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RCH - Richemont Securities AG - Results For The Year Ended 31 March 2008
Richemont Securities AG
(Incorporated in Switzerland)
(Registration CH-170.3.013.861-6)
JSE Code: RCH
ISIN: CH0013157380
RESULTS FOR THE YEAR ENDED 31 MARCH 2008
Richemont, the Swiss luxury goods group, announces its audited results for the
year ended 31 March 2008.
Financial highlights
- Sales increased by 10 per cent to EUR 5 302 million. Good growth seen during
the earlier part of the year continued in the fourth quarter.
- Operating profit from the luxury goods businesses increased by 21 per cent to
EUR 1 108 million.
- Net profit, including the Group`s share of the results of British American
Tobacco, increased by 18 per cent to EUR 1 570 million. Excluding the impact of
non-recurring items in both years, net profit attributable to unitholders
increased by 17 per cent to EUR 1 582 million.
- Cash generated by the Group`s luxury goods operations was EUR 968 million.
- The ordinary dividend for the year, at EUR 0.78 per unit, represents an
increase of 20 per cent over that paid in 2007.
Sales
The 10 per cent sales increase reflected good underlying growth across all
business areas. At constant exchange rates, sales increased by 16 per cent. The
Jewellery Maisons, Specialist Watchmakers and Montblanc all saw strong growth
throughout the year.
Operating profit
Higher sales and increased margins generated a 21 per cent increase in
operating profit to EUR 1 108 million. The operating margin for the year was 21
per cent, 2 percentage points higher than the comparative year.
British American Tobacco (`BAT`)
Richemont`s share of the results of BAT increased 13 per cent to EUR 609
million, reflecting the higher profitability of BAT and the Group`s higher
interest in that company as a result of its buy-back programme.
Cash dividends received from BAT during the year amounted to EUR 325 million.
Net profit
Net profit, including the Group`s share of the results of British American
Tobacco, increased by 18 per cent to EUR 1 570 million. Earnings per unit on a
diluted basis were by 18 per cent higher at EUR 2.760 per unit.
Cash position
The Group`s net cash position at 31 March 2008 was EUR 1 246 million, Group net
cash having increased by EUR 105 million during the year. This reflected strong
net cash generation by the Group`s luxury business of EUR 543 million, after
tax and capital expenditure , as well as the dividends received from BAT , net
of dividends paid to unitholders. During the year, Richemont paid ordinary and
special dividends amounting to EUR 701 million.
Dividend
The dividend for the year will be EUR 0.78 per unit, an increase of 20 per cent
over the prior year`s ordinary dividend.
Richemont holds a portfolio of several of the most prestigious names in the
luxury goods industry including Cartier, Van Cleef & Arpels, Piaget, Vacheron
Constantin, Jaeger-LeCoultre, IWC, Alfred Dunhill and Montblanc. In addition
to its luxury goods interests, Richemont also holds a significant investment
in British American Tobacco - one of the world`s leading tobacco groups.
www.richemont.com
Group results
in EUR millions March 2008 March 2007
Sales 5 302 4 827 +10%
Cost of sales (1 897) (1 753)
Gross profit 3 405 3 074 +11%
Net operating expenses (2 297) (2 158) +6%
Operating profit 1 108 916 +21%
Net financial income 47 31
Profit before taxation 1 155 947
Taxation (195) (158)
Net profit - parent and subsidiaries 960 789 +22%
Share of post-tax profit of associates 610 540 +13%
Net profit 1 570 1 329 +18%
Analysed as follows
Net profit attributable to unitholders 1 571 1 328
Net profit attributable to minority
interests (1) 1
1 570 1 329
Earnings per unit - diluted basis EUR 2.760 EUR 2.331 +18%
Dividends
Ordinary dividend per unit EUR 0.78 EUR 0.65 +20%
Special dividend per unit - EUR 0.60 -
Total dividend per unit EUR 0.78 EUR 1.25 -
Operating profit in the prior year included a one off, non-operational gain of
EUR 16 million. During the year under review, there were no such items.
The Group`s share of the results of its principal associate, British American
Tobacco, also 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 loss of EUR 11 million (2007: loss of EUR 22 million).
Excluding non-recurring items, net profit attributable to unitholders increased
by 17 per cent to EUR 1 582 million from EUR 1 350 million in the prior year.
An analysis of the effect of non-recurring items is given later in this
document.
This document contains forward-looking statements as that term is defined in
the United States Private Securities Litigation Reform Act of 1995.
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
Overview
As we approach the 20th anniversary of the foundation of the Group in September
1988, I am pleased to be able to report that Richemont`s performance during the
past year has demonstrated its capacity to weather the challenging economic
environment. The business has grown across a broad geographic base with sales
increasing by 10 per cent to EUR 5 302 million and operating profit growing by
21 per cent to EUR 1 108 million. All of the Maisons enjoyed a good year, with
some performing exceptionally well. In this respect, I must compliment Cartier,
Van Cleef & Arpels, Piaget, IWC and Jaeger-LeCoultre for their excellent
performances. We see the global market for true luxury goods as continuing to
expand, as consumers seek more sophisticated, authentic and elegant products.
Business developments
Richemont`s Maisons have positioned themselves to take advantage of
opportunities in existing and new market areas. In established markets we
invest in optimising our boutique locations and, have a comprehensive boutique
refurbishment programme across all of our Maisons. In new market areas we seek
to invest prudently, where we believe the potential exists to develop strong
businesses in the medium to long term.
In China for example, we have followed the same principles as we apply
elsewhere - opening stores either directly or with local partners to ensure a
good geographic coverage. It has been important to realise that consumers in
new markets expect to see the same breadth of product offering as they see when
travelling abroad and, to this end, we are taking care to ensure that our
boutiques are both opened in the most prestigious locations and offer the full
range of products. Both Montblanc and Alfred Dunhill have been quick to grasp
the retail growth opportunities which the Chinese market offers. Cartier has
also invested in this important market and now operates 18 stores in mainland
China, in addition to its 9 stores in Hong Kong and Macao.
British American Tobacco
During the year Richemont benefited from a further significant contribution to
profits from its associated company, British American Tobacco (`BAT`). The
equity accounted share of BAT`s profits increased by 13 per cent to EUR 609
million. As a consequence of BAT`s share buy back programme the Group`s
effective interest in the company grew during the year to reach 19.3 per cent
by 31 March 2008. By the end of April 2008, Richemont`s interest in BAT - taken
together with that of our joint venture partner, Remgro - reached 30 per cent
of BAT`s capital. At the BAT annual general meeting held last month, its
shareholders once again approved the special waiver, which allows Richemont and
Remgro to hold more than 30 per cent of BAT`s equity without any obligation
arising on the partners to make a full bid for the shares in BAT that they do
not already own.
Group restructuring proposals
In November 2007, the Group announced that it was considering plans which might
lead to a separation of its luxury goods operations from its other interests,
which include the investment in BAT.
A further announcement has been released co-terminously with this preliminary
results announcement and may be obtained from the Group Secretariat
(secretariat@cfrinfo.net) or downloaded from the Group`s website
(www.richemont.com).
Dividends
Given the strong results of the Group`s businesses this year, the Board has
decided to recommend an increase of 20 per cent in the level of ordinary
dividend to bring it to EUR 0.78 per unit. The dividend will be payable to
unitholders immediately after the annual shareholders` meeting to be held in
September.
Over each of the past three years, Richemont has paid a special dividend in
order to return to unitholders the proceeds of the disposal in 2004 of the BAT
preference shares, received at the time of the merger with Rothmans
International in 1999. In total, the Group has paid some EUR 890 million in
such special dividends. Given that the proceeds of the preference shares have
now been repaid in full to shareholders and in the light of the potential
restructuring referred to above, the Board considers that it would not be
appropriate to make a further special dividend payment this year.
The global environment and outlook
"The pessimist complains about the situation, the optimist hopes it will
improve, and the realist plans and acts according to circumstances."
The crisis currently affecting the global economy is a cause for concern. We
are carefully monitoring the performance of our businesses in all markets to
establish whether consumer purchasing trends are changing.
Over the first 20 years of its existence we have positioned Richemont well to
face the challenges of the global economy. The Group has no net debt and a
strong balance sheet and we have invested our surplus funds prudently.
We fully intend to ensure that the luxury goods business will remain
financially strong after any possible restructuring. The company will possess
adequate resources to finance organic growth or, should appropriate
opportunities present themselves, expansion through acquisitions.
Furthermore, the Group`s business model is straightforward, the Maisons drawing
on the intellectual property inherent in their history, the creative talent
within them and the skill and craftsmanship of their employees. The Maisons
aspire to produce intrinsically desirable products, which respect and interpret
their traditional values, and offer these through a global distribution and
after-sales service network designed to meet our partners` and customers`
expectations.
Despite turbulent times, sales during the first quarter of 2008 showed growth
of 11 per cent at actual exchange rates and that pattern has been repeated in
the month of April, with sales growth of 16 per cent at actual exchange rates
and 24 per cent in local currency terms.
I am confident in the strength of Richemont and look forward to the next 20
years with a well-founded degree of confidence and optimism.
Johann Rupert
Executive Chairman
Compagnie Financiere Richemont SA
Geneva, 22 May 2008
Business Review
March 2008 March 2007
in EUR millions
Sales 5 302 4 827 +10%
Cost of sales (1 897) (1 753)
Gross profit 3 405 3 074 +11%
Net operating expenses (2 297) (2 158) +6%
Selling and distribution expenses (1 181) (1 090) +8%
Communication expenses (607) (570) +6%
Administration expenses (522) (503) +4%
Other operating income 13 5 -
Operating profit 1 108 916 +21%
Further analysed as follows:
Underlying operating profit from luxury
business 1 108 900 +23%
Non-recurring items included in `Other
operating income` - 16 -
Operating profit 1 108 916 +21%
Sales increased by 10 per cent to EUR 5 302 million, with particularly strong
sales growth at the Group`s specialist watchmakers. Sales growth by region was
mixed, with double-digit sales growth in most regions except Japan.
The gross margin percentage increased by 0.5 percentage points to 64.2 per
cent. This was largely due to manufacturing efficiencies combined with channel
and product mix effects. Price changes during the year broadly offset negative
exchange rate impacts. Sales growth and the improved margin percentage
generated an 11 per cent increase in gross profit to EUR 3 405 million.
Net operating expenses increased by 6 per cent. The increase reflected the
growth in selling and distribution expenses linked to the Group`s expanding
boutique network as well as higher communication costs.
The 6 per cent increase in communication costs included the costs associated
with new product launches and initiatives in new markets. As a percentage of
sales, communication costs were marginally lower than the prior year at 11.4
per cent.
Administration expenses increased by 4 per cent overall. Within this figure,
the Group`s central support service costs increased by 7 per cent excluding
provisions for costs associated with the Group restructuring project. Net
operating expenses included stock option charges amounting to EUR 31 million
(2007: EUR 33 million).
Other operating income in the comparative year included a net, non-recurring
gain of EUR 16 million in respect of a property lease disposal attributable to
Alfred Dunhill.
Operating profit increased by 21 per cent to EUR 1 108 million. Excluding net
non-recurring gains, the underlying operating profit of EUR 1 108 million from
the Group`s luxury businesses represented an increase of 23 per cent, compared
to EUR 900 million in the prior year.
Analysis of sales and operating results by business area
Sales and operating results of the Group`s main areas of activity were as
follows:
March 2008 March 2007
in EUR millions
Sales
Jewellery Maisons 2 657 2 435 +9%
Specialist watchmakers 1 378 1 203 +15%
Writing instrument Maisons 637 585 +9%
Leather and accessories Maisons 309 307 +1%
Other businesses 321 297 +8%
Total sales 5 302 4 827 + 10%
Operating results
Jewellery Maisons 767 667 +15%
Specialist watchmakers 376 274 +37%
Writing instrument Maisons 120 110 +9%
Leather and accessories Maisons (3) (11) -
Other businesses 5 20 - 75%
1 265 1 060 +19%
Corporate costs (157) (144) +9%
Central support services (146) (137) +7%
Other operating expense, net (11) (7) +57%
Operating profit 1 108 916 +21%
Further analysed as follows:
Underlying operating profit from luxury
business 1 108 900 +23%
Non-recurring items - Leather and
accessories Maisons - 16
Operating profit 1 108 916 +21%
In the table above, those Maisons which are principally engaged in a specific
business area have been grouped together. By way of example, those businesses
which have a heritage as producers of high jewellery and jewellery watches -
Cartier and Van Cleef & Arpels - are grouped together as `Jewellery Maisons`.
Their entire product ranges, including watches, writing instruments and
leather goods, are reflected in the sales and operating result for that
business area. Charges for stock options have been allocated to operating
costs within the relevant business areas and central support services.
Jewellery Maisons
Cartier reported growth at constant rates in all regions with the exception of
Japan, which saw modest growth. Van Cleef & Arpels also enjoyed very good
growth in sales; albeit from a significantly lower base. Operating profit for
the business area as a whole increased by 15 per cent to EUR 767 million.
Operating margin for the business area improved by 1 percentage point to 29 per
cent.
Specialist Watchmakers
The Group`s seven specialist watchmakers enjoyed very strong demand throughout
the year in all regions, leading to sales growth of 15 per cent. Sales at IWC
and Jaeger-LeCoultre were particularly strong. The increase in sales combined
with operating leverage generated a 37 per cent increase in operating profit.
Writing Instrument Maisons
Montblanc`s sales growth of 9 per cent included strong growth through its
expanding retail network, with an increasing proportion of sales being
generated by leather goods, watches and jewellery lines. Operating profit for
the business area, which includes Montegrappa, increased by 9 per cent and the
operating margin remained stable at 19 per cent.
Leather and Accessories Maisons
Alfred Dunhill reported continuing sales growth, primarily through its own
boutique network. Sales in the Asia-Pacific region grew strongly but sales in
Japan were flat in local currency terms. Excluding one-off gains, Alfred
Dunhill was close to breakeven. This represents a significant improvement over
the prior year, when operating losses were EUR 8 million after taking into
account the benefit of a non-recurring gain of EUR 16 million on the disposal
of a property.
Lancel`s sales were lower than the prior year, reflecting steps to reposition
its product ranges at higher price points with improved margins. The
repositioning provides a basis for further expansion , particularly in the
fast-growing Asia-Pacific region. Lancel`s operating losses increased from EUR
3 million in the prior year to EUR 4 million in the year under review.
Other businesses
Chloe`s sales were in line with the prior year. Sales of this business area
included the impact of acquisitions made during the current financial year.
These included watch component manufacturing businesses and Azzedine Alaia`s
Haute Couture Maison.
Operating profit in this business area fell significantly, largely due to
losses from watch component manufacturing activities. These issues are being
addressed. In addition, the costs of developing the joint venture in terms of
watches and jewellery manufacturing with Polo Ralph Lauren Inc, which has
not yet started trading, are reported in this business area.
Corporate costs
Corporate costs include central support services such as strategic management,
marketing and functional support, legal services, manufacturing and logistics,
intellectual property, finance, human resources and information technology
together with central marketing initiatives. These and other net expenses are
not allocated to specific business areas. Costs are well controlled, the
increase in other operating expenses being largely due to costs associated with
the Group restructuring project.
Operating profit
After corporate costs, Group operating profit amounted to EUR 1 108 million, an
increase of 21 per cent over the prior year. This increase reflects the growth
in sales, the improvement in the gross margin percentage and continuing cost
control. The Group`s overall operating profit margin increased from 19 per
cent to 21 per cent.
Sales by region
in EUR millions March 2008 March 2007
Europe 2 293 2 042
Asia-Pacific 1 296 1 070
Americas 1 014 984
Japan 699 731
5 302 4 827
Movement at:
Constant Actual
exchange exchange
rates rates
Europe +14% +12%
Asia-Pacific +31% +21%
Americas +13% +3%
Japan +3% -4%
Total +16% +10%
Europe
Europe remains the Group`s most important market by far, with sales
representing 43 per cent of turnover. The 12 per cent increase reflects good
growth in established markets and double-digit sales growth in developing
markets in the region, including the Middle East.
Asia-Pacific
Sales growth was very strong, particularly in China and Hong Kong. Despite the
negative impact of exchange rate movements relative to the euro, sales
increased by 21 per cent. Overall sales in the region now represent 25 per cent
of total sales.
Americas
The Americas region reported good underlying growth for the year as a whole.
Sales during the final quarter of the year proved to be very resilient in local
currency terms. The significant decrease in the value of the dollar relative
to the euro during the year resulted in sales growth for the year as a whole
being limited to 3 per cent at actual exchange rates. Sales in the Americas
represent 19 per cent of total sales.
Japan
The Japanese market was challenging throughout the year, with local currency
sales in the fourth quarter being slightly below the prior year`s levels.
Notwithstanding the limited growth in underlying sales the weakness of the yen
resulted in sales in euro terms being down by 4 per cent. Sales in Japan now
represent 13 per cent of total Group sales.
Sales by distribution channel
in EUR millions March 2008 March 2007
Retail 2 214 2 009 +10%
Wholesale 3 088 2 818 +10%
5 302 4 827 +10%
Retail
Retail sales increased by 10 per cent to EUR 2 214 million. This high level of
growth reflected good trading at established boutiques and the expansion of the
network of Group-owned points of sale. The total retail network increased by
158 to 1 312 boutiques. This increase includes the opening or internalisation
of boutiques by Montblanc, Alfred Dunhill and Chloe in particular. At the end
of March 2008, the Group`s Maisons owned 738 boutiques. A further 574 points
of sale were operated by franchise partners.
Wholesale
Wholesale sales increased by 10 per cent. Strong sales at certain specialist
watchmakers and Van Cleef & Arpels contributed to this double-digit growth
rate. Sales to franchise partners are treated as wholesale sales.
Summary income statement and results of associates
in EUR millions March 2008 March 2007
Operating profit 1 108 916
Net finance income 47 31
Profit before taxation 1 155 947
Taxation (195) (158)
Share of post-tax results of associated
undertakings 610 540
Before non-recurring expenses 621 578
Share of non-recurring expenses (11) (38)
Net profit 1 570 1 329
Attributable to unitholders 1 571 1 328
Attributable to minority interests (1) 1
Net profit 1 570 1 329
Net finance income amounting to EUR 47 million includes net interest income,
net foreign exchange gains and losses and fair value adjustments. Net fair
value gains amounted to EUR 9 million (2007: EUR 16 million gain), including
the appreciation of certain listed and unlisted investments. Under IFRS, such
investments and other `fair value financial assets` must be revalued at the
balance sheet date with reference to market valuations. This `mark to market`
approach inevitably creates such volatility in the reported finance income
line.
Excluding the Group`s share of the results of its investment in British
American Tobacco, the Group`s effective taxation rate was 16.9 per cent
compared with 16.7 per cent last year. The effective taxation rate in general
reflects the lower level of corporate taxes in Switzerland compared to other
jurisdictions. The lower effective taxation rate in the prior year reflected
principally the first time deductibility of costs related to share-based
payments.
Associated companies
The Group`s principal associated company is British American Tobacco plc. At 31
March 2008, Richemont had an effective interest of 19.3 per cent in British
American Tobacco, with a market value of EUR 9 250 million.
The Group also has a number of smaller investments which are classified as
associated companies. The Group`s share of results of these smaller investments
amounted to a profit of EUR 1 million (2007: a profit of EUR 1 million).
British American Tobacco plc (`BAT`)
The Group`s share of the results of BAT increased by 13 per cent to EUR 609
million. Excluding non-recurring income and expense from both years, the
Group`s share of the results of BAT would have increased by 7 per cent to EUR
620 million.
Non-recurring items in respect of BAT are reported net of taxation and minority
interests in this review. Non-recurring items include those of BAT`s
subsidiary companies as well as its own associated companies.
Further details of non-recurring items are given later in this
announcement.
In its financial year ended 31 March 2008, Richemont accounted for BAT`s nine
months ended 31 December 2007 and three months ended 31 March 2008. In the
comparative period, the same approach was applied. The following table
presents the Group`s effective interest in BAT applied in the current and the
prior year periods. The increases in the Group`s interest in both the current
and prior year were due to the share buy-back programme carried out by BAT.
2007-08 2006-07
% %
1 April to 30 June 19.1 18.8
1 July to 31 December 19.3 18.9
1 January to 31 March 19.3 19.0
BAT reports its results in sterling. The average euro: sterling exchange rate
for the Group`s financial year was 0.71, compared with 0.68 in the prior year.
Consequently, there was a 4 per cent negative impact on the Group`s share of
BAT`s results on translation into euros due to exchange rate movements.
In cash flow terms, the Group received dividends totalling EUR 325 million
from BAT during the year (2007: EUR 280 million).
In British American Tobacco`s financial year to 31 December 2007, its adjusted,
diluted earnings per share, a good indicator of its underlying performance,
grew by 11 per cent to 108.53 pence per share, principally as a result of the
strong growth in profit from operations, partly offset by the adverse impact
from foreign exchange movements. Basic earnings per share were higher at
105.19p compared to the prior year of 92.08p.
The following commentary is condensed from British American Tobacco`s annual
report for the year ended 31 December 2007.
BAT`s cigarette sales volumes from subsidiaries for the year ended 31 December
2007 decreased by 1 per cent to 684 billion, mainly as a result of the high
level of trade buying in some markets at the end of 2006, supply chain
disruptions in the Middle East and the loss of StiX in Germany. British
American Tobacco`s revenue increased by 3 per cent to GBP 10 018 million but,
at comparable rates of exchange, would have increased by 5 per cent as a result
of more favourable pricing and an improving product mix.
Profit from operations was 11 per cent higher at GBP 2 905 million or 7 per
cent higher if exceptional items were excluded. However, profit from operations
at comparable rates of exchange and excluding exceptional items, would have
been 11 per cent higher, with all regions contributing to this strong result.
In Europe, profit at GBP 842 million was up GBP 61 million or 8 per cent, at
both current and comparable rates of exchange, mainly as a result of higher
margins in Russia, Romania, Hungary and Spain, which more than offset the
impact of reduced volumes in a number of markets.
In Asia-Pacific, profit rose by GBP 56 million to GBP 672 million, mainly
attributable to strong performances from Australasia, Vietnam, Pakistan and
Bangladesh, despite the adverse impact of exchange rates. At comparable rates
of exchange, profit would have increased by GBP 66 million or 11 per cent.
Profit in Latin America increased by GBP 69 million to GBP 680 million due to
good performances in key markets such as Brazil and Venezuela, partly offset by
lower profit in Mexico and the adverse impact of some weaker local currencies.
At comparable rates of exchange, profit would have increased by GBP 86 million
or 14 per cent.
Profit in the Africa and Middle East region was GBP 2 million higher at GBP 470
million due to exchange rate movements. However, at comparable rates of
exchange, profit would have increased by GBP 53 million or 11 per cent with
strong performances from South Africa and Nigeria.
The profit from the America-Pacific region increased by GBP 22 million to GBP
446 million as a result of higher profit in local currency in Japan and Canada,
partly offset by the impact of weaker exchange rates. At comparable rates of
exchange, profit would have increased by GBP 45 million or 11 per cent.
BAT`s associated companies comprise Reynolds American, ITC and Skandinavisk
Tobakskompagni (ST). BAT`s share of the post-tax results of its associates
increased by GBP 11 million, or 3 per cent to GBP 442 million, after taxation
of GBP 246 million. Excluding exceptional items, BAT`s share of the post-tax
results of associates was GBP 449 million. However, BAT`s share of these
results was particularly affected by the weakening of the average US dollar
rate against sterling from 1.844 to 2.001 and, at comparable rates of exchange,
the increase would have been 11 per cent.
In terms of recent developments, BAT announced an agreement to acquire 100 per
cent of the Skandinavisk Tobakskompagni`s (ST) cigarette and snus business in
exchange for its 32.25 per cent holding in ST and payment of DKK 11 384
million in cash. This transaction is subject to approval by the European
Commission. ST accounts for more than 60 per cent of cigarette sales in
Scandinavia. In addition, BAT won the public tender for the cigarette assets of
Tekel, the Turkish state owned tobacco company, with a bid of US$ 1 720 million
(GBP 860 million). On completion, which is expected later this year and is
subject to regulatory approvals, the acquisition will raise BAT`s market share
in Turkey, the eighth largest cigarette market in the world, to some 36 per
cent from just over 7 per cent prior to acquisition.
Further information in respect of British American Tobacco can be obtained from
that company`s website : www.bat.com.
Analysis of underlying net profit attributable to unitholders
March 2008
in EUR millions Underlying Non-recurring IFRS
items
Sales 5 302 - 5 302
Operating profit 1 108 - 1 108
Net profit - parent and subsidiaries 961 - 961
Share of post-tax profit of
associates 621 (11) 610
Net profit attributable to
unitholders 1 582 (11) 1 571
March 2007
in EUR millions Underlying Non-recurring IFRS
items
Sales 4 827 - 4 827
Operating profit 900 16 916
Net profit - parent and subsidiaries 772 16 788
Share of post-tax profit of
associates 578 (38) 540
Net profit attributable to
unitholders 1 350 (22) 1 328
Underlying earnings per unit excluding non-recurring items
March 2008 March 2007
Basic EUR 2.819 EUR 2.800 EUR 2.405 EUR 2.366
Diluted basis EUR 2.780 EUR 2.760 EUR 2.369 EUR 2.331
During the year under review, there were no significant non-recurring items in
operating profit.
During the prior year, the Group realised non-recurring income of EUR 16
million, being a net gain on the disposal of a retail property lease by Alfred
Dunhill.
The non-recurring items included in the Group`s share of the results of its
associate, BAT , amounted to a net charge of EUR 11 million in the year under
review (2007: EUR 38 million). This primarily reflected restructuring charges,
net of gains and losses on the disposal of businesses and brands as well as
termination fees received by Reynolds American, an associated company of BAT.
Non-recurring items in respect of BAT are reported net of taxation and
minority interests in the analysis above. Non-recurring items include those of
BAT`s subsidiary companies as well as its own associated companies.
Excluding non-recurring items from both years, attributable net profit in the
year to 31 March 2008 would have been EUR 1 582 million compared to EUR 1 350
million in the prior year, an increase of 17 per cent.
Excluding non-recurring items, Richemont`s basic earnings per unit would have
increased by 17 per cent from EUR 2.405 to EUR 2.819 and diluted earnings per
unit would have increased by 17 per cent from EUR 2.369 to EUR 2.780.
Cash flow
in EUR millions March 2008 March 2007
Operating profit 1 108 916
Depreciation, amortisation and other items, net 134 175
Increase in working capital (274) (121)
Cash generated from operations 968 970
Dividends received from associate 325 280
Net interest received 41 27
Taxation paid (171) (177)
Net acquisitions of tangible fixed assets (265) (201)
Net acquisitions of intangible assets (30) (20)
Other investing activities, net (102) (126)
Net cash inflow before financing activities 766 753
Dividends paid to unitholders (701) (612)
Ordinary dividend (364) (334)
Special dividend (337) (278)
Increase/(decrease) in borrowings and other
financing activities 69 (14)
Net cash flow in respect of treasury units (37) 63
Exchange rate effects 51 17
Increase in cash and cash equivalents 148 207
Cash and cash equivalents at the beginning of the
year 1 623 1 416
Cash and cash equivalents at end of year (1) 1 771 1 623
Borrowings (525) (482)
Net cash at the end of the year 1 246 1 141
(1) Cash and cash equivalents are as per the consolidated cash flow statement
later in this report.
The Group`s net cash position at 31 March 2008 was EUR 1 246 million compared
with EUR 1 141 million twelve months earlier. The increase in net cash largely
reflects the net cash inflow before financing activities of EUR 766 million,
partly offset by the payment of ordinary and special dividends to unitholders
in September 2007.
Cash generated from operations totalled EUR 968 million for the year. An
increase in working capital , due to higher inventories, largely offset the
higher contribution from operating profit. The increase in net inventories
reflected principally higher raw material stocks and work in progress.
Dividends received from the Group`s associate, BAT , comprised 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.
Net acquisitions of tangible fixed assets amounted to EUR 265 million. This
amount included investments in the Group`s network of boutiques as well as the
further investment in the Maisons` manufacturing facilities.
Other investing activities included the acquisition of the watch component
production facilities of Manufacture Roger Dubuis SA, the watch case maker
Donze - Baume SA and the Haute Couture Maison of Azzedine Alaia. The cash
outflow from these investing activities was partly offset by proceeds from the
disposal of financial assets.
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 20
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 31 March 2008 31 March 2007
Non-current assets
Fixed assets 1 207 922
Investment in associated undertakings 3 008 3 506
Other non-current assets 493 546
4 708 4 974
Net current assets 1 866 1 594
Net operating assets 6 574 6 568
Net cash 1 246 1 141
Cash and cash equivalents 1 771 1 623
Borrowings (525) (482)
Other non-current liabilities (168) (196)
7 652 7 513
Equity
Unitholders` equity 7 648 7 511
Minority interests 4 2
7 652 7 513
At 31 March 2008, the Group`s interest in BAT`s ordinary shares amounted to
19.3 per cent and BAT`s market capitalisation, based on 2 016 million ordinary
shares in issue, amounted to EUR 47 815 million (GBP 38 126 million). The fair
value of the Group`s investment in BAT therefore amounted to EUR 9 250 million.
The carrying value of the investment amounted to EUR 2 998 million on that
date. Details of movements in the Group`s effective interest in BAT ordinary
shares during the year are given in the commentary earlier in this document.
The carrying value of investments in other associates at 31 March 2008 was
EUR 10 million.
Net current assets increased by EUR 272 million compared to March 2007. The
value of net inventories increased by 20 per cent to EUR 2 076 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 1.3 months to 16.4 months. The increases in
inventories were partly offset by increases in current liabilities.
At 31 March 2008, net cash amounted to EUR 1 246 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.
Unitholders` equity amounted to EUR 7 648 million, net of the cost of
repurchased treasury units and related instruments. These treasury units are
held as a hedge against the exercise of executive unit options. At 31 March
2008, the Group held 13.1 million treasury units, representing 2.5 per cent of
the total number of the `A` bearer units in issue.
Proposed dividend
The Board has proposed an ordinary dividend of EUR 0.78 per unit, an increase
of 20 per cent over the prior year`s level. Withholding tax is payable on the
proposed dividend to be paid by Compagnie Financiere Richemont SA, Switzerland
as detailed in the table below.
The dividends will be payable following the Annual General Meeting in September
2008. The meeting is currently scheduled to take place on Wednesday, 10
September 2008. The currently anticipated dividend payment dates are as
follows:
`A` unit dividend: Monday, 15 September 2008
The dividend in respect of Richemont `A` units is payable in euros.
South African Depository Receipt dividend: Friday, 26 September 2008
The South African Depository Receipt dividend is payable in rand to residents
of the South African Common Monetary Area (`CMA`) but may, dependent upon
status, be payable in euros to non-CMA residents.
The dividend will be paid as follows:
Gross dividend Withholding Net payable
per unit tax @ 35% per unit
Ordinary dividend
Richemont SA, Luxembourg EUR 0.720 EUR - EUR 0.720
Compagnie Financiere
Richemont SA, Switzerland EUR 0.060 EUR (0.021) EUR 0.039
EUR 0.780 EUR (0.021) EUR 0.759
Norbert Platt Richard Lepeu
Chief Executive Officer Group Finance Director
Compagnie Financiere Richemont SA
Geneva, 22 May 2008
Extracts from the audited
consolidated financial statements
at 31 March 2008
Consolidated balance sheet
at 31 March
2008 2007
ASSETS EUR m EUR m
Note
Non-current assets
Property, plant and equipment 975 808
Intangible assets 232 114
Investments in associated undertakings 2 3 008 3 506
Deferred income tax assets 251 268
Financial assets held at fair value through
profit or loss 68 113
Other non-current assets 174 165
4 708 4 974
Current assets
Inventories 2 076 1 732
Trade and other receivables 641 658
Derivative financial instruments 72 15
Prepayments and accrued income 147 121
Cash at bank and on hand 2 094 1 881
5 030 4 407
Total assets 9 738 9 381
EQUITY AND LIABILITIES
Equity
Share capital 334 334
Participation reserve 645 645
Treasury units (268) (264)
Hedge and unit option reserves 176 151
Cumulative translation adjustment reserve (348) 113
Retained earnings 7 109 6 532
Total Unitholders` equity 7 648 7 511
Minority interest 4 2
Total equity 7 652 7 513
LIABILITIES
Non-current liabilities
Borrowings 246 203
Deferred income tax liabilities 59 32
Retirement benefit obligations 42 103
Provisions 52 61
Other long term liabilities 15 -
414 399
Current liabilities
Trade and other payables 563 488
Current income tax liabilities 188 160
Borrowings 12 28
Derivative financial instruments 8 2
Provisions 95 90
Accruals and deferred income 216 192
Short-term loans 267 251
Bank overdrafts 323 258
1 672 1 469
Total liabilities 2 086 1 868
Total equity and liabilities 9 738 9 381
Consolidated income statement
for the year ended 31 March
2008 2007
EUR m EUR m
Notes
Sales 1 5 302 4 827
Cost of sales (1 897) (1 753)
Gross profit 3 405 3 074
Selling and distribution expenses (1 181) (1 090)
Communication expenses (607) (570)
Administrative expenses (522) (503)
Other operating income 3 13 5
Operating profit 1 108 916
Finance costs 4 (114) (58)
Finance income 4 161 89
Share of post-tax profit of associated
undertakings 2 610 540
Profit before taxation 1 765 1 487
Taxation 5 (195) (158)
Net profit 1 570 1 329
Attributable to:
Unitholders 1 571 1 328
Minority interest (1) 1
1 570 1 329
Earnings per unit for profit attributable
to Unitholders during
the year (expressed in EUR per unit)
- basic 6 2.800 2.366
- diluted 6 2.760 2.331
Consolidated statement of changes in equity
for the year ended 31 March
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 - - 22
- recycle to income statement - - (3)
Net share of expense of associated
undertakings recognised directly in equity - - -
Tax on items recognised directly in equity - - 29
Net income / (expense) recognised
directly in equity - - 48
Net profit - - -
Total recognised income - - 48
Acquisition of minority interest - - -
Net share of transactions of associated
undertakings with their equity holders - - -
Net changes in treasury units - 144 -
Employee unit option scheme - - 31
Dividends paid - - -
Balance at 31 March 2007 979 (264) 151
Currency translation adjustments - - -
Cash flow hedges:
- net gains - - 31
- recycle to income statement - - (13)
Net share of expense of associated
undertakings recognised directly in equity - - -
Tax on items recognised directly in equity - - (24)
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 - (4) -
Employee unit option scheme - - 31
Dividends paid - - -
Balance at 31 March 2008 979 (268) 176
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 75 - 75
Cash flow hedges:
- net gains - - 22
- recycle to income statement - - (3)
Net share of expense of associated
undertakings recognised directly in equity - (97) (97)
Tax on items recognised directly in equity - - 29
Net income / (expense) recognised
directly in equity 75 (97) 26
Net profit - 1 328 1 328
Total recognised income 75 1 231 1 354
Acquisition of minority interest - - -
Net share of transactions of associated
undertakings with their equity holders - (98) (98)
Net changes in treasury units - (81) 63
Employee unit option scheme - - 31
Dividends paid - (612) (612)
Balance at 31 March 2007 113 6 532 7 511
Currency translation adjustments (461) - (461)
Cash flow hedges:
- net gains - - 31
- recycle to income statement - - (13)
Net share of expense of associated
undertakings recognised directly in equity - (87) (87)
Tax on items recognised directly in equity - - (24)
Net income / (expense) recognised
directly in equity (461) (87) (554)
Net profit - 1 571 1 571
Total recognised income/(expense) (461) 1 484 1 017
Net share of transactions of associated
undertakings with their equity holders - (173) (173)
Net changes in treasury units - (33) (37)
Employee unit option scheme - - 31
Dividends paid - (701) (701)
Balance at 31 March 2008 (348) 7 109 7 648
Minority Total
interest equity
EUR m EUR m
Balance at 1 April 2006 8 6 781
Currency translation adjustments - 75
Cash flow hedges:
- net gains - 22
- recycle to income statement - (3)
Net share of expense of associated
undertakings recognised directly in equity - (97)
Tax on items recognised directly in equity - 29
Net income / (expense) recognised directly in equity - 26
Net profit 1 1 329
Total recognised income 1 1 355
Acquisition of minority interest (7) (7)
Net share of transactions of associated
undertakings with their equity holders - (98)
Net changes in treasury units - 63
Employee unit option scheme - 31
Dividends paid - (612)
Balance at 31 March 2007 2 7 513
Currency translation adjustments 3 (458)
Cash flow hedges:
- net gains - 31
- recycle to income statement - (13)
Net share of expense of associated
undertakings recognised directly in equity - (87)
Tax on items recognised directly in equity - (24)
Net income / (expense) recognised directly in equity 3 (551)
Net profit (1) 1 570
Total recognised income/(expense) 2 1 019
Net share of transactions of associated
undertakings with their equity holders - (173)
Net changes in treasury units - (37)
Employee unit option scheme - 31
Dividends paid - (701)
Balance at 31 March 2008 4 7 652
Consolidated cash flow statement
for the year ended 31 March
2008 2007
Note EUR m EUR m
Cash flows from operating activities
Cash flow generated from operations 7 968 970
Interest received 82 60
Interest paid (41) (33)
Dividends from associated undertaking 325 280
Taxation paid (171) (177)
Net cash generated from operating activities 1 163 1 100
Cash flows from investing activities
Acquisition of subsidiary undertakings, net of
cash acquired (145) (19)
Acquisition of associated undertakings (1) (4)
Acquisition of minority interest - (20)
Acquisition of property, plant and equipment (271) (207)
Proceeds from disposal of property, plant and
equipment 6 6
Acquisition of intangible assets (33) (40)
Proceeds from disposal of intangible assets 3 20
Acquisition of other non-current assets (44) (102)
Proceeds from disposal of other non-current assets 88 19
Net cash used in investing activities (397) (347)
Cash flows from financing activities
Proceeds from borrowings 179 284
Repayment of borrowings (107) (295)
Dividends paid (701) (612)
Payment for treasury units (80) (14)
Proceeds from sale of treasury units 43 77
Capital element of finance lease payments (3) (3)
Net cash used in financing activities (669) (563)
Net increase in cash and cash equivalents 97 190
Cash and cash equivalents at beginning of year 1 623 1 416
Exchange gains on cash and cash equivalents 51 17
Cash and cash equivalents at end of year 1 771 1 623
Notes to the consolidated financial statements
31 March 2008
Accounting policies and basis of preparation
These consolidated financial statements of the Company are for the year ended
31 March 2008. They have been prepared in accordance with International
Financial Reporting Standards (`IFRS`).
The financial statements are presented in millions of euros; the euro
represents the functional and presentational currency of the Group.
1. 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 identified 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 costs of the Group`s corporate
operations which cannot be meaningfully 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 years ended 31 March are as follows:
Sales Inter-segment sales
2008 2007 2008 2007
Sales EUR m EUR m EUR m EUR m
Jewellery Maisons 2 657 2 435 1 1
Specialist Watchmakers 1 378 1 203 7 5
Writing Instrument Maisons 637 585 1 11
Leather and Accessories Maisons 309 307 - -
Other Businesses 321 297 105 97
5 302 4 827 114 114
Total segment sales
2008 2007
Sales EUR m EUR m
Jewellery Maisons 2 658 2 436
Specialist Watchmakers 1 385 1 208
Writing Instrument Maisons 638 596
Leather and Accessories Maisons 309 307
Other Businesses 426 394
5 416 4 941
2008 2007
Operating result EUR m EUR m
Jewellery Maisons 767 667
Specialist Watchmakers 376 274
Writing Instrument Maisons 120 110
Leather and Accessories Maisons (3) (11)
Other Businesses 5 20
Corporate (157) (144)
Operating profit 1 108 916
Finance costs (114) (58)
Finance income 161 89
Operating profit before share of results of associated
undertakings 1 155 947
Share of post-tax profit of associated undertakings 610 540
Profit before taxation 1 765 1 487
Taxation (195) (158)
Net profit 1 570 1 329
Net segment assets at 31 March are as follows:
Segment assets
2008 2007
Net segment assets EUR m EUR m
Jewellery Maisons 1 777 1 656
Specialist Watchmakers 1 019 843
Writing Instrument Maisons 446 362
Leather and Accessories Maisons 181 169
Other Businesses 459 211
Corporate 503 485
4 385 3 726
Investments in associated undertakings 3 008 3 506
Cash and cash equivalents 2 094 1 881
Short-term loans and borrowings - -
Retirement benefit obligations - -
Deferred and current income tax, net 251 268
Net assets 9 738 9 381
Segment liabilities
2008 2007
Net segment assets EUR m EUR m
Jewellery Maisons (295) (259)
Specialist Watchmakers (164) (135)
Writing Instrument Maisons (86) (80)
Leather and Accessories Maisons (60) (67)
Other Businesses (111) (86)
Corporate (233) (206)
(949) (833)
Investments in associated undertakings - -
Cash and cash equivalents (323) (258)
Short-term loans and borrowings (525) (482)
Retirement benefit obligations (42) (103)
Deferred and current income tax, net (247) (192)
Net assets (2 086) (1 868)
Net segment assets
2008 2007
Net segment assets EUR m EUR m
Jewellery Maisons 1 482 1 397
Specialist Watchmakers 855 708
Writing Instrument Maisons 360 282
Leather and Accessories Maisons 121 102
Other Businesses 348 125
Corporate 270 279
3 436 2 893
Investments in associated undertakings 3 008 3 506
Cash and cash equivalents 1 771 1 623
Short-term loans and borrowings (525) (482)
Retirement benefit obligations (42) (103)
Deferred and current income tax, net 4 76
Net assets 7 652 7 513
Other segment information for the years ended 31 March is as follows:
Depreciation/
amortisation
Items related to Capital expenditure charge
property, plant, equipment 2008 2007 2008 2007
and intangible assets EUR m EUR m EUR m EUR m
Jewellery Maisons 107 104 63 54
Specialist Watchmakers 61 49 31 26
Writing Instrument Maisons 43 33 21 19
Leather and Accessories Maisons 25 20 11 11
Other Businesses 36 20 19 10
Corporate 39 34 29 24
311 260 174 144
Unit option costs
2008 2007
Other non-cash items EUR m EUR m
Jewellery Maisons 6 6
Specialist Watchmakers 5 4
Writing Instrument Maisons 2 2
Leather and Accessories Maisons 1 1
Other Businesses 1 1
Corporate 16 19
31 33
(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 in respect of
the years ended 31 March:
Sales
2008 2007
EUR m EUR m
Europe 2 293 2 042
France 493 462
Switzerland 257 211
Germany, Italy and Spain 690 671
Other Europe 853 698
Asia 1 995 1 801
China/Hong Kong 791 600
Japan 699 731
Other Asia 505 470
Americas 1 014 984
USA 777 771
Other Americas 237 213
5 302 4 827
Segment assets at 31 March
2008 2007
EUR m EUR m
Europe 3 273 2 587
France 508 470
Switzerland 1 911 1 364
Germany, Italy and Spain 492 445
Other Europe 362 308
Asia 676 690
China/Hong Kong 239 278
Japan 293 276
Other Asia 144 136
Americas 436 449
USA 345 393
Other Americas 91 56
4 385 3 726
Capital expenditure
2008 2007
EUR m EUR m
Europe 194 178
France 25 26
Switzerland 92 88
Germany, Italy and Spain 30 33
Other Europe 47 31
Asia 75 54
China/Hong Kong 34 21
Japan 30 22
Other Asia 11 11
Americas 42 28
USA 36 25
Other Americas 6 3
311 260
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.
2. Investments in associated undertakings
BAT Other Total
EUR m EUR m EUR m
At 1 April 2006 3 343 4 3 347
Exchange adjustments 90 - 90
Share of post-tax profit 539 1 540
Dividends received (280) - (280)
Acquisition of associated undertakings - 4 4
Other equity movements arising from:
- expenses recognised directly in equity (97) - (97)
- transactions with equityholders (98) - (98)
At 31 March 2007 3 497 9 3 506
Exchange adjustments (523) (1) (524)
Share of post-tax profit 609 1 610
Dividends received (325) - (325)
Acquisition of associated undertakings - 1 1
Other equity movements arising from:
- expenses recognised directly in equity (87) - (87)
- transactions with equityholders (173) - (173)
At 31 March 2008 2 998 10 3 008
Investments in associated undertakings at 31 March 2008 include goodwill of
EUR 2 200 million (2007: EUR 2 583 million).
British American Tobacco (`BAT`)
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:
2008 2007
EUR m EUR m
Operating profit 826 748
After:
Share of other expense (27) (41)
Finance costs (137) (106)
Finance income 53 28
Share of post-tax profit of associates 134 118
Profit before taxation 876 788
Taxation (223) (205)
Net profit 653 583
Attributable to:
Shareholders` equity 609 539
Minority interest 44 44
653 583
Richemont accounts for its effective interest in BAT under the equity method.
At 31 March 2008, the Group held an effective interest of 19.3 per cent in BAT.
The Group has joint control of R&R Holdings SA, Luxembourg (`R&R`) which holds
30.0 per cent of BAT, and this joint venture has the ability to exert
significant influence over BAT, including representation on the Board of
Directors. Thus, Richemont considers BAT to be an associated undertaking.
The market capitalisation of BAT ordinary shares at 31 March 2008 was
GBP 38 126 million (2007: GBP 32 658 million). The fair value of the Group`s
effective interest of 19.3 per cent in BAT ordinary shares at that date was
EUR 9 250 million (2007: effective interest 19.0 per cent, fair value
EUR 9 130 million).
3. Other operating income
2008 2007
EUR m EUR m
Royalty income - net 15 13
Profit on sale of an interest in a leasehold property - 19
Other expenses (2) (27)
13 5
4. Net finance income
2008 2007
Finance income: EUR m EUR m
Interest income on bank and other deposits 82 62
Dividend income on financial assets at fair value through
profit or loss 6 2
Net changes in fair value of financial assets at fair
value through profit or loss 9 16
Net foreign exchange gains on derivatives 64 9
Finance income 161 89
Finance costs:
Interest expense:
- bank borrowings (35) (32)
- other financial expenses (1) (2)
Net foreign exchange losses on monetary items (78) (24)
Finance costs (114) (58)
Net finance income 47 31
Foreign exchange gains resulting from effective hedge derivative instruments of
EUR 13 million (2007: gains of EUR 3 million) were reflected in cost of sales
during the year. Gains and losses on all non-hedge derivatives are included in
net finance income.
5. Taxation
Taxation charge in the income statement:
2008 2007
EUR m EUR m
Current tax 204 144
Deferred tax charge/(credit) (9) 14
195 158
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 years ended 31 March 2008 and 2007 were
16.9 per cent and 16.7 per cent respectively.
6. Earnings per unit
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 year,
excluding units purchased by the Company and held in treasury.
2008 2007
Profit attributable to Unitholders of the
Company (EUR millions) 1 571 1 328
Weighted average number of units in issue (millions) 561.1 561.4
Basic earnings per unit (EUR per unit) 2.800 2.366
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.
2008 2007
Profit attributable to Unitholders of the Company
(EUR millions) 1 571 1 328
Weighted average number of units in issue (millions) 561.1 561.4
Adjustment for unit options (millions) 8.0 8.4
Weighted average number of units for diluted earnings per
unit (millions) 569.1 569.8
Diluted earnings per unit (EUR per unit) 2.760 2.331
7. Cash flow generated from operating activities
2008 2007
EUR m EUR m
Operating profit 1 108 916
Depreciation of property, plant and equipment 139 121
Amortisation of intangible assets 35 23
Loss on disposal of property, plant and equipment 1 -
Profit on disposal of intangible assets (2) (19)
Increase in provisions 2 14
(Decrease)/increase in retirement benefit obligations (60) 2
Non-cash items 19 34
Increase in inventories (308) (145)
Increase in trade debtors (11) (56)
Increase in other receivables, prepayments and accrued
income (13) (37)
Increase in current liabilities 58 117
Cash flow generated from operations 968 970
8. 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 pre-determined 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 thirteen years from the date of grant. During the year ended 31 March 2008,
awards of 2 368 400 options (2007: 3 343 800 options) were granted at a
weighted average exercise price of CHF 75.10 (2007: CHF 53.10) per unit.
Options in respect of 2 697 893 units (2007: 5 405 424 units) were exercised
during the year at an average exercise price of CHF 25.97 (2007: CHF 23.18)
per unit.
Exchange rates
The results of the Group`s subsidiaries and associates which do not report in
euros have been translated at the following average rates of exchange against
the euro. The balance sheet of those subsidiaries and associates have been
translated into euros at the closing rates set out below.
Exchange rates Year to Year to
against the Euro March 2008 March 2007
Average
United States dollar 1.42 1.28
Japanese yen 161.59 150.00
Swiss franc 1.64 1.59
Pound sterling 0.71 0.68
31 March 2008 31 March 2007
Closing
United States dollar 1.58 1.33
Japanese yen 157.82 157.22
Swiss franc 1.57 1.62
Pound sterling 0.80 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 units are listed on SWX Swiss Exchange
and traded on SWX Europe Limited (formerly named virt- x Exchange Limited)
(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 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 31 March 2008 was CHF 55.70 and
the market capitalisation of the Group`s `A` units on that date was CHF 29 075
million (EUR 18 531 million). Over the preceding twelve months, the highest
closing price of an `A` unit was CHF 82.80 (29 October 2007), and the lowest
CHF 52.75 (17 March 2008).
Compagnie Financiere Richemont SA Richemont SA
Registered office: Registered office:
50 chemin de la Chenaie 35 boulevard Prince Henri
1293 Bellevue 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@cfrinfo.net
secretariat@cfrinfo.net
pressoffice@cfrinfo.net
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 year ended 31 March
2008 was 10.1050 ; this compares with a rate of 9.0354 during the prior year.
in ZAR millions March 2008 March 2007
Sales 53 577 43 614 + 23%
Operating profit 11 196 8 276 +35%
Net profit - parent and subsidiaries 9 701 7 129 +36%
Share of post-tax profit of associates 6 164 4 879 +26%
Net profit 15 865 12 008 +32%
Analysed as follows
Net profit attributable to unitholders 15 875 11 999
Net profit attributable to minority
interests (10) 9
15 865 12 008
Earnings per depositary receipt -
diluted basis ZAR 2.7890 ZAR 2.1062 +32%
Operating profit in the prior year included a one off, non-operational gain of
ZAR 145 million or EUR 16 million. During the year under review, there were no
such items. Excluding non-recurring items, operating profit increased by 38 per
cent from ZAR 8 132 million (EUR 900 million) to ZAR 11 196 million (EUR 1 108
million).
The Group`s share of the results of its principle associate, British American
Tobacco, also 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
loss of ZAR 111 million or EUR 11 million (2007: ZAR 199 million or EUR 22
million). Excluding non-recurring items, net profit attributable to
unitholders increased by 31 per cent from ZAR 12 198 million (EUR 1 350
million) to ZAR 15 986 million (EUR 1 582 million).
Subject to approval of the shareholders at the annual general meeting,
currently scheduled to take place on 10 September 2008, it is currently
anticipated that the dividend will be paid to Depository Receipt holders on 26
September 2008. The rand dividend amount per Depository Receipt will be
calculated by reference to the euro/rand exchange rate prevailing on the
currency conversion date in September 2008.
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 Limited.
Richemont 2008
Sponsor
RAND MERCHAN BANK (A division of FirstRand Bank Limited)
Date: 22/05/2008 07:36:47 Produced by the JSE SENS Department.
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