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REI/CFR - Reinet Investments S.C.A. Depositary Receipts/Compagnie Financiere
Richemont SA Depositary Receipts - Unaudited results for the six months ended
30 September 2008
Reinet Investments S.C.A. Depositary Receipts
issued by Richemont Securities AG
(Incorporated in Switzerland)
ISIN: CH0045793657
Depositary Receipt Code: REI
Compagnie Financiere Richemont SA Depositary Receipts
issued by Richemont Securities AG
(Incorporated in Switzerland)
ISIN: CH0045159024
Depositary Receipt Code: CFR
Unaudited results for the six months ended 30 September 2008
Richemont, the Swiss luxury goods group, announces its unaudited results for
the six-month period ended 30 September 2008.
Financial highlights
- Sales increased by 10 per cent to Euro 2 800 million.
- Operating profit from the luxury goods businesses increased by 14 per
cent to Euro 639 million.
- Net profit, including the Group`s share of the results of British
American Tobacco, increased by 5 per cent to Euro 864 million.
- Cash generated by the Group`s luxury goods operations was Euro 224
million.
Sales
Group sales increased by 10 per cent to Euro 2 800 million, reflecting
particularly strong growth in the Europe and Asia-Pacific regions. At constant
exchange rates, sales growth was 16 per cent.
Operating profit
Operating profit from the Group`s luxury goods businesses increased by 14 per
cent to Euro 639 million. The significant increase reflected the higher sales,
and continuing tight cost control.
British American Tobacco (`BAT`)
The Group`s share of the post-tax profit of its associated company, British
American Tobacco (`BAT`), decreased by 4 per cent to Euro 320 million. The
decrease principally reflected foreign exchange movements compared to the
prior period, as the underlying businesses continued to perform well.
Net profit
Net profit, including the Group`s share of the results of British American
Tobacco, increased by 5 per cent to Euro 864 million. Earnings per unit
attributable to unitholders on a diluted basis increased by 6 per cent to Euro
1.532. Excluding the impact of non-recurring items reported by British
American Tobacco in both years, net profit attributable to unitholders
increased by 6 per cent to Euro 872 million.
Cash position
Cash generated by the Group`s luxury goods operations was Euro 224 million.
After investing activities and taxation payments, the Group`s luxury goods
businesses generated Euro 36 million of free cash flow and Richemont received
dividends from BAT totalling Euro 342 million. Net cash at 30 September 2008,
after the payment of the ordinary dividends of Euro 437 million, amounted to
Euro 927 million.
Group restructuring
Richemont unitholders approved the proposed restructuring, involving inter
alia the separation of the luxury business and the Group`s tobacco and other
interests into two separately-listed entities at shareholder and PC holder
meetings held in early October. The reconstruction was effected on 20 October
2008. The figures presented in this document for the period ended 30 September
2008 therefore reflect the Group in its entirety prior to the restructuring,
including the interests in British American Tobacco.
Group results
in Euro millions September September
2008 2007
Sales 2`800 2 548 + 10 %
Cost of sales (1`010) ( 893)
Gross profit 1`790 1 655 + 8 %
Net operating expenses (1`151) (1 095) + 5 %
Operating profit 639 560 + 14 %
Net financial income 15 38
Profit before taxation 654 598
Taxation (111) ( 108)
Net profit - parent and 543 490 + 11 %
subsidiaries
Share of post-tax profit of associates 321 334 - 4 %
Net profit 864 824 + 5 %
Analysed as follows
Net profit attributable to unitholders 866 823
Net profit attributable to minority (2) 1
interests
864 824
Earnings per unit - diluted basis Euro Euro + 6 %
1.532 1.445
There were no significant one-off items included in the results of the parent
and its subsidiaries during either the current or comparative periods. 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 loss of Euro 6 million (2007: a gain of Euro 2 million). Excluding non-
recurring items, net profit attributable to unitholders increased by 6 per
cent to Euro 872 million from Euro 821 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
Overview
The first half of the year has seen the Group`s luxury businesses perform very
strongly. In particular, the Jewellery Maisons and the Specialist Watchmakers
have seen strong growth over the period. The broad geographic spread of the
businesses has been an important factor as continued strong growth in Europe
and in Asian markets, in particular China, has offset weaker performances
elsewhere.
Richemont`s principal businesses are well positioned at the top end of the
market for luxury goods. Cartier and Van Cleef & Arpels have benefited from
their positioning at the pinnacle of the market for jewellery products, where
demand was strong throughout the period. High jewellery sales have been an
important factor for both Maisons. The specialist watchmakers have also seen
good demand; new products launched at the Salon International de la Haute
Horlogerie in April 2008 were well received by our retail partners and the
watch Maisons maintained good levels of deliveries. Sales at Montblanc were in
line with the comparative period at actual exchange rates but operating profit
declined as the costs of the expanded boutique network were not fully covered.
The Leather and Accessories Maisons reported higher losses during the period.
Richemont restructuring
As announced earlier in the year, the restructuring of the Group has been
implemented in October and November, following approval by shareholders of
Compagnie Financiere Richemont SA (`CFR SA`) and participation certificate
(`PC`) holders of Richemont SA in early October. On 20 October, the luxury
businesses were transferred from Richemont SA to CFR SA and the link between
the shares of CFR SA and the PCs issued by Richemont SA was broken.
CFR SA continues to be listed on the Swiss stock exchange and traded on SWX
Europe in London. It is the parent company of the Jewellery Maisons,
Specialist Watchmakers, Writing Instrument Maisons, Leather and Accessories
Maisons and the other luxury businesses.
Upon the separation from CFR SA, Richemont SA changed its legal status,
becoming a limited partnership, and was listed separately on the Luxembourg
stock exchange as Reinet Investments SCA. Following the separation of the two
entities, Reinet retained the 19.5 per cent interest in BAT together with some
Euro 350 million in cash and a portfolio of small, non-luxury investments. On
3 November, 90 per cent of Reinet`s holding of BAT shares was distributed to
its shareholders by way of a partial capital reduction.
Current trading and outlook
Over the past few years we have expressed concerns about the over-exuberance
in the world economy and financial markets.
Years of excess liquidity and the resultant availability of unrealistically
priced "easy credit" led to the excesses that have now come to haunt the
financial markets. The resultant irresponsible assumption of excess borrowings
led to many sectors of the economy being over-leveraged.
Richemont has not suffered any losses in terms of its liquid resources, having
already adopted a very conservative approach to cash management last year.
Reality has now set in. A protracted period of reckless assumption of risk and
debt is now being forced out of the system. This will not be a quick or easy
process.
The chaos in financial markets has now inevitably begun to impact the real
economy around the world. Short-term concerns are no longer about inflation
but about the spectre of deflation. Unemployment is set to rise in many
economies and the financial sector has been hit hard in this respect.
Although our Maisons have seen steady demand in the period through to the end
of September, the turmoil experienced in October has started to impact demand
for the Group`s products. Sales for the month increased by only 1.6 per cent
overall compared to October last year. The stronger yen and dollar contributed
to the increase; sales at constant rates were 2 per cent lower for the month.
The largest decline was seen in the Americas region. Although Asian markets
continued to grow at a double-digit rate, Europe also registered a decline
despite strong sales to non-European customers. Sales in Japan were also below
the prior year in yen terms but showed growth on conversion into euros.
The continuous de-leveraging referred to above will not disappear in the
foreseeable future. The resultant effect on the real economy and the loss of
the "feel-good" factor that the luxury goods industry relies upon will
undoubtedly impact upon sales.
Having expected this downturn for some time, Richemont is in a relatively good
position to weather the current storm. The Group has a strong balance sheet,
with adequate cash resources, and has an experienced management team. The
Maisons have survived recessions and economic turmoil in the past and will
certainly survive the difficulties that we are facing today. The Group is
significantly better positioned to withstand a slowdown in demand, with a
broader geographic spread and better financial controls and is much more
reactive to the market than it was seven years ago.
We will take whatever steps may be necessary to limit the negative impact of
the slowdown on the Group, recognising that there is no point in taking action
for short-term gain to the detriment of our long-term goals and strategy.
Johann Rupert
Executive Chairman
Geneva, 14 November 2008
Business Review
Overview
in Euro millions September September
2008 2007
Sales 2`800 2 548 + 10 %
Cost of sales (1`010) ( 893)
Gross profit 1`790 1 655 + 8 %
Net operating expenses (1`151) (1 095) + 5 %
Selling and distribution (602) ( 565) + 7 %
expenses
Communication expenses (290) ( 282) + 3 %
Administration expenses (264) ( 255) + 4 %
Other income 5 7 - 29 %
Operating profit 639 560 + 14 %
Sales of luxury goods during the six-month period increased by 10 per cent to
Euro 2 800 million. This performance reflected a continuation of the strong
demand for jewellery, jewellery watches and mechanical watches seen over the
previous year. Overall sales increased by 16 per cent in constant currency
terms.
Gross profit increased by 8 per cent to Euro 1 790 million. The gross margin
declined by 1.1 per cent to 63.9 per cent of sales. The lower margin reflected
the strengthening of the Swiss franc during the period, as well other exchange
rate movements and an increase in precious metal and gemstone costs. The Swiss
franc is of particular importance to the cost of sales, with close to 50 per
cent of the Group`s final sales being generated by watches.
Net operating expenses increased by 5 per cent overall. The main increase in
operating expenses was in selling and distribution expenses, which grew more
slowly than sales. Communication costs increased by 3 per cent and, as a
percentage of sales, were lower than the comparative period at some 10.4 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 14 per cent to Euro 639 million with the
operating margin improved by 0.8 percentage points to 22.8 per cent in 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 Euro millions September September
2008 2007
Sales
Jewellery Maisons 1`420 1 277 + 11 %
Specialist Watchmakers 794 707 + 12 %
Writing Instrument Maisons 286 284 + 1 %
Leather and Accessories Maisons 130 137 - 5 %
Other Businesses 170 143 + 19 %
Total sales 2`800 2 548 + 10 %
Operating results
Jewellery Maisons 449 367 + 22 %
Specialist Watchmakers 232 218 + 6 %
Writing Instrument Maisons 34 42 - 19 %
Leather and Accessories Maisons (15) ( 9) - 67 %
Other Businesses 4 11 - 64 %
704 629 + 12 %
Corporate (65) ( 69) - 6 %
Central support services (72) ( 74) - 3 %
Other income 7 5 + 40 %
Operating profit 639 560 + 14 %
Jewellery Maisons
Cartier`s sales benefited from strong sales of high jewellery pieces and
jewellery watches, as well as good demand for the Ballon Bleu watch
collection.
Van Cleef & Arpels continued to report very strong sales growth in the period;
the success of high jewellery collections was reinforced by the Alhambra
jewellery range.
The Jewellery Maisons` sales increased by 11 per cent overall and total
operating profit increased by 22 per cent to Euro 449 million, representing an
operating margin of 32 per cent.
Specialist Watchmakers
Overall sales of the Group`s specialist watchmaking Maisons` increased by 12
per cent and operating profit increased by 6 per cent. Operating margin, at 29
per cent, was two percentage points lower than the comparative period,
reflecting negative foreign exchange effects, the rising price of materials
and production constraints.
During the period, the Group acquired a controlling interest in the Geneva-
based manufacturer Roger Dubuis. All Roger Dubuis mechanical watch movements
bear the prestigious Poincon de Geneve seal. The impact of the acquisition on
sales and results is not yet material.
The continuing growth in sales reflects demand for both existing models and
the new collections presented at the 2008 Salon International de la Haute
Horlogerie in Geneva. IWC benefited from sales of its Vintage Collection and
Jaeger-LeCoultre`s Master Compressor range enjoyed particularly strong demand.
The Magic Hour watch helped reinforce Piaget`s reputation as both jeweller and
watchmaker. Panerai`s Manifattura Collection, featuring in-house movements,
saw strong demand and Vacheron Constantin launched the Quai de l`ile,
featuring Poincon de Geneve movements. Baume & Mercier successfully launched
the Ilea range and A. Lange & Sohne`s Cabaret Tourbillon introduced further
technological innovations to fine watchmaking.
Writing Instrument Maisons
Montblanc`s diversified portfolio of luxury goods, including writing
instruments, leather goods, watches and jewellery, provided the basis for
strong retail sales growth through the Maison`s own boutique network. This
growth was largely offset by a decrease in wholesale sales compared with the
prior period, partially linked to the planned reduction in the wholesale
distribution network.
Operating profit decreased by 19 per cent, reflecting the costs of newly
opened boutiques, which were not fully compensated during the period by the
growth in retail sales described above. The Maisons` overall operating margin
decreased from 15 per cent in the comparative period to 12 per cent during the
period under review.
Leather and Accessories Maisons
Alfred Dunhill reported sales growth of 2 per cent at constant exchange rates
during the period, with sales growth in the Asia-Pacific region largely offset
by lower sales in other regions. Alfred Dunhill`s operating losses for the six
months amounted to Euro 9 million.
Lancel`s sales were 4 per cent below the prior period at constant exchange
rates. Compared with the same six months last year, operating losses were
marginally higher.
Other businesses
Chloe`s sales slowed down significantly in the period resulting in a decrease
in operating profit. The overall increase in sales of other businesses
included the impact of acquisitions made during the previous financial year.
Corporate
Corporate expenses 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. Costs in the period also included fees
relating to the Group restructuring.
Operating profit
Operating profit for the period increased by 14 per cent to Euro 639 million
and the operating profit margin increased from 22.0 per cent to 22.8 per cent.
Sales by region
Movement at:
Constant Actual
exchange exchange
in Euro millions September September rates rates
2008 2007
Europe 1`259 1 092 + 18 % + 15 %
Asia-Pacific 729 612 + 30 % + 19 %
Americas 497 506 + 9 % - 2 %
Japan 315 338 - 7 % - 7 %
2`800 2 548 + 16 % + 10 %
Europe
Sales in European markets increased by 15 per cent and accounted for 45 per
cent of total Group sales. The increase reflects continuing sales growth in
the region`s established markets as well as strong sales growth in the Middle
East and other developing markets.
Asia-Pacific
This region continued to report very strong growth, particularly in mainland
China and Hong Kong. At constant exchange rates, sales growth in the region as
a whole was 30 per cent. Sales in the region represented 26 per cent of Group
turnover during the period.
Americas
Underlying sales in the Americas region grew by 9 per cent during the six
month period. Growth slowed from the beginning of August, reflecting the
depressed economic climate particularly in the US market. The growth in dollar-
terms was more than offset on translation into euros. The average euro:
average dollar exchange rates used were 1.53 in the current period and 1.36 in
the prior period, a movement of 11 per cent.
Japan
Luxury businesses continue to face challenging market conditions in Japan and
Group sales in both yen and terms decreased by 7 per cent. The domestic
Japanese market accounted for 11 per cent of total Group sales.
Sales by distribution channel
in Euro millions September September
2008 2007
Retail 1`108 995 + 11 %
Wholesale 1`692 1 553 + 9 %
2`800 2 548 + 10 %
Retail
Retail sales increased by 11 per cent to Euro 1 108 million. During the six-
month period, the overall retail network increased by 36 to 774 boutiques. In
terms of retail distribution, at the end of September there were 1 376
dedicated boutiques; of these 602 are operated under franchise agreements.
Wholesale
Wholesale sales increased by 9 per cent during the period under review,
including a slowdown in the rate of growth since August 2008. Sales to
franchise partners are treated as wholesale sales.
Summary income statement and results of associates
in Euro millions
September September
2008 2007
Operating profit 639 560
Finance income 15 38
654 598
Share of post-tax results of associated 321 334
undertakings
Before non-recurring income / (expenses) 327 332
Share of non-recurring income / (expenses) (6) 2
Profit before taxation 975 932
Taxation (111) (108)
Net profit 864 824
Net financial income amounted of Euro 15 million in the period under review.
Interest income on deposits was partly offset by interest on borrowings, net
foreign exchange losses and fair value losses on financial instruments.
Finance income reported in the comparative period included financial
investment disposal gains.
Excluding its share of the results of its investment in British American
Tobacco, the Group`s effective taxation rate was 17.0 per cent, reflecting the
anticipated full-year rate.
Associated companies
The Group`s principal associated company to 30 September 2008 was British
American Tobacco plc. Richemont has an effective interest of 19.5 per cent in
British American Tobacco, with a market value at 30 September 2008 of Euro 9
081 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 2008, the Group`s share of the
results of BAT decreased to Euro 320 million. Excluding non-recurring items
from the Group`s share of the results of its associates, attributable profit
decreased by 4 per cent. Non-recurring items primarily related to
restructuring costs, intangible asset impairment charges and net asset
disposal gains.
The results in the period reflected a 19.4 per cent interest in BAT`s results
for the three months to June 2008 and a 19.5 per cent interest for the three
months to September 2008. The results for the prior 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 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. Movements in the average
sterling-euro exchange rate between the period under review and the
comparative period had a 17 per cent negative impact on the Group`s share of
post-tax results from BAT.
In cash flow terms, during the six months under review, Richemont received
dividends from BAT totalling Euro 342 million (2007: Euro 338 million).
BAT has a 31 December year-end but reports to its shareholders on a quarterly
basis. 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 18 per cent higher at GBP 2 714
million, up 20 per cent if exceptional items are excluded, with all regions
contributing to this strong result. Profit from operations, excluding
exceptional items, would have been 10 per cent higher at constant rates of
exchange, with Latin America the only region lower.
BAT`s adjusted diluted earnings per share rose by 17 per cent, principally as
a result of the strong growth in profit from operations and favourable
exchange rate movements.
Analysis of net profit
in Euro millions
September September
2008 2007
Net profit from parent and subsidiaries 543 490
Share of post-tax profit of associates
Net profit before non-recurring income / (expenses) 327 332
Non-recurring income / (expenses) (6) 2
Net profit - share of associates 321 334
Net profit of the Group 864 824
Attributable to:
Unitholders 872 821
Minority interests and non-recurring income / (8) 3
(expenses)
Net profit of the Group 864 824
Earnings per unit excluding non-recurring income / (expenses)
Basic Euro Euro
1.557 1.463
Diluted basis Euro Euro
1.543 1.442
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 charge of Euro 6
million in the period under review (2007: a net gain of Euro 2 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, intangible asset impairment charges and net asset
disposal gains.
Excluding all such non-recurring items from both periods and minority
interests, attributable net profit in the six months to 30 September 2008
would have been Euro 872 million compared to Euro 821 million in the prior
period, representing an increase of 6 per cent. On the same basis, diluted
earnings per unit would have increased by 6 per cent from Euro 1.442 to Euro
1.543.
Cash flow
in Euro millions
September September
2008 2007
Operating profit 639 560
Depreciation and other non-cash items 104 101
Earnings before interest, tax and depreciation 743 661
Increase in working capital ( 519) ( 393)
Cash generated from operations 224 268
Dividends received from associate 342 338
Returns on investments and servicing of finance 32 19
Taxation paid ( 84) ( 71)
Net acquisitions of fixed assets ( 137) ( 108)
Other investing activities, net ( 160) 12
Net cash inflow before financing activities 217 458
Dividends paid to unitholders ( 437) ( 689)
Ordinary dividend ( 437) ( 358)
Special dividend - ( 331)
(Decrease)/increase in borrowings ( 2) 35
Payments relating to treasury units, net ( 37) ( 37)
Other financing activities ( 2) ( 2)
Decrease in cash, cash equivalents and short-term ( 261) ( 235)
borrowings
Cash and cash equivalents at the beginning of 1 771 1 623
period
Exchange rate effects ( 19) 13
Cash and cash equivalents at the end of period 1 491 1 401
Borrowings ( 564) ( 497)
Net cash 927 904
The Group`s net cash position decreased from Euro 1 246 million at 31 March
2008 to Euro 927 million at 30 September 2008. The decrease largely reflected
the payment of the ordinary dividends at the end of September.
During the period, cash generated from operations amounted to Euro 224 million
(2007: Euro 268 million). The increase in operating profit was partially
offset by increases in working capital requirements. An increase in
inventories primarily reflected finished goods, in particular jewellery
products, as well as raw material purchases and work in progress. An increase
in debtors reflected both the seasonality of wholesale sales and the growth in
wholesale sales reported during the period under review.
Dividends received from associates, namely British American Tobacco, comprise
the final dividend in respect of its financial year ended 31 December 2007,
received in May 2008 and the interim dividend for the 2008 financial year,
received in September 2008. In total, dividends received amounted to Euro 342
million.
Investing activities during the period included the acquisition of a
controlling interest in Manufacture Roger Dubuis SA, a Geneva-based specialist
watchmaker. Further investments were made in the Group`s worldwide
distribution network and its European manufacturing facilities.
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 2008. 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 1.7 million Richemont `A` units for a consideration of Euro 44
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 Euro
37 million.
Summarised balance sheet
in Euro millions 30 31
September March
2008 2008
Non-current assets
Fixed assets 1`403 1 207
Investment in associated undertakings 3`055 3 008
Other non-current assets 558 493
5`016 4 708
Net current assets 2`340 1 866
Net operating 7`356 6 574
assets
Net cash 927 1 246
Cash and cash equivalents 1`491 1 771
Borrowings (564) ( 525)
Other non-current liabilities (216) ( 168)
8`067 7 652
Equity
Unitholders` equity 8`059 7 648
Minority interests 8 4
8`067 7 652
At 30 September 2008, the Group`s interest in British American Tobacco (`BAT`)
ordinary shares amounted to 19.5 per cent and BAT`s market capitalisation,
based on 2 001 million ordinary shares in issue, amounted to Euro 46 599
million (GBP 36 725 million). The fair value of the Group`s investment in BAT
therefore amounted to Euro 9 081 million. The carrying value of the investment
amounted to Euro 3 043 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 2008 was Euro 12
million (2007: Euro 9 million).
Net current assets increased by Euro 474 million compared to March 2008. The
value of net inventories increased by 16 per cent to Euro 2 404 million. The
inventory increase largely reflects finished goods in the growing boutique
network, particularly jewellery pieces, as well as the purchase of raw
materials and an increase in the work in progress inventories. Consequently,
the inventory rotation rate in the six month period has slowed by 1.5 months
to 17.9 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 2008, net cash amounted to Euro 927 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
Group Chief Executive Officer
Richard Lepeu
Group Finance Director
Compagnie Financiere Richemont SA
Geneva, 14 November 2008
14 November 2008
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited
Unaudited consolidated interim financial statements
at 30 September 2008
Consolidated balance sheet
30 31
September March
2008 2008
ASSETS Note Euro m Euro m
Non-current assets
Property, plant and equipment 1 040 975
Intangible assets 363 232
Investments in associated 5 3 055 3 008
undertakings
Deferred income tax assets 266 251
Financial assets held at fair value through 104 68
profit or loss
Other non-current assets 188 174
5 016 4 708
Current assets
Inventories 2 404 2 076
Trade and other receivables 934 641
Derivative financial instruments 6 72
Prepayments and accrued income 179 147
Cash at bank and on hand 2 131 2 094
5 654 5 030
Total assets 10 670 9 738
EQUITY AND LIABILITIES
Equity
Share capital 334 334
Participation reserve 645 645
Treasury units ( 298) ( 268)
Hedge and unit option reserves 146 176
Cumulative translation adjustment reserve ( 330) ( 348)
Retained earnings 7 562 7 109
Total unitholders` equity 8 059 7 648
Minority interest 8 4
Total equity 8 067 7 652
LIABILITIES
Non-current liabilities
Borrowings 262 246
Deferred income tax liabilities 66 59
Retirement benefit obligations 41 42
Provisions 81 52
Other long term liabilities 28 15
478 414
Current liabilities
Trade and other payables 509 563
Current income tax liabilities 221 188
Borrowings 3 12
Derivative financial instruments 87 8
Provisions 89 95
Accruals and deferred income 277 216
Short-term loans 299 267
Bank overdrafts 640 323
2 125 1 672
Total liabilities 2 603 2 086
Total equity and liabilities 10 670 9 738
The notes on pages 18 to 27 are an integral part of these consolidated interim
financial statements.
Consolidated income statement
Six Six
months to months to
30 30
September September
2008 2007
Notes Euro m Euro m
Sales 4 2 800 2 548
Cost of sales (1 010) ( 893)
Gross profit 1 790 1 655
Selling and distribution ( 602) ( 565)
expenses
Communication expenses ( 290) ( 282)
Administrative expenses ( 264) ( 255)
Other operating income 6 5 7
Operating profit 639 560
Finance costs 7 ( 100) ( 45)
Finance income 7 115 83
Share of post-tax profit 5 321 334
of associated
undertakings
Profit before taxation 975 932
Taxation 9 ( 111) ( 108)
Net profit 864 824
Attributable to:
Unitholders 866 823
Minority interest ( 2) 1
864 824
Earnings per unit for
profit attributable to
unitholders during the
period (expressed in
Euro per unit)
- basic 8 1.546 1.467
- diluted 8 1.532 1.445
The notes on pages 18 to 27 are an integral part of these consolidated interim
financial statements.
Consolidated statement of changes in equity
Equity attributable to unitholders
Cumulative
translation
Unitholders` Treasury Other adjustment Retained
capital units reserves reserve earnings
Euro m Euro m Euro m Euro m Euro m
Balance at 1 979 ( 264) 151 113 6 532
April 2007
Currency - - - ( 133) -
translation
adjustments
Cash flow
hedges:
- net gains - - 10 - -
- recycle to - - ( 5) - -
income
statement
Net share of
income of
associated
- - - - 29
undertakings
recognised
directly in
equity
Tax on items - - 1 - -
recognised
directly in
equity
Net income /
(expense)
recognised
directly in - - 6 ( 133) 29
equity
Net profit - - - - 823
Total - - 6 ( 133) 852
recognised
income /
(expense)
Net share of
transactions
of associated
undertakings - - - - ( 119)
with their
equity
holders
Net changes - ( 11) - - ( 23)
in treasury
units
Employee unit - - 16 - -
option scheme
Dividends - - - - ( 700)
paid
Balance at 30 979 ( 275) 173 ( 20) 6 542
September
2007
Balance at 1 979 ( 268) 176 ( 348) 7 109
April 2008
Currency - - - 18 -
translation
adjustments
Cash flow
hedges:
- net losses - - ( 34) - -
- recycle to - - ( 11) - -
income
statement
Net share of
income of
associated
- - - - 107
undertakings
recognised
directly in
equity
Net income /
(expense)
recognised
directly in - - ( 45) 18 107
equity
Net profit - - - - 866
Total - - ( 45) 18 973
recognised
income /
(expense)
Minority - - - - -
interest in
business
combinations
Net share of
transactions
of associated
undertakings - - - - ( 75)
with their
equity
holders
Net changes - ( 30) - - ( 8)
in treasury
units
Employee unit - - 15 - -
option scheme
Dividends - - - - ( 437)
paid
Balance at 30 979 ( 298) 146 ( 330) 7 562
September
2008
Minority Total
interest equity
Total
Euro m Euro m Euro m
Balance at 1 April 2007 7 511 2 7 513
Currency translation adjustments ( 133) - ( 133)
Cash flow hedges:
- net gains 10 - 10
- recycle to income statement ( 5) - ( 5)
Net share of income of associated
undertakings recognised directly 29 - 29
in equity
Tax on items recognised directly in 1 - 1
equity
Net income / (expense) recognised
directly in equity ( 98) - ( 98)
Net profit 823 1 824
Total recognised income / (expense) 725 1 726
Net share of transactions of
associated
undertakings with their equity ( 119) - ( 119)
holders
Net changes in treasury units ( 34) - ( 34)
Employee unit option scheme 16 - 16
Dividends paid ( 700) - ( 700)
Balance at 30 September 2007 7 399 3 7 402
Balance at 1 April 2008 7 648 4 7 652
Currency translation adjustments 18 - 18
Cash flow hedges:
- net losses ( 34) - ( 34)
- recycle to income statement ( 11) - ( 11)
Net share of income of associated
undertakings recognised directly 107 - 107
in equity
Net income / (expense) recognised
directly in equity 80 - 80
Net profit 866 ( 2) 864
Total recognised income / (expense) 946 ( 2) 944
Minority interest in business - 6 6
combinations
Net share of transactions of
associated
undertakings with their equity ( 75) - ( 75)
holders
Net changes in treasury units ( 38) - ( 38)
Employee unit option scheme 15 - 15
Dividends paid ( 437) - ( 437)
Balance at 30 September 2008 8 059 8 8 067
The notes on pages 18 to 27 are an integral part of these consolidated interim
financial statements.
Consolidated cash flow statement
Six months Six months
to to
30 30
September September
2008 2007
Notes Euro m Euro m
Cash flows from operating
activities
Cash flow generated from 10 224 268
operations
Interest received 51 45
Interest paid ( 19) ( 26)
Dividends from associated 342 338
undertaking
Taxation paid ( 84) ( 71)
Net cash generated from 514 554
operating activities
Cash flows from investing
activities
Acquisition of subsidiary 13 ( 121) ( 36)
undertakings, net of cash
acquired
Acquisition of associated ( 1) -
undertakings
Acquisition of property, plant ( 124) ( 98)
and equipment
Proceeds from disposal of 2 1
property, plant and equipment
Acquisition of intangible ( 15) ( 12)
assets
Proceeds from disposal of - 1
intangible assets
Acquisition of other non- ( 44) ( 31)
current assets
Proceeds from disposal of 6 79
other non-current assets
Net cash used in investing ( 297) ( 96)
activities
Cash flows from financing
activities
Proceeds from borrowings 144 103
Repayment of borrowings ( 146) ( 68)
Dividends paid ( 437) ( 689)
Payment for treasury units ( 49) ( 74)
Proceeds from sale of treasury 12 37
units
Capital element of finance ( 2) ( 2)
lease payments
Net cash used in financing ( 478) ( 693)
activities
Net decrease in cash and cash ( 261) ( 235)
equivalents
Cash and cash equivalents at 1 771 1 623
beginning of period
Exchange (losses)/gains on ( 19) 13
cash and cash equivalents
Cash and cash equivalents at 1 491 1 401
end of period
The notes on pages 18 to 27 are an integral part of these consolidated interim
financial statements.
Notes to the consolidated interim financial statements
at 30 September 2008
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, Roger Dubuis, 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 SIX Swiss Exchange and traded on SWX Europe
Limited 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 13 November 2008.
2. Basis of preparation
This interim financial information for the half year ended 30 September 2008
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 2008.
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 2008.
There are no new standards, amendments to standards or interpretations which
are mandatory for the financial year ending 31 March 2009 that will have a
material effect on the Group`s consolidated net income and financial position.
IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction became effective from 1 January 2008. The
interpretation provides guidance on assessing the limit in IAS 19 on the
amount of surplus that can be recognised as an asset. The Group has considered
the requirements in respect of its defined benefit plans and concluded that
there are currently no surpluses that result in the recognition of assets. In
respect of the Group`s plans which are in surplus, current and future
contributions are expected to exceed service costs, thus no economic benefit
is available through contribution reductions.
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 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, Officine Panerai and Roger
Dubuis.
- Writing Instrument Maisons - businesses whose primary activity includes
the design, manufacture and distribution of writing instruments. These
are Montblanc and Montegrappa; and
- 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 Inter- Total
segment segment
sales sales
2008 2007 2008 2007 2008 2007
Sales Eurom Eurom Eurom Eurom Eurom Eurom
Jewellery Maisons 1 420 1 277 1 1 1 421 1 278
Specialist 794 707 5 3 799 710
Watchmakers
Writing Instrument 286 284 - 1 286 285
Maisons
Leather and 130 137 - - 130 137
Accessories Maisons
Other Businesses 170 143 78 52 248 195
2 800 2 548 84 57 2 884 2 605
2008 2007
Operating result Eurom Eurom
Jewellery Maisons 449 367
Specialist 232 218
Watchmakers
Writing Instrument Maisons 34 42
Leather and Accessories ( ( 9)
Maisons 15)
Other Businesses 4 11
Corporate ( (
65) 69)
Operating profit 639 560
Finance costs ( (
100) 45)
Finance income 115 83
Operating profit before share of results of 654 598
associated undertakings
Share of post-tax profit of associated 321 334
undertakings
Profit before 975 932
taxation
Taxation (111) (108)
Net Profit 864 824
The net segment assets at 30 September are as follows:
Segment Segment Net segment
assets liabilities assets
2008 2007 2008 2007 2008 2007
Net segment assets Eurom Eurom Eurom Eurom Eurom Eurom
Jewellery Maisons 2 087 1 788 ( ( 1 779 1 519
308) 269)
Specialist 1 443 957 ( ( 1 242 816
Watchmakers 201) 141)
Writing Instrument 535 419 ( 89) ( 446 343
Maisons 76)
Leather and Accessories 212 175 ( 55) ( 157 114
Maisons 61)
Other Businesses 427 261 ( 99) ( 328 187
74)
Corporate 514 493 ( ( 195 266
319) 227)
5 218 4 093 ( 1 ( 4 147 3 245
071) 848)
Investments in associated undertakings 3 055 3 318
Cash and cash 1 491 1 401
equivalents
Short-term loans and ( (
borrowings 564) 497)
Retirement benefit obligations ( (
41) 105)
Deferred and current income tax, net ( 40
21)
Net assets 8 067 7 402
Other segment information for the six months to 30 Depreciation/
September is as follows:
Items related to Capital amortisation
expenditure charge
property, plant and equipment 2008 2007 2008 2007
and intangible assets Eurom Eurom Eurom Eurom
Jewellery Maisons 35 49 32 29
Specialist 35 22 18 15
Watchmakers
Writing Instrument 12 11 12 10
Maisons
Leather and Accessories 13 8 5 5
Maisons
Other Businesses 19 11 17 5
Corporate 25 9 12 12
139 110 96 76
Unit option
costs
2008 2007
Other non-cash items Eurom Eurom
Jewellery Maisons 3 3
Specialist 2 2
Watchmakers
Writing Instrument 1 1
Maisons
Leather and Accessories 1 1
Maisons
Corporate 8 9
15 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:
Segment
assets
Sales at 30 Capital
September expenditure
2008 2007 2008 2007 2008 2007
Eurom Eurom Eurom Eurom Eurom Eurom
Europe 1 259 1 092 3 818 2 894 97 65
France 268 231 584 487 9 7
Switzerland 153 112 2 118 1 485 52 29
Germany, Italy and 320 332 590 512 10 10
Spain
Other Europe 518 417 526 410 26 19
Asia 1 044 950 878 707 31 29
China/Hong Kong 447 367 364 250 19 7
Japan 315 338 316 298 4 17
Other Asia 282 245 198 159 8 5
Americas 497 506 522 492 11 16
USA 374 391 438 397 10 12
Other Americas 123 115 84 95 1 4
2 800 2 548 5 218 4 093 139 110
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. Investments in associated undertakings
BAT Other Total
Euro m Euro m Euro m
At 1 April 2007 3 497 9 3 506
Exchange ( 94) - ( 94)
adjustments
Share of post-tax profit 334 - 334
Dividends ( 338) - ( 338)
received
Other equity movements ( 90) - ( 90)
At 30 September 3 309 9 3 318
2007
At 1 April 2008 2 998 10 3 008
Exchange 35 - 35
adjustments
Share of post-tax profit 320 1 321
Dividends ( 342) - ( 342)
received
Acquisition of associated - 1 1
undertakings
Other equity movements 32 - 32
At 30 September 3 043 12 3 055
2008
Investments in associated undertakings at 30 September 2008 include goodwill
of Euro 2 226 million (September 2007: Euro 2 511 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 Six months
to to
30 30
September September
2008 2007
Euro m Euro m
Operating profit 467 457
After:
Share of other ( 8) 4
income/(expense)
Finance costs ( 57) ( 57)
Finance income 14 16
Share of post-tax profit of 56 63
associates
Profit before 480 479
taxation
Taxation ( 135) ( 121)
Net profit 345 358
Attributable to:
Shareholders` 320 334
equity
Minority interest 25 24
345 358
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 2008
Percentage
1 April 2008 to 30 June 2008 19.4
1 July 2008 to 30 September 19.5
2008
For the six months ended 30 September 2007
1 April 2007 to 30 June 2007 19.1
1 July 2007 to 30 September 2007 19.3
6. Other operating income / (expenses)
Included in other operating income / (expenses) are royalties received of
Euro 7 million (2007: Euro 6 million).
7. Net finance income
Six months Six months
to to
30 30
September September
2008 2007
Euro m Euro m
Finance income:
Interest income on bank and 51 52
other deposits
Net foreign exchange gains on 64 -
monetary items
Fair value gains on financial - 14
instruments
Net foreign exchange gains on - 17
derivatives
Finance income 115 83
Finance costs:
Interest
expense:
- bank ( 18) ( 17)
borrowings
- other financial expenses - ( 1)
Fair value losses on financial ( 11) -
instruments
Net foreign exchange losses on - ( 25)
monetary items
Net foreign exchange losses on ( 71) ( 2)
derivatives
Finance costs ( 100) ( 45)
Net finance 15 38
income
Foreign exchange gains resulting from effective hedge derivative instruments
of Euro 11 million (2007: gains of Euro 5 million) were reflected in cost of
sales during the period.
8. Earnings per unit
1.1 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 Six months
to to
30 30
September September
2008 2007
Profit attributable to unitholders of 866 823
the Company (Euro millions)
Weighted average number of units in 560.2 561.1
issue (millions)
Basic earnings per unit 1.546 1.467
(Euro per unit)
The weighted average number of units in issue is not expected to change
significantly as a result of the restructuring described in note 15.
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 Six months
to to
30 30
September September
2008 2007
Profit attributable to unitholders of 866 823
the Company (Euro millions)
Weighted average number of units in 560.2 561.1
issue (millions)
Adjustment for unit options 4.9 8.4
(millions)
Weighted average number of units for
diluted earnings per
unit (millions) 565.1 569.5
Diluted earnings per unit (Euro per 1.532 1.445
unit)
As a consequence of restructuring described in note 15 the Group will
implement changes to the unit option plan which will result in an increase in
the number of options outstanding. The dilution impact on earnings per unit
will therefore be greater.
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 2008 and 2007 were
17.0 per cent and 18.1 per cent respectively.
10 Cash flow generated from operations
Six months Six months
to to
30 30
September September
2008 2007
Euro m Euro m
Operating profit 639 560
Depreciation of property, plant and 75 62
equipment
Amortisation of intangible assets 21 14
Increase in provisions 4 10
(Decrease)/increase in retirement ( 2) 3
benefit obligations
Non-cash items 6 12
Increase in inventories ( 268) ( 170)
Increase in trade debtors ( 218) ( 183)
Increase in other receivables, ( 59) ( 45)
prepayments and accrued income
Increase in current and long-term 26 5
operating liabilities
Cash flow generated from operations 224 268
11. Related-party transactions
As at 30 September 2008, Compagnie Financiere Rupert, Bellevue, Geneva held
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`703 Richemont `A` bearer units, or the equivalent thereof in the form of
Depository Receipts, as at 31 March 2008, 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).
On 7 August 2008, the Company, its wholly-owned subsidiary Richemont SA and
Remgro Limited entered into an agreement whereby Richemont SA sold Remgro
Limited a put option granting Remgro Limited the right to contribute 21 430
000 BAT shares to Reinet Investments SCA, which was formerly Richemont SA and
which came into existence upon the implementation of the reconstruction of the
Group on 20 October 2008, in exchange for 30 255 541 new shares in Reinet
Investments SCA. A liability of Euro 7 million is included in the balance
sheet at 30 September 2008 in respect of this put option arrangement.
There has been no other 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. Dividends
In September 2008 a dividend was paid of Euro 0.78 per unit (2007: Euro 0.65
per unit, together with a special dividend of Euro 0.60 per unit).
13. Business combinations
Acquisitions of subsidiary undertakings
In August 2008, the Group acquired a 60 per cent controlling interest in
Manufacture Roger Dubuis SA, a Geneva watchmaker. The Group also acquired
controlling interest in other non-material business operations during the
period.
The financial information is presented on an aggregate basis and includes
provisional amounts for certain assets and liabilities.
Net assets acquired in the period Business operations
ended 30 September 2008
acquired
Fair Acquirees
value
carrying
amount
Euro m Euro m
Property, plant and equipment and 2 2
other long-term assets
Intangible assets 54 -
Inventories 28 28
Trade and other receivables 4 4
Cash and cash equivalents -15 -15
Current and long-term liabilities -57 -57
Borrowings, current and deferred tax -4 7
Net assets acquired 12 -31
Attributable to minority interests -6
Fair value of net assets acquired 6
Receivable due to parent 7
Goodwill 80
Purchase consideration - cash paid 93
Overdraft acquired 15
Cash outflow on acquisitions 108
Cash paid to settle deferred consideration for 13
combinations made in prior periods
Cash outflow on acquisitions 121
The complete disclosures related to these acquisitions will be provided in the
annual financial statements prepared to 31 March 2009.
14. Financial commitments and contingent liabilities
At 30 September 2008 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.
The Group has entered into an irrevocable forward purchase agreement to
acquire own shares commencing after the effective date of de-twinning of the
Richemont units. The agreement was conditional on the restructuring proposals
(note 15) being approved by shareholders on 9 October 2008. Therefore no value
was attributed at 30 September 2008.
15. Post balance sheet events
At the Extraordinary General Meeting held on 9 October 2008 the shareholders
of the Company approved the proposals for restructuring the Richemont
businesses by separating the luxury goods businesses from its other interests.
The restructuring comprises the following related elements:
- The de-twinning of the Richemont units, which was effected on 20 October
2008;
- The splitting of the luxury goods businesses held by the Company from the
interest in BAT, Euro 351 million in cash and other assets held by Reinet
Investments SCA (formerly Richemont SA), which was also effected on 20
October 2008;
- The return of 90 per cent of Richemont`s interest in BAT to former
unitholders, which was effected by Reinet Investments SCA on 3 November
2008.
These financial statements do not reflect the transactions above which
represent a partial liquidation of Richemont SA in the context of the Group
restructuring. Provision has been recognised for professional service fees in
respect of the reconstruction received to date.
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 Six
to months
to
against the euro 30 Sept 30 Sept
2008 2007
Average
United States 1.53 1.36
dollar
Japanese yen 162.36 162.39
Swiss franc 1.61 1.65
Pound sterling 0.79 0.68
30 31
September March
2008 2008
Closing
United States 1.41 1.58
dollar
Japanese yen 149.20 157.82
Swiss franc 1.57 1.57
Pound sterling 0.79 0.80
Statutory Information
As detailed in note 15 of the Consolidated Interim Financial Statements,
trading of Richemont `A` units ceased with effect from close of business on 20
October 2008. Accordingly, the following statutory information relates
specifically to Compagnie Financiere Richemont SA shares.
`A` shares issued by the Swiss parent company, Compagnie Financiere Richemont
SA, are listed on the SIX Swiss Exchange and traded on SWX Europe Limited,
(Reuters "CFR.VX" / Bloombergs "CFR:VX" / ISIN CH0045039655) and are included
in the Swiss Market Index (`SMI`) of leading stocks.
South African depository receipts in respect of Richemont `A` shares are
traded on the Johannesburg Stock Exchange operated by JSE Limited (Reuters
"RCHJ.J" / Bloombergs "RCH:SJ" / ISIN CH0045793657).
Based on the valuation of the underlying assets of the Group at the time the
restructuring was effected, the luxury business owned by Compagnie Financiere
Richemont SA and therefore represented by the `A` share were calculated as
being 43.65967 per cent of the last traded value of the Richemont `A` units at
the close of business on 20 October 2008, the balance of the closing unit
price being attributable to the Reinet Investments SCA share. Accordingly, of
the actual market closing price CHF 42.90 per `A` unit, CHF 18.73 was
attributable to the Compagnie Financiere Richemont SA `A` share and the
remainder, being CHF 24.17, was attributable to the Reinet Investments SCA
share.
The closing price of the former Richemont `A` unit on 30 September 2008 was
CHF 48.90 (CHF 21.35 per `A` share equivalent) and the market capitalisation
of the Group`s `A` units on that date was CHF 25 526 million (CHF 11 145
million for the market capitalisation of the Group`s `A` share equivalents).
Over the preceding six months, the highest closing price of the former `A`
unit was CHF 68.80 (CHF 30.05 per `A` share equivalent) on 19 May, and the
lowest closing price of the former `A` unit was CHF 48.40 (CHF 21.15 per `A`
share equivalent) on 29 September.
Compagnie Financiere Richemont SA
Registered office:
50 chemin de la Chenaie
1293 Bellevue Geneva
Switzerland
Tel: (+41) (0) 22 721 3500
Fax: (+41) (0) 22 721 3550
Internet: www.richemont.com
E-mail: investor.relations@cfrinfo.net
secretariat@cfrinfo.net
pressoffice@cfrinfo.net
Further information regarding Reinet Investments SCA, the vehicle separated
from Richemont in the de-twinning effected on 20 October 2008, can be found on
that company`s website: www.reinet.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 2008 was 11.922; this compares with a rate of 9.6609 during the
prior period.
in ZAR millions September September
2008 2007
Sales 33 382 24 616 + 36
%
Operating profit 7 618 5 410 + 41
%
Net profit - parent and subsidiaries 6 474 4 734 + 37
%
Share of post-tax profit of associates 3 827 3 227 + 19
%
Net profit 10 301 7 961 + 29
%
Analysed as follows
Net profit attributable to unitholders 10 325 7 951
Net profit attributable to minority ( 24) 10
interests
10 301 7 961
Earnings per depositary receipt - ZAR 1.827 ZAR 1.396 + 31
diluted basis %
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 charge of ZAR 72 million or Euro 6 million (2007: a net gain
of ZAR 21 million or Euro 2 million). Excluding non-recurring items, net
profit attributable to unitholders increased by 31 per cent to ZAR 10 396
million (Euro 872 million).
Copyright Richemont 2008
Date: 14/11/2008 08:57:24 Produced by the JSE SENS Department.
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