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RCH
RCH - Richemont Securities AG - Results For The Six Months Ended
30 September 2007
RICHEMONT SECURITIES AG
(Incorporated in Switzerland)
Share code: RCH
ISIN: CH0013157380
RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
Richemont, the Swiss luxury goods group, announces its unaudited results for
the six-month period ended 30 September 2007.
Financial highlights
- Sales increased by 11 per cent to EUR 2 548 million.
- Operating profit from the luxury goods businesses increased by 28 per cent
to EUR 560 million.
- Net profit, including the Group`s share of the results of British American
Tobacco, increased by 28 per cent to EUR 824 million.
- Cash generated by the Group`s luxury goods operations was EUR 268 million.
Sales
Group sales increased by 11 per cent to EUR 2 548 million. At constant exchange
rates, sales growth was 16 per cent, including particularly strong growth in
the Asia-Pacific region.
Operating profit
Operating profit from Richemont`s luxury goods businesses increased by 28 per
cent to EUR 560 million. The significant increase reflected the increase in
sales, an improvement in gross margin and operating leverage.
British American Tobacco (`BAT`)
The Group`s share of the post-tax profit of its associated company, British
American Tobacco (`BAT`), increased by 22 per cent to EUR 334 million.
The Group`s share of the underlying post-tax profit of BAT before non-recurring
items in both years increased by 10 per cent to EUR 332 million.
Net profit
Net profit, including the Group`s share of the results of British American
Tobacco, increased by 28 per cent to EUR 824 million. Earnings per unit
attributable to unitholders on a diluted basis increased by 27 per cent to EUR
1.445. Excluding the impact of non-recurring items reported by British American
Tobacco in both years, net profit attributable to unitholders increased by 22
per cent to EUR 821 million.
Cash position
During the period, cash generated by operations was EUR 268 million and the
Group received dividends from BAT totalling EUR 338 million. Net cash at 30
September 2007, after the payment of the ordinary and special dividends of EUR
689 million, amounted to EUR 904 million.
Group results
in EUR millions September 2007 September 2006
Sales 2 548 2 303 + 11 %
Cost of sales (893) (840)
Gross profit 1 655 1 463 + 13 %
Net operating expenses (1 095) (1 027) +7%
Operating profit 560 436 + 28 %
Net financial income 38 9
Profit before taxation 598 445
Taxation (108) (74)
Net profit - parent and
subsidiaries 490 371 + 32 %
Share of post-tax profit of
associates 334 274 + 22 %
Net profit 824 645 + 28 %
Analysed as follows
Net profit attributable to
unitholders 823 645
Net profit attributable to
minority interests 1 -
824 645
Earnings per unit - diluted
basis EUR 1.445 EUR 1.141 + 27 %
There were no significant one-off items included in the results of the parent
and its subsidiaries during either the current or comparative periods. However,
the Group`s share of the results of its principal associate, British American
Tobacco, includes non-recurring items reported by that entity. Further details
are given on page 10 of this report.
Including the Group`s share of results from associates, the overall impact of
non-recurring items, after taxation and minority interests, on net profit was a
gain of EUR 2 million (2006: a loss of EUR 29 million). Excluding non-recurring
items, net profit attributable to unitholders increased by 22 per cent to EUR
821 million from EUR 674 million in the comparative period.
This document contains forward-looking statements as that term is defined in
the United States Private Securities Litigation Reform Act of 1995.
Words such as `may`, `should`, `estimate`, `project`, `plan`, `believe`,
`expect`, `anticipate`, `intend`, `potential`, `goal`, `strategy`, `target`,
`will`, `seek`, and similar expressions may identify forward-looking
statements. Such forward-looking statements are not guarantees of future
performance. Actual results may differ materially from the forward-looking
statements as a result of a number of risks and uncertainties, many of which
are outside the Group`s control. Richemont does not undertake to update, nor
does it have any obligation to provide updates of or to revise, any
forward-looking statements.
Executive Chairman`s commentary
The Group`s results for the first half of the year are very satisfactory.
Sales of luxury goods increased by 11 per cent and further margin improvements
have resulted in operating profit growth of 28 per cent to EUR 560 million for
the six-month period. In general, the market for luxury goods has remained
favourable and Richemont has been well positioned to take advantage of this
with its first-class portfolio of Maisons and broad geographic footprint.
Operating performance
The Jewellery Maisons reported 9 per cent sales growth. Cartier continued to
develop its business, both in established markets and in new markets such as
China and Russia. The sales performance at Van Cleef & Arpels was very strong
during the period under review, albeit from a much smaller base than Cartier.
Sales of the Group`s Specialist Watchmakers grew by 18 per cent during the
period, with excellent performances reported by IWC and Jaeger-LeCoultre.
The strong demand for watches featuring high quality mechanical movements seen
by the Swiss watch industry as a whole has led to some supply constraints in
terms of components. Dependent upon the level of demand, these shortages may
limit sales of specific product ranges during the second half of this year.
Sales of the Writing Instrument Maisons increased by 11 per cent, an excellent
achievement considering the high comparative figures from 2006 linked to
Montblanc`s centenary year.
In the Leather and Accessories businesses, Alfred Dunhill saw growth in sales
and lower operating losses during the period under review. Lancel reported
lower sales, in connection with the planned repositioning of its product
ranges. Both Maisons are moving in the right direction, in line with their
respective business plans.
In terms of the Group`s other businesses, Chloe is in a consolidation phase
after seeing extremely high rates of growth in recent years. The Maison`s store
opening programme is continuing, reflecting the international recognition of
the Chloe name and its potential in new markets.
British American Tobacco (`BAT`)
The Group`s share of BAT`s results increased by 22 per cent in euro terms
compared to the first six months of last year and BAT contributed EUR 334
million to the Group`s net profit for the period. Excluding restructuring
charges and one-off items in both periods, the Group`s share of BAT`s results
increased by 10 per cent to EUR 332 million.
Over the six month period, the Group received dividends from BAT amounting to
EUR 338 million. This represents a 22 per cent increase in cash receipts,
reflecting the board of BAT`s commitment to return profits to shareholders.
Outlook for the year
Sales for the month of October continued the pattern established in the first
six months of the year, showing an increase of 11 per cent at actual exchange
rates. At constant exchange rates, underlying growth was 18 per cent for the
month. Sales growth in Europe and the Asia-Pacific region was above the level
established during the first six months of the year, whereas constant currency
sales growth in the Americas and Japan was lower at 11 per cent and 4 per cent,
respectively. The results of any one month are not necessarily a reliable
indicator of broader trends but October`s figures are nonetheless encouraging
ahead of the important pre-Christmas trading season.
Overall, the Group achieved a high level of profitability over the first half
of the year. However, recent, marked movements in exchange rates linked to the
current uncertainties in financial markets will make the second half of the
year more testing. Additionally, the Group performed particularly well over the
Christmas season last year, setting tough comparative figures. Given the appeal
of our products, the strength of the Maisons and the financial position of the
Group as a whole, I nonetheless look forward with a degree of confidence and,
in the absence of any significant deterioration in debt and equity markets,
expect that the Group`s results for the full financial year will be comfortably
ahead of last year.
Johann Rupert
Executive Chairman
Geneva, 16 November 2007
Business Review
Overview
in EUR millions September 2007 September 2006
Sales 2 548 2 303 + 11 %
Cost of sales (893) (840)
Gross profit 1 655 1 463 + 13 %
Net operating expenses (1 095) (1 027) +7%
Selling and distribution expenses (565) (515) + 10 %
Communication expenses (282) (262) +8%
Administration expenses (255) (248) +3%
Other income/(expenses) 7 (2) -
Operating profit 560 436 + 28 %
Sales of luxury goods during the six-month period increased by 11 per cent to
EUR 2 548 million. This performance reflected both the strength of the Group`s
Maisons, market conditions and very strong demand for mechanical watches.
Overall sales increased by 16 per cent in constant currency terms.
The improvement in gross margin reflected product and channel mix effects,
product pricing adjustments and the favourable movement in the euro:Swiss franc
exchange rate, which combined to more than offset an otherwise negative foreign
exchange environment. Sales growth and the improved gross margin generated a 13
per cent increase in gross profit.
Net operating expenses increased by 7 per cent overall. The main increases in
operating expenses were in selling and distribution expenses and communication
costs. The 10 per cent growth in selling and distribution expenses was broadly
in line with the growth in sales. Communication costs increased by 8 per cent
but, as a percentage of sales, were lower than the comparative period at some
11.1 per cent of sales.
There were no significant one-off items included in the operating results
during either the current or comparative periods.
Operating profit increased by 28 per cent to EUR 560 million with the operating
margin improving by 3.1 percentage points to 22.0 per cent for the period under
review.
Analysis of sales and operating results by business area
Sales and the operating results of the Group`s main areas of activity were as
follows:
in EUR millions September 2007 September 2006
Sales
Jewellery Maisons 1 277 1 170 +9 %
Specialist Watchmakers 707 597 + 18 %
Writing Instrument Maisons 284 257 + 11 %
Leather and Accessories Maisons 137 136 +1 %
Other Businesses 143 143 +0 %
Total sales 2 548 2 303 + 11 %
Operating results
Jewellery Maisons 367 328 + 12 %
Specialist Watchmakers 218 140 + 56 %
Writing Instrument Maisons 42 39 +8 %
Leather and Accessories Maisons (9) (12) + 25 %
Other Businesses 11 15 -
629 510 + 23 %
Corporate (69) (74) -7%
Central support services (74) (67) + 10 %
Other income/(expenses) 5 (7) -
Operating profit 560 436 + 28 %
Jewellery Maisons
Sales increased by 9 per cent overall. Sales growth at Cartier benefited from
the successful launch of the Ballon Bleu watch collection and the Marcello bag.
The Maison`s Inde MystErieuse high jewellery collection was presented in
September, reinforcing Cartier`s long relationship with India.
Despite the contribution to sales related to Van Cleef & Arpels` centenary
celebrations in the comparative period, the Maison continued to report very
strong sales growth in the first six months of the current year.
The Jewellery Maisons` total operating profit increased by 12 per cent to EUR
367 million, representing an operating margin of 29 per cent.
Specialist Watchmakers
The Group`s specialist watchmaking Maisons reported an overall 18 per cent
increase in sales and a 56 per cent increase in operating profit. As a
consequence, the operating margin increased from 23 per cent to 31 per cent.
The seven Maisons continued to develop new markets and reported very good
trading in established markets. The very strong rate of sales growth reflects
demand for both classic watches and the new collections presented at the 2007
Salon International de la Haute Horlogerie in Geneva. Jaeger-LeCoultre
benefited from sales of its Master Compressor line. The redesigned Pilot
collection from IWC and Panerai`s watches featuring in-house movements were
also in demand. Piaget`s reputation as jeweller and watchmaker was enhanced by
additions to its Limelight Party collection while Vacheron Constantin enjoyed
notable success with its relaunched Patrimony collection, featuring the Poincon
de Geneve hallmark. Baume & Mercier launched its trendsetting Hampton Square
Magnum, while more classical designs from A. Lange & Sohne included the Lange
31.
Writing Instrument Maisons
Following its centenary year, Montblanc`s increasingly diversified portfolio of
luxury goods, including writing instruments, jewellery, watches and leather
goods, provided the basis for strong retail sales growth. Operating profit
increased by 8 per cent and the Maisons` operating margin was in line with the
comparative period at 15 per cent.
Leather and Accessories Maisons
Alfred Dunhill`s sales increased overall, with good growth in sales through its
own retail network. Alfred Dunhill`s operating losses for the six months
amounted to EUR 5 million, significantly lower than in the comparative period.
In connection with a planned product repositioning programme, Lancel reported
lower sales than the comparative period. The programme includes higher price
points and gross margin for new products. Compared with the same six months
last year, operating losses were marginally higher.
Other businesses
Sales of other businesses were in line during the six-month period with Chloe
up against strong prior period comparatives, which benefited significantly from
sales of its Paddington bag collection.
Corporate
Corporate principally represent the costs of central management, marketing
support and other central functions, as well as other expenses and income which
are not allocated to specific business areas, including foreign exchange
hedging gains and losses.
Central support service costs increased by 10 per cent during the period. This
increase was more than offset by the effects of the foreign exchange hedging
programme, leading to a 7 per cent reduction in net corporate costs overall.
Operating profit
Operating profit for the period increased by 28 per cent to EUR 560 million.
The continued growth in sales, combined with the improvement in gross margin
and continuing cost control, has resulted in a 3.1 percentage point improvement
in the operating profit margin from 18.9 per cent to 22.0 per cent.
Sales by region
Movement at:
Constant Actual
exchange exchange
in EUR millions September 2007 September 2006 rates rates
Europe 1 092 975 + 14 % + 12 %
Asia-Pacific 612 499 + 30 % + 23 %
Americas 506 478 + 13 % +6 %
Japan 338 351 +7 % -4 %
2 548 2 303 + 16 % + 11 %
Europe
Sales in European markets, which together accounted for 43 per cent of total
sales, increased by 12 per cent. The European region includes the Russian and
Middle Eastern markets, where sales growth was very strong.
Asia-Pacific
Demand for luxury goods, particularly watches, in the Asia-Pacific region
remained excellent. Overall sales in the important markets of Hong Kong and
mainland China increased by 33 per cent to EUR 367 million. Elsewhere in the
region, sales growth rates were also good. At constant exchange rates, sales
growth in the region was 30 per cent.
Americas
The further weakening of the average euro: dollar exchange rate, from 1.27 in
the prior period to 1.36 in the current six month period, reduced sales growth
in the region from 13 per cent in dollar terms to 6 per cent in euro terms.
Sales in the United States amounted to EUR 391 million during the period, an
increase of 4 per cent in euro terms.
Japan
A 7 per cent sales increase in yen terms was more than offset by movements in
the euro: yen exchange rate, leading to a reported decrease for the period of 4
per cent at actual exchange rates. In yen terms, double-digit growth in the
specialist watchmaker business area was partly offset by slower sales growth in
other areas. Sales in Japan accounted for 13 per cent of Group sales during the
period.
Sales by distribution channel
in EUR millions September 2007 September 2006
Retail 995 904 + 10 %
Wholesale 1 553 1 399 + 11 %
2 548 2 303 + 11 %
Retail
Retail sales increased by 10 per cent to EUR 995 million. During the six-month
period, the total retail network increased by 64 stores to 1 218 boutiques.
The total increase included 22 internal stores. A further 42 external boutiques
were either opened or were reclassified as boutiques, having previously been
classified as `shop-in-shops` or `corners`. At the end of September, the
Group`s Maisons owned 695 boutiques, with a further 523 points of sale being
operated by franchise partners.
Wholesale
Wholesale sales increased by 11 per cent overall, with particularly strong
growth among the specialist watchmakers. Wholesale growth reflects the
weighting of sales growth by product area and by Maison as well as the impact
of the expansion of the Group`s own retail operations.
Summary income statement and results of associates
in EUR millions September 2007 September 2006
Operating profit 560 436
Finance income 38 9
598 445
Share of post-tax results of associated
undertakings 334 274
Before non-recurring income / (expenses) 332 303
Share of non-recurring income / (expenses) 2 (29)
Profit before taxation 932 719
Taxation (108) (74)
Net profit 824 645
Net financial income amounted of EUR 38 million in the period under review.
Interest income on deposits and financial investment disposal gains were partly
offset by interest on borrowings and net foreign exchange losses.
Excluding its share of the results of its investment in British American
Tobacco, the Group`s effective taxation rate was 18.1 per cent, reflecting the
anticipated full-year rate. The effective taxation rate in general reflects the
lower level of corporate taxes in Switzerland compared to other jurisdictions.
The increase in the effective taxation rate compared to the prior period was
largely due to the first-time recognition of specific deferred tax assets in
the prior period.
Associated companies
The Group`s principal associated company is British American Tobacco plc.
Richemont has an effective interest of 19.3 per cent in British American
Tobacco, with a market value at 30 September 2007 of EUR 9 785 million.
In addition, the Group has a number of smaller investments which are classified
as associated companies. These other associated companies have no material
impact on the Group`s financial statements.
British American Tobacco (`BAT`)
For the six-month period ended 30 September 2007, the Group`s share of the
results of BAT increased to EUR 334 million. Excluding non-recurring items from
the Group`s share of the results of its associates, attributable profit
increased by 10 per cent. Non- recurring items primarily related to
restructuring costs, and net asset disposal gains.
The results in the period reflected a 19.1 per cent interest in BAT`s results
for the three months to June 2007 and a 19.3 per cent interest for the three
months to September 2007. The results for the prior period reflected an 18.8
per cent interest in BAT`s results for the three months to June 2006 and an
18.9 per cent interest for the three months to September 2006. The increase in
the Group`s interest reflects the impact of BAT`s own share buy-back programme,
which Richemont does not participate in.
As a U.K.-based company, BAT reports in sterling. The average sterling-euro
exchange rate during the period was broadly in line with the average rate in
the comparative six-month period. Accordingly, the exchange rate impact on the
Group`s share of BAT`s sterling-denominated results was negligible.
In cash flow terms, during the six months under review, Richemont received
dividends from BAT totalling EUR 338 million (2006: EUR 278 million).
BAT has a 31 December year-end but reports to its shareholders on a quarterly
basis. The following commentary is condensed from BAT`s financial report for
the nine months ended 30 September 2007. More complete information in respect
of BAT, including copies of the annual and quarterly reports, is available from
the BAT website at www.bat.com.
The reported profit from BAT`s operations was 19 per cent higher at GBP 2 304
million or 8 per cent higher if non-recurring items are excluded. However,
profits from operations at comparable rates of exchange and excluding
non-recurring items would have been 14 per cent higher, with all regions
contributing to this result.
In Europe, profit at GBP 650 million was up GBP 56 million mainly as a result of
higher margins in Russia, Romania, Hungary and Spain, partly offset by the
impact of reduced volumes in a number of markets and weaker exchange rates. At
comparable rates of exchange, profits would have increased by GBP 67 million or
11 per cent.
In BAT`s Asia-Pacific region, profit rose by GBP 32 million to GBP 498 million,
mainly attributable to strong performances from Australasia, South Korea,
Vietnam, Pakistan and Bangladesh, despite the adverse impact of exchange. At
comparable rates of exchange, profit would have increased by GBP 47 million or
10
per cent.
Profit in Latin America increased by GBP 103 million to GBP 550 million due to
exceptionally strong performances in Brazil and Venezuela, partly offset by
lower profit in Mexico and the adverse impact of weaker local currencies. At
comparable rates of exchange, profit would have grown by GBP 127 million or 28
per cent. Profit in the Africa and Middle East region fell by GBP 8 million to
GBP 354 million due to exchange rate movements. However, at comparable rates of
exchange, profit would have increased by GBP 45 million or 12 per cent with
strong performances from South Africa and Nigeria.
The profit from BAT`s America-Pacific region decreased by GBP 12 million to GBP
320
million as a result of lower profit in Canada and the impact of weaker exchange
rates. At comparable rates of exchange, profit would have increased by GBP 15
million or 5 per cent.
BAT`s share of the post-tax results of its associates decreased by GBP 13
million
to GBP 335 million. Excluding the exceptional item in 2006, its share of the
post-tax results of associates was slightly up at GBP 335 million but would have
been 8 per cent higher at comparable rates of exchange. The contribution from
Reynolds American, excluding the benefit from the favourable resolution of tax
matters in 2006, was GBP 10 million lower due to the impact of the weaker US
dollar. BAT`s associate in India, ITC, continued its strong growth and its
contribution rose by GBP 12 million to GBP 77 million.
BAT`s adjusted, diluted earnings per share for the nine- month period rose 9
per cent to 82.00 pence, principally as a result of the strong operating profit
performance, partly offset by the adverse impact from foreign exchange
movements. Some 38 million shares were repurchased in the nine months at a cost
of GBP 612 million and at an average of 1630 pence per share.
Analysis of net profit
in EUR millions September 2007 September 2006
Net profit from parent and subsidiaries 490 371
Share of post-tax profit of associates
Net profit before non-recurring income /
(expenses) 332 303
Non-recurring income / (expenses) 2 (29)
Net profit - share of associates 334 274
Net profit of the Group 824 645
Analysed as follows:
Parent, subsidiaries and share of
associates before non-recurring items 822 674
Non-recurring income/ (expenses) 2 (29)
Net profit of the Group 824 645
Earnings per unit excluding non-recurring
income / (expenses)
Basic EUR 1.463 EUR 1.211
Diluted basis EUR 1.442 EUR 1.193
There were no significant one-off items included in the results from the parent
and its subsidiaries during either the current or comparative periods.
The non-recurring items included in the Group`s share of the results of its
associate, British American Tobacco, amounted to a net gain of EUR 2 million in
the period under review (2006: a net charge of EUR 29 million). Non-recurring
items in BAT`s subsidiaries and those of its own associated companies, which
are presented on a post-tax basis, primarily relate to restructuring costs and
net asset disposal gains.
The presentation of BAT`s non-recurring items in Richemont`s analysis of its
consolidated results was revised in the financial year ended 31 March 2007.
Accordingly, the non-recurring expense reported for the comparative period has
been revised from a charge of EUR 39 million at the pre-tax level reported last
year to a post-tax charge of EUR 29 million. The overall contribution from BAT
on an IFRS basis remains unchanged. The presentational change has no effect on
Richemont`s IFRS-reported results or balance sheet. The comparative, net profit
of the Group before non-recurring items has been amended together with the
related underlying earnings per unit. The revised underlying net profit
attributable to unitholders for the six month period ended 30 September 2006 is
EUR 674 million. The amount previously reported was EUR 684 million.
Excluding all such non-recurring items from both periods, net profit in the six
months to 30 September 2007 would have been EUR 822 million compared to EUR 674
million in the prior period, representing an increase of 22 per cent. On the
same basis, diluted earnings per unit would have increased by 21 per cent from
EUR 1.193 to EUR 1.442.
Cash flow
in EUR millions September 2007 September 2006
Operating profit 560 436
Depreciation and other non-cash items 101 97
Earnings before interest, tax and
depreciation 661 533
Increase in working capital (393) (298)
Cash generated from operations 268 235
Dividends received from associate 338 278
Returns on investments and servicing of finance 19 16
Taxation paid (71) (97)
Net acquisitions of fixed assets (108) (72)
Other investing activities, net 12 (71)
Net cash inflow before financing
activities 458 289
Dividends paid to unitholders
Normal dividend (358) (335)
Special dividend (331) (278)
Increase in borrowings 35 35
(Payments)/proceeds relating to treasury
units, net (37) 12
Other financing activities (2) (2)
Decrease in cash, cash equivalents and
short-term borrowings (235) (279)
Cash and cash equivalents at the
beginning of period 1 623 1 416
Exchange rate effects 13 12
Cash and cash equivalents at the end of period 1 401 1 149
Borrowings (497) (548)
Net cash 904 601
The Group`s net cash position decreased from EUR 1 141 million at 31 March 2007
to EUR 904 million at 30 September 2007. The decrease largely reflected the
payment of the regular dividend and the special dividend at the end of
September.
During the period, cash generated from operations amounted to EUR 268 million
(2006: EUR 235 million). The increase in operating profit was partially offset
by increases in working capital requirements. An increase in inventories
reflected higher raw material purchases and work in progress. An increase in
debtors reflected the growth in wholesale sales during the period.
Dividends received from associates, namely British American Tobacco, comprise
the final dividend in respect of its financial year ended 31 December 2006,
received in May 2007 and the interim dividend for the 2007 financial year,
received in September 2007.
Investing activities during the period included further investments in the
Group`s worldwide distribution network and European manufacturing facilities,
including the acquisition of the watch component production facilities of
Manufacture Roger Dubuis SA, Geneva. The cash outflow from these investing
activities was more than offset by proceeds from the disposal of financial
assets.
The dividends paid in the current period represent the dividends paid by
Compagnie Financiere Richemont SA and Richemont SA, Luxembourg for the year
ended 31 March 2007. The withholding tax payable on the part of the dividend
paid by Compagnie Financiere Richemont SA was remitted to the Swiss authorities
in October.
In order to hedge executive stock option grants, the Group exercised options to
purchase Richemont units for a consideration of EUR 60 million and bought
further call options over Richemont `A` units for a consideration of
EUR 14 million. The cost of these purchases was partly offset by proceeds
from the exercise of stock options by executives, leading to a net cash outflow
of EUR 37 million.
Summarised balance sheet
in EUR millions 30 September 2007 31 March 2007
Non-current assets
Fixed assets 950 922
Investment in associated undertakings 3 318 3 506
Other non-current assets 510 546
4 778 4 974
Net current assets 1 930 1 594
Net operating assets 6 708 6 568
Net cash 904 1 141
Cash and cash equivalents 1 401 1 623
Borrowings (497) (482)
Other non-current liabilities (210) (196)
7 402 7 513
Equity
Unitholders` equity 7 399 7 511
Minority interests 3 2
7 402 7 513
At 30 September 2007, the Group`s interest in British American Tobacco (`BAT`)
ordinary shares amounted to 19.3 per cent and BAT`s market capitalisation,
based on 2 025 million ordinary shares in issue, amounted to EUR 50 808 million
(GBP 35 483 million). The fair value of the Group`s investment in BAT therefore
amounted to EUR 9 785 million. The carrying value of the investment amounted to
EUR 3 309 million on that date. Details of movements in the Group`s effective
interest in BAT ordinary shares during the period are given in the notes to the
consolidated interim financial statements. The carrying value of investments in
other associates at 30 September 2007 was EUR 9 million (2006: EUR 14 million).
Net current assets increased by EUR 336 million compared to March 2007. The
value of net inventories increased by 9 per cent to EUR 1 885 million. The
inventory increase largely reflects the purchase of raw materials and an
increase in the work in progress inventories. Consequently, the inventory
rotation rate has slowed by 0.4 months to 15.8 months. Trade debtors increased
during the six months, reflecting both the seasonality of wholesale sales and
the growth in wholesale sales reported during the period under review.
At 30 September 2007, net cash amounted to EUR 904 million. Cash balances were
primarily denominated in euros, whereas borrowings were spread across the
principal currencies of the countries in which the Group has significant
operations, namely, euros, yen, US dollars, Hong Kong dollars and Swiss francs.
Borrowings reflect the financing of net operating assets in the countries
concerned.
Norbert Platt Richard Lepeu
Group Chief Executive Officer Group Finance Director
Compagnie Financiere Richemont SA
Geneva, 16 November 2007
Unaudited consolidated interim financial statements at 30 September 2007
Richemont
Consolidated balance sheet
30 September 2007 31 March 2007
ASSETS Note EUR m EUR m
Non-current assets
Property, plant and equipment 839 808
Intangible assets 111 114
Investments in associated
undertakings 5 3 318 3 506
Deferred income tax assets 269 268
Financial assets held at fair
value through profit or loss 56 113
Other non-current assets 185 165
4 778 4 974
Current assets
Inventories 1 885 1 732
Trade and other receivables 852 658
Derivative financial
instruments 30 15
Prepayments and accrued income 135 121
Cash at bank and on hand 1 799 1 881
4 701 4 407
Total assets 9 479 9 381
EQUITY AND LIABILITIES
Equity
Share capital 334 334
Participation reserve 645 645
Treasury units (275) (264)
Hedge and unit option reserves 173 151
Cumulative translation
adjustment reserve (20) 113
Retained earnings 6 542 6 532
Total unitholders` equity 7 399 7 511
Minority interest 3 2
Total equity 7 402 7 513
LIABILITIES
Non-current liabilities
Borrowings 188 203
Deferred income tax liabilities 34 32
Retirement benefit obligations 105 103
Provisions 71 61
398 399
Current liabilities
Trade and other payables 459 488
Current income tax liabilities 195 160
Borrowings 15 28
Derivative financial
instruments 2 2
Provisions 86 90
Accruals and deferred income 230 192
Short-term loans 294 251
Bank overdrafts 398 258
1 679 1 469
Total liabilities 2 077 1 868
Total equity and liabilities 9 479 9 381
The notes following these statements are an integral part of these consolidated
interim financial statements.
Consolidated income statement
Six months to Six months to
30 September 2007 30 September 2006
Notes EUR m EUR m
Sales 4 2 548 2 303
Cost of sales (893) (840)
Gross profit 1 655 1 463
Selling and distribution
expenses (565) (515)
Communication expenses (282) (262)
Administrative expenses (255) (248)
Other operating income /
(expenses) 6 7 (2)
Operating profit 560 436
Finance costs 7 (45) (28)
Finance income 7 83 37
Share of post-tax profit
of associated undertakings 5 334 274
Profit before taxation 932 719
Taxation 9 (108) (74)
Net profit 824 645
Attributable to:
Unitholders 823 645
Minority interest 1 -
824 645
Earnings per unit for
profit attributable to
unitholders
during the period
(expressed in EUR per unit)
- basic 8 1.467 1.159
- diluted 8 1.445 1.141
The notes following these statements are an integral part of these consolidated
interim financial statements.
Consolidated statement of changes in equity
Equity attributable to unitholders
Unitholders` Treasury Other
capital units reserves
EUR m EUR m EUR m
Balance at 1 April 2006 979 (408) 72
Currency translation adjustments
Cash flow hedges: - - -
- net gains - - 14
- recycle to income statement - - 4
Net share of expense of associated
undertakings recognised directly in equity - - -
Tax impact
on unit option scheme - - 22
Net income / (expense) recognised
directly in equity - - 40
Net profit - - -
Total recognised income - - 40
Acquisition of minority interest - - -
Net share of transactions of associated
undertakings with their equity holders - - -
Net changes in treasury units - 42 -
Employee unit option scheme - - 16
Dividends paid - - -
Balance at 30 September 2006 979 (366) 128
Balance at 1 April 2007 979 (264) 151
Currency translation adjustments - - -
Cash flow hedges:
- net gains - - 10
- recycle to income statement - - (5)
Net share of income of associated
undertakings recognised directly in equity - - -
Tax impact
on unit option scheme - - 1
Net income / (expense) recognised
directly in equity - - 6
Net profit - - -
Total recognised income / (expense) - - 6
Net share of transactions of associated
undertakings with their equity holders - - -
Net changes in treasury units - (11) -
Employee unit option scheme - - 16
Dividends paid - - -
Balance at 30 September 2007 979 (275) 173
Equity attributable to unitholders
Cumulative
translation
adjustment Retained
reserve earnings Total
EUR m EUR m EUR m
Balance at 1 April 2006 38 6 092 6 773
Currency translation adjustments
Cash flow hedges: 101 - 101
- net gains - - 14
- recycle to income statement - - 4
Net share of expense of associated
undertakings recognised directly in equity - (24) (24)
Tax impact
on unit option scheme - - 22
Net income / (expense) recognised
directly in equity 101 (24) 117
Net profit - 645 645
Total recognised income 101 621 762
Acquisition of minority interest - - -
Net share of transactions of associated
undertakings with their equity holders - (70) (70)
Net changes in treasury units - (30) 12
Employee unit option scheme - - 16
Dividends paid - (613) (613)
Balance at 30 September 2006 139 6 000 6 880
Balance at 1 April 2007 113 6 532 7 511
Currency translation adjustments (133) - (133)
Cash flow hedges:
- net gains - - 10
- recycle to income statement - - (5)
Net share of income of associated
undertakings recognised directly in equity - 29 29
Tax impact
on unit option scheme - - 1
Net income / (expense) recognised
directly in equity (133) 29 (98)
Net profit - 823 823
Total recognised income / (expense) (133) 852 725
Net share of transactions of associated
undertakings with their equity holders - (119) (119)
Net changes in treasury units - (23) (34)
Employee unit option scheme - - 16
Dividends paid - (700) (700)
Balance at 30 September 2007 (20) 6 542 7 399
Minority Total
interest equity
EUR m EUR m
Balance at 1 April 2006 8 6 781
Currency translation adjustments
Cash flow hedges: - 101
- net gains - 14
- recycle to income statement - 4
Net share of expense of associated
undertakings recognised directly in equity - (24)
Tax impact
on unit option scheme - 22
Net income / (expense) recognised
directly in equity - 117
Net profit - 645
Total recognised income - 762
Acquisition of minority interest 3 3
Net share of transactions of associated
undertakings with their equity holders - (70)
Net changes in treasury units - 12
Employee unit option scheme - 16
Dividends paid - (613)
Balance at 30 September 2006 11 6 891
Balance at 1 April 2007 2 7 513
Currency translation adjustments - (133)
Cash flow hedges:
- net gains - 10
- recycle to income statement - (5)
Net share of income of associated
undertakings recognised directly in equity - 29
Tax impact
on unit option scheme - 1
Net income / (expense) recognised
directly in equity - (98)
Net profit 1 824
Total recognised income / (expense) 1 726
Net share of transactions of associated
undertakings with their equity holders - (119)
Net changes in treasury units - (34)
Employee unit option scheme - 16
Dividends paid - (700)
Balance at 30 September 2007 3 7 402
The notes following these statements are an integral part of these consolidated
interim financial statements.
Consolidated cash flow statement
Six months to Six months to
30 September 2007 30 September 2006
Note EUR m EUR m
Cash flows from operating
activities
Cash flow generated from
operations 10 268 235
Interest received 45 29
Interest paid (26) (13)
Dividends from associated
undertaking 338 278
Taxation paid (71) (97)
Net cash generated from
operating activities 554 432
Cash flows from investing
activities
Acquisition of subsidiary
undertakings, net of cash
acquired (36) (12)
Acquisition of associated
undertakings - (10)
Acquisition of property,
plant and equipment (98) (61)
Proceeds from disposal of
property, plant and
equipment 1 4
Acquisition of intangible
assets (12) (17)
Proceeds from disposal of
intangible assets 1 2
Acquisition of other
non-current assets (31) (58)
Proceeds from disposal of
other non-current assets 79 9
Net cash used in investing
activities (96) (143)
Cash flows from financing
activities
Proceeds from borrowings 103 144
Repayment of borrowings (68) (109)
Dividends paid (689) (613)
Payment for treasury units (74) (12)
Proceeds from sale of
treasury units 37 24
Capital element of finance
lease payments (2) (2)
Net cash used in financing
activities (693) (568)
Net decrease in cash and
cash equivalents (235) (279)
Cash and cash equivalents
at beginning of period 1 623 1 416
Exchange gains on cash and
cash equivalents 13 12
Cash and cash equivalents
at end of period 1 401 1 149
The notes following these statements are an integral part of these consolidated
interim financial statements.
Notes to the consolidated interim financial statements
at 30 September 2007
1. General Information
Compagnie Financiere Richemont SA (`the Company`) and its subsidiaries
(together `Richemont` or `the Group`) is one of the world`s leading luxury
goods groups. The Group`s luxury goods interests encompass several of the most
prestigious names in the industry including Cartier, Van Cleef & Arpels,
Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC, A. Lange & Sohne, Officine
Panerai, Baume & Mercier, Montblanc, Alfred Dunhill, Chloe and Lancel. In
addition to its luxury goods businesses, the Group holds a significant
investment in British American Tobacco (`BAT`) - one of the world`s leading
tobacco groups.
The Company is registered in Bellevue, Geneva, Switzerland. Shares of the
Company are indivisibly twinned with participation certificates issued by its
wholly-owned subsidiary, Richemont SA, Luxembourg to form Richemont units.
Richemont units are listed on the Swiss Stock Exchange and traded on the virt-x
market and are included in the Swiss Market Index (`SMI`) of leading stocks.
Depository receipts in respect of Richemont units are traded on the
Johannesburg Stock Exchange operated by JSE Limited.
These consolidated interim financial statements have been approved for issue by
the Board of Directors on 15 November 2007.
2. Basis of preparation
This interim financial information for the half year ended 30 September 2007
has been prepared in accordance with IAS 34 Interim Financial Reporting. The
interim financial report should be read in conjunction with the annual
consolidated financial statements for the year ended 31 March 2007.
Where necessary, comparative figures have been adjusted to conform with changes
in presentation in the current period.
3. Accounting policies
The accounting policies adopted are consistent with those described in the
annual consolidated financial statements for the year ended 31 March 2007.
There are no new standards, amendments to standards or interpretations which
are mandatory for the financial year ending 31 March 2008 that will have a
material effect on the Group`s consolidated net income and financial position.
Additional disclosures relating to International Financial Reporting Standard 7
Financial Instruments: Disclosures will be presented in the annual consolidated
financial statements.
4. Segment information
A business segment is a group of assets and operations engaged in providing
products that are subject to risks and returns that are different from those of
other business segments. The Group has opted to use business segments as the
primary segments.
A geographical segment is engaged in providing products within a particular
economic environment that is subject to risks and returns that are different
from those of segments operating in other economic environments. The Group uses
geographical segments as the secondary segments.
(a) Primary reporting format - business segments
For the purposes of clarity and comparability of external reporting, the Group
combines internal management units with similar risk and reward profiles into
business operating segments, which are constituted as follows:
- Jewellery Maisons - businesses whose heritage is in the design, manufacture
and distribution of jewellery products; these comprise Cartier and Van Cleef
& Arpels.
- Specialist Watchmakers - businesses whose primary activity includes the
design, manufacture and distribution of precision timepieces. The Group`s
specialist watchmakers comprise Jaeger-LeCoultre, Baume & Mercier, IWC,
Vacheron Constantin, A. Lange & Sohne, Piaget and Officine Panerai.
- Writing Instrument Maisons - businesses whose primary activity includes the
design, manufacture and distribution of writing instruments. These are
Montblanc and Montegrappa.
- Leather and Accessories Maisons - businesses whose principal activities
include the design and distribution of leather goods and other accessories,
being Alfred Dunhill and Lancel.
Other Group operations mainly comprise Chloe, royalty income and other
businesses. None of these constitutes a separately reportable segment.
Amounts included in `Corporate` represent the net cost of the Group`s corporate
operations, which are not attributed to the segments.
The entire product range of a particular Maison, which may include jewellery,
watches, writing instruments and leather goods, is reflected in the sales and
operating result for that segment.
Segment assets consist primarily of property, plant and equipment, inventories,
trade and other debtors and non-current assets.
Segment liabilities comprise operating liabilities, including provisions, but
exclude short and long-term loans and bank overdrafts.
Inter-segment transactions are transacted at prices that reflect the risk and
rewards transferred and are entered into under normal commercial terms and
conditions.
The segment results for the six months ended 30 September are as follows.
Sales
2007 2006
Sales EUR m EUR m
Jewellery Maisons 1 277 1 170
Specialist Watchmakers 707 597
Writing Instrument Maisons 284 257
Leather and Accessories Maisons 137 136
Other Businesses 143 143
2 548 2 303
Inter-segment sales
2007 2006
Sales EUR m EUR m
Jewellery Maisons 1 -
Specialist Watchmakers 3 3
Writing Instrument Maisons 1 2
Leather and Accessories Maisons - -
Other Businesses 52 45
57 50
Total segment sales
2007 2006
Sales EUR m EUR m
Jewellery Maisons 1 278 1 170
Specialist Watchmakers 710 600
Writing Instrument Maisons 285 259
Leather and Accessories Maisons 137 136
Other Businesses 195 188
2 605 2 353
2007 2006
Operating result EUR m EUR m
Jewellery Maisons 367 328
Specialist Watchmakers 218 140
Writing Instrument Maisons 42 39
Leather and Accessories Maisons (9) (12)
Other Businesses 11 15
Corporate (69) (74)
Operating profit 560 436
Finance costs (45) (28)
Finance income 83 37
Operating profit before share of results of associated
undertakings 598 445
Share of post-tax profit of associated undertakings 334 274
Profit before taxation 932 719
Taxation (108) (74)
Net Profit 824 645
The net segment assets at 30 September are as follows:
Segment assets
2007 2006
Net segment assets EUR m EUR m
Jewellery Maisons 1 788 1 729
Specialist Watchmakers 957 868
Writing Instrument Maisons 419 353
Leather and Accessories Maisons 175 159
Other Businesses 261 184
Corporate 493 445
4 093 3 738
Segment liabilities
2007 2006
Net segment assets EUR m EUR m
Jewellery Maisons (269) (272)
Specialist Watchmakers (141) (134)
Writing Instrument Maisons (76) (72)
Leather and Accessories Maisons (61) (50)
Other Businesses (74) (77)
Corporate (227) (167)
(848) (772)
Net segment assets
2007 2006
Net segment assets EUR m EUR m
Jewellery Maisons 1 519 1 457
Specialist Watchmakers 816 734
Writing Instrument Maisons 343 281
Leather and Accessories Maisons 114 109
Other Businesses 187 107
Corporate 266 278
3 245 2 966
Investments in associated undertakings 3 318 3 352
Cash and cash equivalents 1 401 1 149
Short-term loans and borrowings (497) (548)
Retirement benefit obligations (105) (103)
Deferred and current income tax, net 40 75
Net assets 7 402 6 891
Other segment information for the six months to 30 September is as follows:
Items related to Capital expenditure
property, plant and equipment 2007 2006
and intangible assets EUR m EUR m
Jewellery Maisons 49 27
Specialist Watchmakers 22 16
Writing Instrument Maisons 11 7
Leather and Accessories Maisons 8 3
Other Businesses 11 8
Corporate 9 16
110 77
Depreciation/
Items related to amortisation charge
property, plant and equipment 2007 2006
and intangible assets EUR m EUR m
Jewellery Maisons 29 25
Specialist Watchmakers 15 12
Writing Instrument Maisons 10 10
Leather and Accessories Maisons 5 5
Other Businesses 5 4
Corporate 12 11
76 67
Other non-cash items Unit option costs
2007 2006
EUR m EUR m
Jewellery Maisons 3 3
Specialist Watchmakers 2 2
Writing Instrument Maisons 1 1
Leather and Accessories Maisons 1 -
Corporate 9 10
16 16
(b) Secondary reporting format - geographical segments
Sales, segment assets and capital expenditure in the three main geographical
areas where the Group`s business segments operate are as follows for the six
months ended 30 September:
Sales
2007 2006
EUR m EUR m
Europe 1 092 975
France 231 230
Switzerland 112 101
Germany, Italy and Spain 332 310
Other Europe 417 334
Asia 950 850
China/Hong Kong 367 276
Japan 338 351
Other Asia 245 223
Americas 506 478
USA 391 377
Other Americas 115 101
2 548 2 303
Segment assets
at 30 September
2007 2006
EUR m EUR m
Europe 2 894 2 500
France 487 489
Switzerland 1 485 1 262
Germany, Italy and Spain 512 459
Other Europe 410 290
Asia 707 750
China/Hong Kong 250 303
Japan 298 308
Other Asia 159 139
Americas 492 488
USA 397 415
Other Americas 95 73
4 093 3 738
Capital expenditure
2007 2006
EUR m EUR m
Europe 65 53
France 7 8
Switzerland 29 33
Germany, Italy and Spain 10 7
Other Europe 19 5
Asia 29 16
China/Hong Kong 7 7
Japan 17 5
Other Asia 5 4
Americas 16 8
USA 12 7
Other Americas 4 1
110 77
Sales are allocated based on the location of the customer or the boutique.
Segment assets and capital expenditure are allocated based on where the assets
are located.
5. Investment in associated undertakings
BAT Other Total
EUR m EUR m EUR m
At 1 April 2006 3 343 4 3 347
Exchange adjustments 94 - 94
Share of post-tax profit 274 - 274
Dividends received (278) - (278)
Acquisition of associated undertakings - 10 10
Other equity movements (95) - (95)
At 30 September 2006 3 338 14 3 352
At 1 April 2007 3 497 9 3 506
Exchange adjustments ( 94) - (94)
Share of post-tax profit 334 - 334
Dividends received (338) - (338)
Other equity movements (90) - (90)
At 30 September 2007 3 309 9 3 318
Investments in associated undertakings at 30 September 2007 include goodwill of
EUR 2 511 million (September 2006: EUR 2 592 million).
The summarised financial information in respect of the Group`s share of
results, assets and liabilities of its principal associated undertaking, BAT,
is as follows:
Six months to Six months to
30 September 2007 30 September 2006
EUR m EUR m
Operating profit 457 366
After:
Share of other income/(expense) 4 (39)
Finance costs (57) (51)
Finance income 16 12
Share of post-tax profit of
associated undertakings 63 62
Profit before taxation 479 389
Taxation (121) (93)
Net profit 358 296
Attributable to:
Shareholders` equity 334 274
Minority interest 24 22
358 296
Richemont accounts for its effective interest in BAT under the equity method.
Changes in the Group`s percentage holding of BAT during the period relate to
the share buy-back programme carried out by BAT. The following table indicates
the percentages applied to BAT`s profits:
For the six months ended 30 September 2007
Percentage
1 April 2007 to 30 June 2007 19.1
1 July 2007 to 30 September 2007 19.3
For the six months ended 30 September 2006
1 April 2006 to 30 June 2006 18.8
1 July 2006 to 30 September 2006 18.9
6. Other operating income / (expenses)
Included in other operating income/(expenses) are royalties received of EUR 6
million (2006: EUR 5 million).
7. Net finance income
Six months to Six months to
30 September 2007 30 September 2006
EUR m EUR m
Finance income:
Interest income on bank and other deposits 52 30
Fair value gains on financial instruments 14 2
Net foreign exchange gains on derivatives 17 5
Finance income 83 37
Finance costs:
Interest expense:
- bank borrowings (17) (15)
- other financial expenses (1) (3)
Net foreign exchange losses on monetary items (25) (4)
Net foreign exchange losses on derivatives (2) (6)
Finance costs (45) (28)
Net finance income 38 9
Foreign exchange gains of EUR 5 million (2006: losses of EUR 4 million) were
reflected in cost of sales during the period.
8. Earnings per unit
8.1. Basic
Basic earnings per unit is calculated by dividing the profit attributable to
unitholders by the weighted average number of units in issue during the period,
excluding units purchased by the Company and held in treasury.
Six months to Six months to
30 September 2007 30 September 2006
Profit attributable to unitholders
of the Company (EUR millions) 823 645
Weighted average number of units in
issue (millions) 561.1 556.5
Basic earnings per unit (EUR per unit) 1.467 1.159
8.2. Diluted
Diluted earnings per unit is calculated adjusting the weighted average number
of units outstanding, which assumes conversion of all dilutive potential units.
The Company has only one category of dilutive potential units: unit options.
The calculation is performed for the unit options to determine the number of
units that could have been acquired at fair value (determined as the average
annual market unit price of the Company`s units) based on the monetary value of
the subscription rights attached to outstanding unit options. The number of
units calculated as above is compared with the number of units that would have
been issued assuming the exercise of the unit options.
Six months to Six months to
30 September 2007 30 September 2006
Profit attributable to unitholders
of the Company (EUR millions) 823 645
Weighted average number of units in
issue (millions) 561.1 556.5
Adjustment for unit options (millions) 8.4 8.6
Weighted average number of units
for diluted earnings per unit (millions) 569.5 565.1
Diluted earnings per unit (EUR per unit) 1.445 1.141
9. Taxation
The average effective tax rate is calculated in respect of profit before
taxation but excluding the share of post-tax profit of associated undertakings.
The rates for the periods ended 30 September 2007 and 2006 were 18.1 per cent
and 16.6 per cent respectively.
In the year ended 31 March 2007 the Group implemented procedures to increase
further the tax effects of the costs of share- based payments. This, together
with other one-time benefits, significantly contributed to the decrease in the
effective tax rate in that period.
10. Cash flow generated from operations
Six months to Six months to
30 September 2007 30 September 2006
EUR m EUR m
Operating profit 560 436
Depreciation of property, plant and equipment 62 57
Amortisation of intangible assets 14 10
Profit on disposal of property,
plant and equipment - (2)
Increase in provisions 10 5
Increase in retirement benefit obligations 3 2
Non-cash items 12 25
Increase in inventories (170) (116)
Increase in trade debtors (183) (210)
Increase in other receivables,
prepayments and accrued income (45) (24)
Increase in current liabilities 5 52
Cash flow generated from operations 268 235
11. Related-party transactions
Compagnie Financiere Rupert, Bellevue, Geneva holds 52.2 million `B` registered
units, each unit comprising 10 `B` registered shares in Compagnie Financiere
Richemont SA indivisibly twinned with a `B` registered participation
certificate issued by Richemont SA, Luxembourg. Compagnie Financiere Rupert
therefore has an interest in 50 per cent of the voting rights in Compagnie
Financiere Richemont SA. In addition, Compagnie Financiere Rupert has advised
that parties related to it held a total of 160`694 Richemont `A` bearer units,
or the equivalent thereof in the form of Depository Receipts, as at 31 March
2007, representing 0.02 per cent of the voting rights of the Company.
The Group has a number of transactions and relationships with related parties,
as defined by IAS 24 Related Party Disclosures, all of which are undertaken in
the normal course of business.
Besides Compagnie Financiere Rupert and the Boards of Directors of both
Compagnie Financiere Richemont SA and Richemont SA, the Group has identified
the following other related parties:
- Richemont`s associated undertakings;
- Richemont`s joint venture interests;
- Remgro Limited, a public company incorporated in South Africa;
- VenFin Limited, a private company incorporated in South Africa; and
- Richemont foundations (employee and others).
There has been no significant change in the nature and magnitude of the
related-party transactions and relationships during the period. Full details of
related-party transactions will be included in the annual consolidated
financial statements.
12. Share-based payment
Unit option scheme
The Group has a long-term unit-based compensation plan whereby executives are
awarded options to acquire units at a predetermined price. Awards under the
unit option scheme vest over periods of three to eight years and have expiry
dates, the date after which unexercised options lapse, of between five and 13
years from the date of grant. The executive must remain in the Group`s employ
until vesting. During the period ended 30 September 2007, awards of 2 368 400
options (2006: 3 343 800 options) were granted at a weighted average exercise
price of CHF 75.10 (2006: CHF 53.10) per unit. Options in respect of 2 337 254
units (2006: 1 518 870 units) were exercised during the period at an average
exercise price of CHF 25.94 (2006: CHF 24.65) per unit.
13. Dividends
In September 2007 a dividend was paid of EUR 0.65 per unit (2006: EUR 0.60 per
unit), together with a special dividend of EUR 0.60 per unit (2006: EUR 0.50
per unit).
14. Business combinations
Acquisitions of subsidiary undertakings
In September 2007 Richemont acquired the component production facility of
Manufacture Roger Dubuis SA which, together with other non-material
manufacturing businesses acquired during the period, represent the total
business combinations. The Group`s venture capital/investment funds did not
make any business combinations in the period to 30 September 2007.
The financial information presented is on an aggregate basis and includes
provisional values for certain assets and liabilities.
Net assets acquired Business operations
acquired
Fair value Acquirees
carrying
amount
EUR m EUR m
Property, plant and equipment 17 17
Intangible assets 3 -
Inventories 20 14
Receivables 1 1
Cash and cash equivalents - -
Liabilities (1) (1)
Borrowings, current and deferred tax (4) (4)
Net assets 36 27
Fair value of net assets acquired 36
Goodwill -
Purchase consideration - cash paid 36
Cash and cash equivalents acquired -
Cash outflow on acquisition 36
15. Financial commitments and contingent liabilities
At 30 September 2007 the Group had contingent liabilities in respect of bank
and other guarantees and other matters arising in the ordinary course of
business from which it is anticipated that no material losses will arise.
At 30 September 2007 the Group has provided a short-term guarantee to a bank up
to a maximum of EUR 24 million. The Group has a lien over certain third party
assets as security for this guarantee.
The Group has also entered into a short-term commitment to provide a
conditional, secured loan facility of up to a maximum of EUR 62 million. The
agreement provides for interest to be earned at a rate of 2 per cent above
LIBOR.
16. Post balance sheet events
In October 2007 the Group acquired 100 per cent of the ordinary capital of the
French fashion house, Azzedine Alaia SAS.
Exchange rates
The results of the Group`s subsidiaries and its associates which do not report
in euros have been translated at the following average rates of exchange
against the euro. The balance sheets of those subsidiaries and the associates
have been translated into euros at the closing rates set out below.
Exchange rates Six months to Six months to
against the euro 30 Sept 2007 30 Sept 2006
Average
United States dollar 1.36 1.27
Japanese yen 162.39 145.93
Swiss franc 1.65 1.57
Pound sterling 0.68 0.68
30 September 2007 31 March 2007
Closing
United States dollar 1.42 1.33
Japanese yen 163.61 157.22
Swiss franc 1.66 1.62
Pound sterling 0.70 0.68
Statutory Information
Shares of Compagnie Financiere Richemont SA are indivisibly twinned with
participation certificates issued by its wholly-owned subsidiary Richemont SA
to form Richemont units. Richemont `A` units are listed on the SWX Swiss
Exchange and traded on the virt-x market (Reuters `CFR.VX`/Bloombergs `CFR VX`)
and are included in the Swiss Market Index (`SMI`) of leading stocks. The ISIN
of Richemont `A` units is CH0012731458 and the Swiss `Valorennummer` is
1273145. South African depository receipts in respect of Richemont `A` units
are traded on the Johannesburg Stock Exchange operated by JSE Limited (Reuters
`RCHJ.J`/Bloombergs `RCH SJ`).
The closing price of a Richemont `A` unit on 28 September 2007 was CHF 77.15
and the market capitalisation of the Group`s `A` units on that date was CHF 40
272 million (EUR 24 230 million).
Over the preceding six months, the highest closing price of an `A` unit was CHF
80.40 (23 July), and the lowest CHF 68.75 (2 April).
Compagnie Financiere Richemont SA Richemont SA
Registered office: Registered office:
50 chemin de la Chenaie 35 boulevard Prince Henri
1293 Bellevue Geneva L 1724 Luxembourg
Switzerland Tel: (+352) 22 42 10
Tel: (+41) (0) 22 721 3500 Fax: (+352) 22 42 19
Fax: (+41) (0) 22 721 3550
Internet: www.richemont.com
E-mail: investor.relations@richemont.com
secretariat@richemont.com
press.office@richemont.com
Notes for South African editors
Acknowledging the interest in Richemont`s results on the part of South African
investors, set out below are key figures from the results expressed in rand.
The average euro/rand exchange rate prevailing during the period ended 30
September 2007 was 9.6609; this compares with a rate of 8.6192 during the prior
period.
Six months to Six months to
in ZAR millions September 2007 September 2006
Sales 24 616 19 850 + 24 %
Operating profit 5 410 3 758 + 44 %
Net profit - parent and
subsidiaries 4 734 3 198 + 48 %
Share of post-tax profit of
associates 3 227 2 361 + 37 %
Net profit 7 961 5 559 + 43 %
Analysed as follows
Net profit attributable to
unitholders 7 951 5 559
Net profit attributable to
minority interests 10 -
7 961 5 559
Earnings per depositary
receipt - diluted basis ZAR 1.396 ZAR 0.983 + 42 %
There were no significant non-recurring items included in the results of the
parent and its subsidiaries during either the current or comparative periods.
However, the Group`s share of the results of its principal associate, British
American Tobacco, includes non-recurring items reported by that entity.
Including the Group`s share of results from associates, the overall impact of
these non-recurring items, after taxation and minority interests, on net profit
was a net gain of ZAR 21 million or EUR 2 million (2006: a net charge of ZAR
250 million or EUR 29 million). Excluding non-recurring items, net profit
attributable to unitholders increased by 37 per cent to ZAR 7 932 million (EUR
821 million).
Richemont Securities AG Depository Receipts are issued subject to the terms of
the Deposit Agreement dated 25 August 1988 as amended on 18 December 1992 and
28 September 2001 and, by holding Depository Receipts, investors acknowledge
that they are bound by the terms of the Deposit Agreement. Copies of the
Deposit Agreement may be obtained by investors from Richemont Securities AG or
Computershare Investor Services 2004 (Pty) Limited.
16 November 2007
Date: 16/11/2007 08:00:05 Produced by the JSE SENS Department.
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