GENERALMEETINGSPECIAL

2011 ANNUAL

EDITION

Address by jEAN-PAuL AGoN................................. 02Governance, Strategy, Results, Outlook

Highlights ................................................................05

Shareholder views ..............................................06

All shareholder events .....................................08

It was the first AGM to be chaired by Jean-Paul Agon, who was entrusted on March 18th, 2011 with the combined role of Chairman and Chief executive Officer, the latter being a responsability he had since 2006. sir Lindsay Owen-Jones stepped down as Chairman on his 65th bir thday, as originally announced in 2005.

1,500 shareholders present at the Palais des Congrès ■ With more than 1,500 shareholders present and 6,000 represented, accounting in all for more than 81% of the company’s share capital with voting rights, attendance at the AGM was one of the highest in L’Oréal’s history.

L’Oréal enters a new phase in its history■ Addressing the large audience, Jean-Paul Agon gave a presentation focusing on the

group’s governance and strategy, and shared his vision of the development prospects for L’Oréal, which is entering a new phase in its history, that of universalisation and the winning over of a billion new consumers. His address was followed by a highly informative session, during which more than thirty questions from shareholders were answered from the podium.

Resolutions adopted with a very large majority■ All resolutions put to the vote of the sharehol-ders were largely approved. They concerned in par ticular matters such as the approval of the annual f inancial statements, and the renewal of the tenures as director of Mrs Lil iane bettencourt, Mrs Annette roux and Mr Charles-Henri Fil ippi. The proposal of a dividend of €1.80 per share, representing a +20% increase compared with 2009, was also approved.

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COnTenTs

ThE mAjOR ANNUAL shAREhOLDER EvENT, L’ORéAL’s ANNUAL GENERAL mEETING (AGm), wAs hELD ON ApRIL 22ND, 2011, AT ThE pALAIs DEs CONGRès IN pARIs IN ThE pREsENCE Of A LARGE AUDIENCE.

ANNuAL GENERAL MEETING REfLECTS CLoSE DIALoGuE WITh ShAREhoLDERS

the letter

T H E S H A R E H O L D E R S ’

C O R N E R

N° 52 juNE 2011

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Address by jean-paul agon (excerpts)

L’oRéAL’S kEY DEvELoPMENT PRojECT IS uNDERPINNED bY ExEMPLARY GovERNANCE

Vigilant directors and high attendance rates ■ Our governance is based on the extremely strong commitment of all your company’s directors. The diversity of the profiles of the 14 directors, and the complementary range of their experience and expertise facilitates in-depth discussions and genuine richness of de-bate. The directors are independent in their thinking, have a duty of vigi-lance, exercise complete freedom of judgement, and know the company well, thus enabling the board of directors to fully play its role. your board met five times in 2010, with an exceptionally high average attendance rate of 98.5%. similarly high attendance rates were recorded in each of the board’s committees, and the quality of their work is continuing to advance.

Stronger remits ■ Changes in the scope and names of two of the committees reflect the board’s constant concern to ensure that the company has all necessary means to take up the full range of future challenges. The strategy and Implementation Committee has become the strategy and sustainable development Committee, and is now responsible for examining the means and resources relating to sustainable development, and reporting on them to the board, which can thereby ensure that the company is complying with the commitments it has made in this field. The remuneration Committee has become the Human resources and remuneration Committee, and its remit has thus been extended to include human resources policy on matters such as social relations, recruitment, di-versity, talent management and fostering employee loyalty. It also ensures that the rules of ethical conduct set out in the group’s Code of business ethics are correctly disseminated and applied.

jean-Paul Agon L’Oréal Chairman and Chief Executive Officer

Special thanks to Sir Lindsay Owen-Jones, Honorary Chairman of L’Oréal

A particularly moving moment for everyone, because of the strong imprint he has left on the group’s history ■ “ I wou ld l i ke to tha nk S i r L i nds ay Owen-Jones on everyone’s behalf. He has been both the architect and the builder of the magnificent company that is L’Oréal today. For 24 years, he has served as Chairman, achieving what is widely ackowledged as a tremendously successful tenure, as reco-gnised by the Board when it appointed him Honorary Chairman. On a personal note, I would like to say how much I respect him, and express my extreme gratitude. Firstly, respect for what has been achieved, which today enables us to carry out our mission

to universalise beauty all over the world; respect for his vision, his intuition and the dream he formulated for the company; and fi-nally respect for his leadership, characterised by charisma, high standards and trust. In my personal capacity, I would also like to thank him for the elegant, discreet, understanding and always professional way in which he helped me take the helm.”

“Our dream is not over, and doubtless never will be.” Sir Lindsay Owen-Jones

Governance

the letter jUNE 2011

3

Focusing on major worldwide innovations ■ To attract a wider customer base, the group is focusing on major worldwide innovations with high value-added at the right price, which is a price that consumers consider to be fair for the innovation and quality we are offering them.

Extending our brands to include new product categories ■ Here also, the aim is to enlarge the consumer base we target so as to generate additional growth. Men’s skincare and deodorants are two examples.

In men’s skincare, we are taking advantage of booming sales in some new Markets, such as Asia, which represent more than half of the worldwide market.

Accelerating internationalisation ■ We are rapidly building up the penetration of our brands in the new Markets, and our presence in countries where L’Oréal did not previously operate, such as egypt, Pakistan and Kazakhstan.

Increase in spending on Research and Innovation and on Advertising and Promotion ■ Al l our major innovations have become resounding global success stor ies, and - because cosmetics is pr imar i ly technolo-gical - today we are convinced more than ever that i t i s th rough research and In-n o v a t i o n t h a t w e w i l l s t a n d o u t a n d c on t i nu e to ac c e n tu a te ou r wo r l d w id e leadership.

Reorganising the company and cost control ■ Our industrial policies have been profoundly adpated, with the centralisation of purchasing in four procurement centres, globally coordina-ted strategies and production facility upgrades. All these operational excellence initiatives have enhanced the company’s agility, performances, and responsiveness.

2010 hAS bEEN A YEAR of CoNquEST, DuRING WhICh YouR GRouP Took ADvANTAGE of ThE NEW STRATEGIC ThRuSTS

Strategy

Good start to the year■ Our group made a good start to the year with growth of +5.8% like-for-like and +9.3% based on reported figures. L’Oréal thus outperformed the market, particu-larly in the Luxury Products and Consumer Products divisions, which recorded strong growth. north America is accelerating strongly and the powerful dynamism of the new Markets is continuing with very strong growth rates in Latin America, Africa, Middle east and Asia, Pacific. These performances reflect the quality of our innovations, the force and diversity of the brand portfolio, and the right balance in our geographic positions.

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First quarter 2011 sales

e5,160 me4,722 m

2010 2011

+9.3%

Growth in first quarter

2011 sales

T h e S h a r e h o l d e r S ’ C o r n e r

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Winning over a billion new consumers ■ Our objective is to win over a bil l ion new consumers. The economic and geographic shif t taking p lace in the wor ld i s of fe r ing us unpre -cedented grow th prospects. The new Markets have become vast reser vo i rs of new consumers and th is t rend is on the increase. Today, L’Oréal makes the bulk of i ts sales with less than 15% of the world’s popula-tion. In the future, we should have as many customers in the Asia, Paci f ic zone as in europe and the United states combined.

Towards the universalisation of beauty■ This means reaching out to highly diverse populations with a universal vision of beauty. Universalisation does not mean globalisation or standardisation: for L’Oréal, beauty for everyone above all means beauty for each individual. research is at the heart of this challenge. We have set up hubs in each region of the world to group together all our research operations, which are veritable centres of expertise designed for the creation of tailor-made beauty. This marks a veritable turning point in the way innovation is conceived.

A human adventure ■ The group’s success reflects our ability to create a genuine team spirit amongst men and women with a keen sense of commitment, a pioneering and entrepreneurial temperament, who share the same strong corporate culture, which has remained intact despite the scaling up of the company’s ope-rations. All over the world, L’Oréal is the preferred French company of management students, and is number eleven in the rankings for global companies they would like to join. Furthermore, the quality of the company’s human resources management has been recognised in a number of countries, including France, where the group was awarded the Human Capital Trophy in 2010.

L’oRéAL IS ENTERING A NEW PhASE IN ITS hISToRY: ThAT of uNIvERSALISATIoN AND bEAuTY foR EvERYoNE

Outlook

Address by jean-paul agon (continued)

A model of responsible, sustainable and shared growthThe objective of serving two billion consumers is inseparable from the ambition to make L’Oréal a model of responsible, sustainable and shared growth. We have identified three priorities.

■ An ethical and responsible approach on an everyday basis. We work hard to raise our employees’ awareness of ethics. ■ Eco-sustainability. We have set ourselves the very ambitious target, between 2005 and

2015, of halving our CO2 emissions, water consumption and the volume of our waste, more than 95% of which is already recycled. More than 40% of our raw materials are plant-based. L’Oréal has furthermore been ranked the number one CAC 40 company by the WWF for its responsible use of paper and cardboard. ■ Shared development. Over the last twelve years, L’Oréal, with UNESCO, has been supporting women and science through the “For Women in Science” programme. Our corporate citizenship is constantly being reinforced, and our philanthropic initiatives, supported by the L’Oréal Corporate Foundation, have real impact in three key areas: science, education and solidarity.

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the letter jUNE 2011

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Strong dividend increase

RESoLuTIoNS ADOpTED by mORE ThAN 92% ■ Approval of the parent company financial statements (99.37%) and the consolidated financial statements for 2010 (99.38%) ■ Allocation of the company’s net income for 2010 and declaration of the dividend at €1.80 per share (99.84%) ■ renewal of tenures as director of Mrs Liliane bettencourt (97.27%), Mrs Annette roux (99.56%), and Mr Charles-Henri Filippi (99.55%). setting of the maximum amount of attendance fees at €1,300,000 (96.72%)■ Authorisation for the company to buy back its own shares (99.83%) ■ delegations of authority to the board of directors in view of a possible increase of the share capital with maintenance of preferential subscription rights (96.94%), and an eventual capital increase reserved for employees (99.58%)■ Authorisation to the board of directors to grant stock options (92.66%) and to make free grants of shares to employees and corporate officers (92.54%) subject to performance conditions

An AGM prepared for and with the shareholder

A representative sample of 4,000 shareholders received a questionnaire asking them to indicate

the topics they wished to see raised during the AGM. On March 22nd, 2011, the members of the

Individual Shareholder Consultation Committee examined the results of the survey.

Remuneration of corporate officers

Mr Kasriel, Chairman of the Human Resources and

Remuneration Committee, presented the remuneration of the

Chairman and Chief Executive Officer. You will find all the details

in Volume 2 of the 2010 Annual Report, on pages 81 to 86.

Dividend distribution rate 2005-2010 as % of profit(1)

1.00

+22.0%

+18.0%

+16.9%+4.3%

+4.2%

1.18

1.38 1.441.50

1.80

2005 2006 2007 2008 2009 2010

38.5%39.6%

41.1% 41.3%

43.9%

44.9%

+20%

HIGHLIGHTs

The “Shareholder Village” at the Annual General Meeting: 1. The Registered Shareholder corner 2. The Digital Communication corner 3. The Consultation Committee corner

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(1) Dividend distribution rate based on diluted net profit excluding non-recurrent items per share.

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T h e S h a r e h o l d e r S ’ C o r n e r

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AnsWers TO yOUr qUesTIOns

shAREhOLDERs’ qUEsTIONs ThE AGm wAs AN OppORTUNITy TO hAvE A hIGhLy INfORmATIvE q&A sEssION wITh shAREhOLDERs. DURING ONE hOUR, jEAN-pAUL AGON pUbLICLy ANswERED A NUmbER Of qUEsTIONs fROm ThE AUDIENCE. ExCERpTs.

ANIMAL TESTING

“ Where does L’Oréal stand today on animal testing? ”

■ Jean-Paul Agon: On April 11th, 2011, we of f icially opened the world’s f irst predictive evaluation centre at Gerland, near Lyon. This centre _ truly a pilot unit and the only one of its kind in the world _ makes L’Oréal the world leader in alternative methods, designed to put an end to animal testing. May I remind you that L’Oréal completely ended the testing of its finished products on animals in 1989, 14 years before withdrawal was made compulsory in europe. As you know, there is a regulation at european level aimed at stopping all animal tests, including those on ingredients. L’Oréal is preparing for this next step, and today it is the cosmetics company which is investing the most in technology and research to put a complete end to testing on animals, which in certain cases were made compulsory by health

authorities. I would like to reassure you that in this field, as in all others, L’Oréal sets out to be a trailblazer.

PRofITAbILITY of ThE LuxuRY PRoDuCTS DIvISIoN

“ How do your margins compare with those of your main competitors? Margins in luxury are the lowest of your four divisions: what are the prospects for an increase? ”

■ Jean-Paul Agon: Profitability in the Luxury division is considerably better than the profi-tability of our competitors who operate in the luxury sector. It may seem paradoxical that the Luxury division, the one with the most expensive products, is slightly less profitable than the others. There are several reasons for this, one being that, when we acquired

the yves saint Laurent company, for which profitability was lower, we knew there would be a dilution effect, and that it would take time for profits to return to a higher level. but this trend will support the group’s profit growth over the coming years.

TWo bILLIoN CoNSuMERS

“ You are aiming to double the number of users of L’Oréal products, to reach a total of two billion consumers. Does that mean you are looking to double sales? ”

■ Jean-Paul Agon: quite frankly, it is very dif f icult to point to a specif ic f igure today. sales are not going to double, because not all the new consumers we are going to win over – in countries such as China, India, In-donesia, Mexico, brazi l and russia – wi l l, at least in i t ia l ly, consume as much as the French, Americans, Germans or british. but in the long term yes, because I am convinced that the middle classes in these countries will eventually spend as much on cosmetics as their european counterparts.

1 - 2 - 4 - 5. Annual General Meeting3. Consultation Committee

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the letter jUNE 2011

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“Won’t you be forced to use L’Oréal as an umbrella brand, associated with the other brands, in view of the one billion new consumers?”

■ Jean-Paul Agon: I do not think this is the case at all, and in fact I am fully convinced that the opposite is true. What gives L’Oréal the power and the ability to meet all needs, and satisfy all desires in their infinite diversity, is pre-cisely the great diversity of the brands. L’Oréal is synonymous just as much with Garnier, which is a natural, accessible brand, as it is with Maybelline, a highly seductive brand, Lancôme, a luxury brand, and The body shop. This means that all the force of the L’Oréal strategy – and the secret which lies behind it – are on the contrary linked to the development of all the brands in parallel. China, where all our brands are pro-ving successful, is an excellent example of this: Lancôme is number one in luxury, Vichy is number one in pharmacies, L’Oréal Professionnel is num-ber one in hair salon channels, and Maybelline is number one in make-up. This is precisely the approach which enables us to achieve such high market shares.

INDuSTRIAL PoLICY

“You opened your first factory in Russia, and I was amazed to see that the East European countries are in fact contracting. Do you intend to move the centre of gravity of the factories even further to the east? ”

■ Jean-Paul Agon: We did indeed open a factory in russia last year. We already had a very substantial level of sales in russia, parti-

cularly in consumer products. Admittedly, the economy of the east european countries is slightly more fragile than it was before, but we are very confident about the development of our businesses in russia. More generally, in answer to your question about our industrial policy, it has always been L’Oréal’s policy to manufacture in the same place that we sell our products. This means there is no relocation of production whatsoever at L’Oréal. On the contrary, France for example – which accounts for only 10% of L’Oréal sales – represents more than 20% or 25% of units produced.

ACquISITIoNS

“ In the final years of his term of office, Sir Owen-Jones gave priority to internal growth. Are you thinking about external growth? ”

■ Jean-Paul Agon: sir Owen-Jones made many acquisit ions. Indeed he made some very fine ones: Maybelline, which is a magnifi-cent business, world number one in make-up; Matrix, which is now becoming a very important hair salon brand; redken; Kiehl’s and so on. Many of them have been very successful, and I personally see myself as continuing this tradi-tion. The only L’Oréal group brand which has not been acquired is L’Oréal. All the group’s other brands – Vichy, biotherm, Garnier, Maybelline and Lancôme – have been acquisitions. They were purchased, and then developed, and have become so well integrated that, in the end, no one remembers that they were acquisitions. In acquiring yves saint Laurent, we want to achieve the same aim. And we are going to continue, by finding strategic opportunities for

brands which wil l complement the existing portfolio and become an integral part of the group’s long-term strategy.

PREfERENTIAL DIvIDEND

“ The company intends to offer a preferential dividend increased by 10% in 2013. Isn’t it possible to raise the dividend right now? ”

■ Christian Mulliez: shareholders who have held registered shares for more than two years, as stipulated by French law, will be able to take advantage, for the first time, of a +10% preferential dividend. This will not take place in 2013 but in 2012, on the basis of 2011 earnings.

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T h e S h a r e h o l d e r S ’ C o r n e r

LIsTenInG TO yOUr VIeWs

sHAre PrICeJanuary 1st, 2007 to May 31st, 2011

Registered.in.France.as.a.«Société.Anonyme».with.registered.capital.of.120,198,517.euros.-.632.012.100.RCS.Paris.-.NAF.Code:.2042.Z.-.ISIN.Code:.FR0000120321.Registered.office:.14,.rue.Royale,.75008.Paris,.France.-.Headquarters:.41,.rue.Martre,.92117.Clichy,.France.-.Tel..+33.1.40.14.80.50.

For.more.information,.please.contact:.L’Oréal,.Financial.Communications.Department,.41,.rue.Martre,.92117.Clichy,.France.or.consult.the.Shareholders’.Corner.on.the.Internet.site.www.loreal-finance.com.or.the.mobile.website.loreal-finance.mobi.from.your.mobile.phone..

Photograph.credits:.Frédéric.Réglain.(p.1,.2,.5,.6,.7.and.8),.©.Cyrille.Coussat.for.L’Oréal.(p.1,.3.and.8),.©.Stéphane.de.Bourgies.(p.2),.Photographer.:.KK.FONG.-.Wardrobe.Stylist.:.Jerri..Illustrator:.Yoko.Furusho.(p.3),.©.Nayyar.Saeed.for.L’oréal.(p.3),.©.Christian.Pinzon.for.L’Oréal.(p.4),.Stergiakis,.Panos.(p.4)....

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4007 points

L’OréalCAC 40 (reindexed on L’Oréal)

€75.90€84.24

€50.19

€65.04

€86.91

€78.00

5542 points

€87.43

Shareholder Meetings Second Half of 2011

1 Nice: September 15th 2 Annecy: September 19th 3 Bordeaux: September 26th 4 Rennes: October 10th 5 Brussels: November 28th 6 Strasbourg: December 14th

+15.19 % L'Oréal share variation since January 1st, 2007

- 27.69 % CAC 40 variation since January 1st, 2007

EACh YEAR WE ARE DETERMINED To IMPRovE ThE quALITY of INfoRMATIoN AND SERvICE PRovIDED To ShAREhoLDERS

jean-Paul Agon at the AGM on April 22nd

CoNSuLTATIoN CoMMITTEE MEMbERS vISIT A L’oRéAL RESEARCh CENTRE

■ The members of the Individual shareholder Consultation Committee accepted an invita-tion to visit the Charles Zviak research Centre near Par is on March 22nd. The par t ic ipants were able to visit the laborator ies alongside L’Oréal scienti f ic communication staf f, who discussed with them topics that included hair metrology and reconstructed skin.

PrACTICAL InFOrMATIOn

RECEIvE ThE L’oRéAL ShAREhoLDERS’ E-NEWSLETTER!

■ With the L’Oréal shareholders’ e-newslet ter, take a mul t imedia look at the latest L’Oréal headline news. Two i s sues have a l ready been released this year, focusing on the 2010 annual results and the Annual General Meeting. don’t miss the next edition of the e-newsletter!To register, contact us through our website www.loreal-finance.com.

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Visit the shareholders’ e-magazine online !■ To build an ever closer relationship with its shareholders, L’Oréal is again innovating with a practical and informative multimedia magazine, which is also fun to read. To keep up with the latest group news, just go online and find out more about the highlights of the L’Oréal adventure worldwide: the latest published results, the key shareholder events, the international brand saga, and the latest ad-vances in research and Innovation. Consult the reports, interviews, shareholder views and photos, or watch the films. Visit: magazine.loreal-finance.com on your computer, smartphone or tablet!

T h e S h a r e h o l d e r S ’ C o r n e r