LVMH Moet Hennessy Louis Vuitton, said yesterday that it was preparing its financial statements in accordance with international financial reporting standards (IFRS) for all future accounting periods, effective January 1, 2005.

The company said the application of the new standards does not modify its financial performance measures: the net debt to equity ratio does not significantly change and the profit and loss statement is mainly impacted by the reversal of goodwill amortization, thereby increasing 2004 net income by 18%.

On the Group's financial statements for the period ending December 31, 2004, company said the change would have minimal impact on consolidated net sales, which were €12.6bn under French accounting standards and are €12.5bn under IFRS. This 1% decrease is due mainly to the reclassification of certain operating charges.

Current operating income or operating income before "other operating income and expenses" decreases by around 2% to €2372m under IFRS due mainly to the inclusion of a charge relating to stock option plans. Going forward, "Current operating income" will be the level of result highlighted by the Group in its financial results communications,
After the impact of "other operating income and expenses", operating income under IFRS amounts to €2,173m. Net income rises by 18% to €1.2bn under IFRS as a result of the removal of goodwill amortisation.

Total consolidated stockholders' equity, amounting to €8.7bn under IFRS falls by 5% relative to its level under French accounting standards. Noteworthy restatements behind this change include: the deduction of LVMH treasury shares; minority purchase commitments, which, for the part accounted for in minority interests, are no longer classified as equity, but rather as non current liabilities; the revaluation of vineyards as well as, very partially, the Louis Vuitton brand, which offset to a large extent the two impacts described above.

Net consolidated debt rises by around 5% under IFRS due mainly to the integration of securitization operations in respect of client receivables, for which the amount had been deducted from accounts receivable, appeared in the notes to the consolidated accounts under French standards.