thing regarding the foundation project. All that's been delayed by several years because of those appeals filed.
Whereas it's a great location. The project is a major investment that it's going to create close on 2,000 jobs. Well, we have associations that are trying to put a spanner in the work. We'll get there, but it might be delayed. So the ships On the ships, there are still owners for those.
And what's interesting is that these are owners who come from various areas of the world. The last two vessels that we sold a ship of over 40 meters to a Chinese customer that was in 2012. More recently we sold a ship to a Mexican a young Mexican woman and of course with exquisite taste of course. And this all shown to sold to a young Indian. And so there again the customer base is becoming more global.
Are there any other questions? Yes. Good morning, sir. I'm an individual shareholder. I would like to know whether the tax the income tax on companies would have an effect on the dividends of shareholders.
And I have another comment this time. You're running a company that is a world leader. Could you give advice to our President and his government? Thank you.
There'll be no consequence regarding this 70 5% tax rate. I mean the consequence I'm trying to avoid here is that for a number of employees struck at the prospect of having to pay more and more taxes might wish to relocate. I'm trying to avoid that. This new measure whether it's the company that pays, I mean, unfortunately the company has to pay, but the employees are spared. And I hope that will encourage them to stay rather than to leave the country.
As to advice, I don't believe I'm qualified to give advice in the current situation. And I'm not what's more I'm not sure that advice I mean the government must be swamped with advice every day. I'm not sure that that advice is followed. Any further questions?
Mr. President Bonjour. Good morning, sir. To follow-up on this question, what was what is the financial effect of the 75% tax? The second question is, last year, I had a question when the price the share price was about €125 now, The share price is about €120, €130.
And you told me at the time that as to dividing up the share in 2, you have for the price to be stable. But we have found a stable price. Could you consider splitting the shares in 2? Well,
I think it's a little too soon to say because I mean even France is getting poorer. We can afford to buy a share at €120 It's not because it would go to €60,000,000 that it would boost the share price. We have to wait a little more until it gets a little higher and the share price is somewhat unpredictable. We need to really look at the long term and say that over the long term that it's expected to rise at least that's what I'm betting on because in current circumstances, especially if it were to decline a little, I mean, I don't know. I mean, I would buy some more even at €120 you see.
I think it's quite an attractive proposition. But I'm not advising here. I'm not giving any stock market advice. It's just a personal comment. And then the impact on the 75% tax rate, I'll turn to Mr.
Guinee if he's done the math. So I don't know. I won't you'll let me not answer because in fact the arrangements of the tax are not yet known. So we're unable to quantify things. We're really only working on assumptions at this stage.
So I can't really answer only to say that it won't have any major impact. We mentioned the dividend. Of course, it won't have any impact on the dividend. But as regards predictability of profits, it won't have any impact. Well, we've suggested that all salaries should come below the ceiling, but that was not met with any success.
Next question?
Thank you, sir. Alek Hiday. I'm also the individual shareholders. Another question that was asked by another speaker. You did not answer that question.
The museum in the Bois de Boulogne, the museum in the we know that there were some difficulties regarding construction costs and there were also some appeals. Thank God that's behind us. We have the building permit. But when will this be built? I mean, the club of shareholders were fortunate enough to visit the construction site.
It is a remarkable building with futuristic designs. Can you tell us more about this?
Yes, absolutely. As I indicated, there was considerable delay suffered owing to administrative difficulties. We've now overcome those because planning permission has been endorsed now more recently by the Council of States. So the project is nearing completion and is expected to open to the public during the course of 2014. To give you an exact date, I mean, as you see, you visited it, it's a rather complex and technically sophisticated building.
So we'll open during the course of 2014 and perhaps at on that occasion we organize a further visit without a doubt for our shareholders. Next question?
I'm a former shareholder and I'm a shareholder of both LVMH and Dior and also a shareholder of Hermes, which you acquired a substantial percentage. I mean the family shareholders of Hermes were not too happy that it was their problem. They shouldn't have gone public. But I have a question. You may have forgotten to well, you didn't mention Hermes, but Hermes is, of course, the first true luxury brand both in terms of quality and prices because, of course, the prices are quite different between Hermes and LVMH.
So do you have any serious intention past the 20% or 25% you have with Hermes right now? Might you go further and take over after Jean Louis Dumas, a man whom I greatly admired and he was one of the
founding founders of Hermes. You're absolutely right. Hermes is a very iconic brand that produces leather goods of unquestionable quality. Just to point the price of goods, Berkin Kelly bags are very high price. But if you go to Louis Vuitton, the Champs Elysees, you'll see that we also offer high quality leather goods of impeccable quality whose prices are in the same price range as those.
Just to point that out that confirms what I said about Vuitton. Our loyal Vuitton customers know this iconic canvas, but they don't all know that Vuitton offers outstanding high quality leather goods that are totally handmade with ancestral craftsmanship in its stores. And that's why we've decided together with Michael to showcase more of that aspect of things. As to our relations with Hermes on our side, they are quite calm. We became a shareholder of that company as you indicated to the tune of some 20%.
Unexpectedly, we had not planned to become a shareholder of that company. And we made a financial investment and that financial investment was unwound in a way that we had not planned quite frankly. We had not planned that. And so that's the situation. We don't want to be in any way unpleasant with the family shareholders of Hermes.
Quite the contrary we wish to support and that's what we did because we voted in favor of all the resolutions that we attended. We wish to support their policy. And we're being blamed for something that is quite untrue. We don't plan to increase our stake to play a role in that company. We simply wish to provide friendly support to one of the finest French companies.
And if we were to wanted to act differently that would be possible because of the family owned structure of the company. But be that as it may, we're very friendly in our attentions towards Hermes. If there are no further questions, let's move to the vote, because we have a fair number of resolutions to vote on today. Thank you. So we have a quorum.
We have a quorum and let's move to Resolution number 1, approval of financial statements. Please vote. Approved. Approve Resolution number 3, approval of related party agreements. Please vote.
Approved Resolution 4, the dividend. Please vote. Approve resolution number 5, renewal of my appointment as Director. Approve. Approve.
Thank you. For the trust placed in me. Resolution number 6 renewal, the appointment of Madame Benedeti Chiaque as Director. Congratulations, Madam. Congratulations on your reappointment.
Resolution number 7 renewal of the appointment of Mr. Nicholas Clive Worms. Please vote. Approved. Congratulations, Nicolas Resolution 8, renewal.
The appointment of Mr. Charles de Croix as Director, please vote. Approve. Congratulations. Shall Resolution number 9 resume the term of appointment as Mr.
Trapani. Please vote. Approved. Congratulations, Francesco. Resolution number 10 renewal of the appointment as Director, Mr.
Hubert Vadrin. Please vote.
Approve.
Congratulations, Hubert Resolution 11, authorization to trade in the company's shares. Please vote.
Approved resolution number 12, authorization to be granted to the Board of Directors to reduce the share capital. Please vote. Passed Resolution 13, delegation of authority to be given to the Board of Directors to increase the share capital through capitalization of profits. The resolution is carried. Number 14, delegation of authority to the Board of Directors to increase the share capital with preferential subscription rights.
Please vote. Carried. Number 15, delegation to the Board of Directors to increase share capital without preferential subscription rights. Resolution, Kerrey. The number 16, possible increase by the share by the Board of Directors to of the share capital without preferential rights through private placements.
Carried 17, authorization to the board to set the issue price giving access to the company's share capital under certain conditions not to exceed 10%. Please vote. Number 18, authorization to increase the number of shares for issues oversubscribed in the 15, 16 or 17 resolutions. Claired, Resolution 19, delegation of authority to be given to the Board of Directors to increase the share capital in connection with the public exchange
offer.
Thank you. 20th resolution, authority to the Board of Directors to increase the share capital with contributions in kind. Thank you. 21, delegation of authority to be given to Board of Directors to carry out capital increases with preferential subscription rights includes reserve for group employees. Thank you.
22, ceiling for all capital increases. Please vote. Thank you. 23 free shares for group employees. Thank you.
24th and last resolution amendment of the bylaws. Please vote. Thank you. The resolution was carried. Thank you.
You're all welcome to refreshments in the room next doors.