| Thu 14 May 2009, 7:31 | | CFR - Richemont - Audited results for the year ended 31 March 2009 and |
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CFR - Richemont - Audited results for the year ended 31 March 2009 and
proposed cash dividend
Compagnie Financiere Richemont SA Depositary Receipts
issued by Richemont Securities AG
(Incorporated in Switzerland)
ISIN: CH0045159024
Depositary Receipt Code: CFR
("Richemont")
Audited results for the year ended 31 March 2009 and proposed cash dividend
Richemont, the Swiss luxury goods group, announces its audited results for the
year ended 31 March 2009.
Financial highlights
- Sales increased by 2 per cent to EURO 5 418 million. Good growth in the
first six months was largely offset by lower sales in the second six
months as a result of the worldwide economic slowdown.
- Operating profit from the luxury goods businesses decreased by 12 per
cent to EURO 982 million.
- Net profit attributable to shareholders decreased by 31 per cent to EURO
1 075 million. The decrease in net profit reflects in part the
restructuring effected during the year. Profit from continuing operations
decreased by 23 per cent to EURO 751 million.
- Cash generated by the Group`s luxury goods operations was EURO 819
million. Your company has a clean balance sheet and a net cash position
at the year-end of EURO 822 million.
- During the year, Richemont restructured its operations, effectively
spinning out its non-luxury assets to a new investment vehicle, Reinet
Investments S.C.A. (`Reinet`).
- The Board proposes an ordinary dividend for the year of CHF 0.30 per
share. For a former Richemont unitholder who continued to hold the
Richemont, BAT and Reinet shares after completion of the restructuring,
this means a small increase in dividend income over this very difficult
year.
Sales
The overall 2 per cent sales increase reflected 10 per cent growth during the
first six months of the year followed by a 5 per cent sales decline during the
second six months. The decline was primarily the result of the worldwide
economic slowdown, with the United States in particular reporting very weak
trading during the important pre-Christmas period.
Operating profit
Operating profit for the year was EURO 982 million, including one-time charges
amounting to EURO 79 million. Despite a significant profit increase in the
first six months, weak trading in the second half-year significantly reduced
gross profit. Swift measures taken to control operating costs in the second
half-year resulted in the full year operating profit decrease being contained
to 12 per cent. Favourable foreign exchange rate movements were offset by
losses from the Group`s hedging programme, reported as financing charges.
Net profit from continuing operations
Net profit from continuing operations decreased by 23 percent, reflecting the
reduction in operating profit from the luxury businesses and higher net
financing charges compared to the prior year. Continuing operations exclude
the equity accounted results from the Group`s former interest in British
American Tobacco (`BAT`), reflecting the transfer of this interest to Reinet
in October 2008.
Net profit
Group net profit attributable to shareholders, including continuing and
discontinued operations, decreased by 31 per cent to EURO 1 075 million.
Cash position
The Group`s net cash position at 31 March 2009 was EURO 822 million. During
the year, the cash flow before financing activities was EURO 556 million. This
inflow was more than offset by dividends payments and the impact of the Group
restructuring.
Dividend
The proposed dividend for the year is CHF 0.30 per share. The reduction
compared to the prior year primarily reflects the Group restructuring and the
separation from the investment in BAT.
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.
www.richemont.com
Group results
in EURO millions March 2009 March 2008
re-
presented
C o n t i n u i n g o p e r a
t i o n s
Sales 5 418 5 290 + 2 %
Cost of sales (1 988) (1 875) .
Gross profit 3 430 3 415 -
Net operating expenses (2 448) (2 297) + 7 %
Operating profit 982 1 118 - 12 %
Net financial (costs) / income ( 101) 47
Share of post-tax results of 3 1
associates
Profit before taxation 884 1 166 - 24 %
Taxation ( 133) ( 194)
Profit from continuing 751 972 - 23 %
operations
D i s c o n t i n u e d o p e
r a t i o n s
Profit from discontinued 325 592 - 45 %
operations, net of tax
Net profit 1 076 1 564 - 31 %
Analysed as follows:
Net profit attributable to 1 075 1 565
shareholders
Net profit attributable to 1 ( 1)
minority interests
1 076 1 564
Earnings per share from EURO 1.337 EURO 1.710 - 22 %
continuing operations - diluted
basis
Dividend per share CHF 0.30 EURO 0.78 n/a
Operating profit in the year under review included restructuring charges in
respect of continuing operations and other one-off charges amounting to EURO
79 million (2008: EURO 7 million) in total.
The Group`s share of the results of British American Tobacco, reported within
discontinued operations, also includes non-recurring items reported by that
entity.
Following the early adoption of the amendments to IAS 38 Intangible Assets as
well as the reclassification of certain operations under `discontinued
operations`, the results for the year ended 31 March 2008 shown in the table
above have been re-presented. The impact of the re-presentation on sales is a
reduction of EURO 12 million and an operating profit increase of EURO 10
million. The impact on net profit is a decrease of EURO 6 million.
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
The first half of the year under review saw record results by our Maisons(R).
Then came the banking sector problems last September. Since October the impact
of this crisis has spread globally, with the United States, Europe and Japan
particularly hard hit. Our businesses have suffered accordingly.
Management prepared contingency plans for such an eventuality and we have been
working to implement them for quite a while. The Group has thus managed to
optimise free cash flow. This has been achieved through the strict control of
operating costs and working capital together with focused cutbacks in capital
spending.
Our goal was to enter the foreseen economic downturn with a clean balance
sheet and proper liquidity. We are pleased to report that this has largely
been achieved.
Results
Overall sales of EURO 5 418 million for the year reflected strong growth in
the six months to September, followed by a sharp decline in trading from
October until the end of the year. The overall growth was therefore limited to
an increase of 2 per cent. After taking into account restructuring provisions,
operating profit amounted to EURO 982 million. Whilst 12 per cent lower than
the prior year, this still represents a strong performance in a most
challenging trading environment. The Group`s cash flow from operations
remained strong, with net cash on our balance sheet at 31 March 2009 of EURO
822 million.
Group restructuring
On 20 October 2008, the Group implemented the restructuring proposals that
were announced in outline in November 2007 and in detail in August 2008.
Consequently, former Richemont unitholders continue to hold the shares in
Compagnie Financiere Richemont SA, which formerly made up part of the unit
value, and received Reinet shares in exchange for the balance of the unit.
Reinet shares are listed in Luxembourg and, for the benefit of former
Richemont depository receipt holders in South Africa, a secondary listing of
the new Reinet depository receipts was arranged there. The Richemont
depository receipt programme continues, of course, in respect of the shares of
Compagnie Financiere Richemont SA.
Following the separation of the two entities, Reinet held the 19.5 per cent
interest in British American Tobacco (`BAT`) together with some EURO 350
million in cash and a portfolio of small, non-luxury investments. On the date
of separation, some 44 per cent of the former Richemont unit price was
attributed to the Compagnie Financiere Richemont SA share and the remainder to
Reinet.
On 3 November 2008, 90 per cent of Reinet`s holding of BAT shares was
distributed to shareholders by way of a partial capital reduction.
Following the restructuring steps, a former holder of 1 000 Richemont `A`
units would therefore hold 1 000 Richemont `A` shares, 611 BAT ordinary shares
and 137 Reinet ordinary shares.
Dividend
The Richemont dividend proposal of CHF 0.30 per share follows an analysis of
the Group`s cash flow requirements and takes into consideration the resizing
as a consequence of the Group restructuring described above.
BAT remains committed to its target of paying 65 per cent of long-term
sustainable earnings to shareholders. In respect of its financial year ended
31 December 2008, BAT paid total dividends of GBP 1 661 million to its
shareholders, the equivalent to GBP 0.837 per share. Reinet`s dividends will
reflect that company`s profitability, investment needs and cash flows in the
years ahead.
Business development
Whilst the year has been marked by the Group restructuring project, Richemont
has also invested in new businesses.
Richemont acquired the component manufacturing facilities of Geneva-based
Roger Dubuis in 2007 and, in August 2008, bought 60 per cent of its commercial
and brand-related operations. Known for its audacious designs, Roger Dubuis
has a superb engineering and design capability, specifically linked to the
coveted Geneva Poincon de Geneve hallmark.
We were also pleased to see the first fruits of our joint venture
collaboration with Polo Ralph Lauren at this year`s Salon International de la
Haute Horlogerie in January. The collection of luxury watches marks the first
step in what will be a long-term business collaboration, leveraging both
companies` strengths.
Although the second half of the year was very challenging, it is worth noting
that certain Maisons, including Cartier, enjoyed a record year in terms of
both sales and profits.
Management
Mr. Norbert Platt has indicated his intention to retire at the end of this
year after 5 years as Richemont`s Chief Executive Officer.
Over the period, Mr Platt has made an exceptional contribution to the Group in
terms of its management structure and improvements to the core manufacturing
and logistics infrastructure. He has worked with the CEOs of individual
Maisons(R) to help them in realising the full potential of their individual
enterprises. During his tenure, the Group`s sales grew to record levels and
operating profit exceeded EURO 1 billion in the 2008 financial year, before
the current economic downturn.
I would like to thank Norbert personally for his commitment to Richemont over
the last 5 years and to congratulate him on his achievements during that
period. He has instilled a strong discipline across the entire organisation
but has equally ensured that the entrepreneurial spirit has flourished. His
accomplishments during his tenure have been many and he will leave behind a
legacy of successful businesses and a very efficient central and regional
organisation.
It has been a pleasure to work with Norbert over the decades, both in his
current role and during his time as CEO of Montblanc, where he also achieved
so much.
Outlook
Sales in the first month of our new financial year were 19 per cent lower than
April 2008. This significant reduction was not unexpected, given the very
strong comparative figure and the state of the world economy today compared to
a year ago.
There are currently very few encouraging signs in the global economic picture.
The US market is very weak and conditions in Japan have been poor for some
time. Most European markets are unsettled and trading remains hesitant. The
Asia-Pacific region and the Middle East continue to report some positive sales
trends.
Given these conditions, we cannot predict when an overall improvement in
trading will come about. Compared to the record level of sales reported in the
first six months of last year, trading conditions through to September 2009
will be very challenging indeed.
Having prepared for the downturn, we now have the resources available to
support our Maisons(R), our colleagues and our clients during the tough times
ahead.
We intend doing exactly that, and will emerge from these economic headwinds in
a much stronger competitive position - however long it may take.
Johann Rupert
Executive Chairman
Compagnie Financiere Richemont SA
Geneva, 14 May 2009
14 May 2009
Business Review
in EURO millions March 2009 March 2008
re-presented
Sales 5 418 5 290 + 2 %
Cost of sales (1 988) (1 875)
Gross profit 3 430 3 415 -
Net operating expenses (2 448) (2 297) + 7 %
Selling and (1 235) (1 177) + 5 %
distribution expenses
Communication expenses ( 644) ( 608) + 6 %
Administration expenses ( 542) ( 522) + 4 %
Other operating ( 27) 10 n/a
(expense)/income
Operating profit 982 1 118 - 12 %
Sales increased by 2 per cent to EURO 5 418 million. The overall 2 per cent
sales increase reflected 10 per cent growth during the first six months of the
year, offset by a 5 per cent sales decline during the second six months. The
decline was primarily the result of the worldwide economic crisis, with
certain markets reporting very weak trading during the important pre-Christmas
period. This was against the backdrop of strong trading in the second half of
the prior year. Sales growth by region was mixed, with double-digit sales
growth in the Asia-Pacific region and either low single-digit growth or lower
absolute sales reported in other regions. At constant exchange rates, the
annual sales increase would have been 2 per cent.
The gross margin percentage decreased by 1.3 percentage points to 63.3 per
cent. The decrease largely reflects the strengthening of the Swiss franc
against the euro and higher raw material costs, which more than offset price
increases. The economic slowdown in the second half-year also contributed to
the lower gross margin as manufacturing fixed costs were spread across lower
levels of production. The growth in sales revenue was offset by the lower
gross margin percentage such that gross profit, at EURO 3 430 million, was in
line with the prior year.
Net operating expenses increased by 7 per cent. The increase in selling and
distribution expenses largely reflected new boutique locations, primarily in
the Far East. The 6 per cent increase in communication costs reflects the one-
off impact of the costs associated with holding two Geneva watch fairs (Salons
International de la Haute Horlogerie) during the year under review, as well as
the impact of revisions to an accounting standard regarding the treatment of
advertising material. Consequently, as a percentage of sales, communication
costs were higher than the prior year at 11.9 per cent. Administration
expenses increased by 4 per cent overall. Other operating expenses included
restructuring charges linked to the closure of certain marginal boutiques,
cutting excess capacity in specific manufacturing facilities and other cost
control measures.
Operating profit for the year amounted to EURO 982 million, including the once-
off items referred to above which amounted to EURO 79 million. Despite a
significant profit increase in the first six months, weak trading in the
second half of the year significantly reduced the level of gross profit. Swift
measures taken to control operating costs in the second half-year resulted in
the full year profit decrease being contained at 12 per cent.
Analysis of sales and operating results by business area
Sales and operating results of the Group`s main areas of activity were as
follows:
in EURO millions March March 2008
2009 re-
presented
Sales
Jewellery Maisons 2 762 2 657 + 4 %
Specialist watchmakers 1 437 1 378 + 4 %
Writing instrument Maison 587 625 - 6 %
Leather and accessories 294 309 - 5 %
Maisons
Other businesses 338 321 + 5 %
Total sales 5 418 5 290 + 2 %
Operating results
Jewellery Maisons 777 765 + 2 %
Specialist watchmakers 287 374 - 23 %
Writing instrument Maison 69 126 - 45 %
Leather and accessories ( 10) ( 5) - 100 %
Maisons
Other businesses ( 1) 16 n/a
1 122 1 276 - 12 %
Corporate costs ( 140) ( 158) - 11 %
Central support services ( 139) ( 146) - 5 %
Other operating expense, net ( 1) ( 12) - 92 %
Operating profit 982 1 118 - 12 %
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.
Jewellery Maisons
In a difficult trading environment, Cartier reported another record year in
sales and profitability, with the pattern of sales around the world reflecting
those of the Group as a whole. High jewellery sales, which are made
exclusively through Cartier`s own boutique network of 172 stores, were
particularly strong together with sales of high jewellery watches and Ballon
bleu. Sales of other products were broadly in line with the prior year. Van
Cleef & Arpels reported good sales growth, albeit from a significantly lower
base. Operating profit for the business area as a whole increased by 2 per
cent to EURO 777 million. Operating margin for the business area was 1
percentage point lower at 28 per cent.
Specialist Watchmakers
The Group`s nine specialist watchmakers, which now include Roger Dubuis and
Ralph Lauren Watches, enjoyed modest growth for the year as a whole. Sales at
IWC, Vacheron Constantin and Jaeger Le-Coultre were particularly strong and
all of the long-held Maisons were profitable. During the year under review a
second SIHH took place in Geneva and the Group incurred specific charges
relating to the acquisition of the Roger Dubuis business. These additional
costs partly account for the reduction in profitability for the business area
as a whole. Despite the decrease in profit and the increase in sales, the
operating profit margin for the year was contained at 20 per cent. In January
2009, the joint venture with Polo Ralph Lauren premiered its product range;
this had no impact on sales during the year.
Writing Instrument Maison
Montblanc`s sales decreased by 6 per cent. The growth from sales through the
Maisons own boutique network was offset by a fall in sales to wholesale
partners, in large part due to a strategy of cutting back the number of points
of sale. An increasing proportion of sales were generated by leather goods,
watches and jewellery lines and, for the first time in more than 100 years,
writing instruments accounted for less than half of the Maison`s sales. The
additional costs of Montblanc`s own boutique network, which were not fully
compensated by retail sales growth, contributed to the 45 per cent drop in
operating profit. Accordingly, the operating margin decreased from 20 per cent
to 12 per cent.
The Montegrappa writing instrument business has been classified as a
discontinued operation. We are actively engaged in negotiations to sell this
business.
Leather and Accessories Maisons
Despite growth in the Asia-Pacific region, Alfred Dunhill reported a modest
decrease in sales and was close to breaking even for the second year in
succession.
Lancel`s sales were 8 per cent lower than the prior year, reflecting lower
unit volumes as it continues to move to products with higher price points and
improved margins. Largely as a consequence of the lower sales, Lancel`s
operating losses increased from EURO 4 million in the prior year to EURO 8
million in the year under review.
Other businesses
Chloe`s sales were well below the level of the prior year, leading to a lower
level of profit.
Sales of this business area as a whole included the impact of acquisitions
made during the previous financial year. These included watch component
manufacturing businesses and the Alaia Maison. Overall operating profit in
this business area fell significantly, largely due to the lower profitability
at Chloe and losses from watch component manufacturing activities, including
restructuring charges.
Corporate costs
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 year included fees relating to
the Group restructuring.
Operating profit
After corporate costs, Group operating profit amounted to EURO 982 million, a
12 per cent decrease compared to the prior year. This reflects the low level
of growth in sales and the lower gross margin percentage, albeit compensated
by continuing cost control. The Group`s overall operating profit margin
decreased from 21 per cent to 18 per cent.
Sales by region
Movement
at:
Constant Actual
March 2009 March 2008 exchange exchange
in EURO re- rates rates
millions presented
Europe 2 363 2 284 + 5 % + 3 %
Asia- 1 474 1 295 + 14 % + 14 %
Pacific
Americas 889 1 012 - 11 % - 12 %
Japan 692 699 - 12 % - 1 %
5 418 5 290 + 2 % + 2 %
Europe
Sales in European markets increased by 3 per cent and accounted for 44 per
cent of total turnover. The 3 per cent increase reflects a modest increase in
established markets and double-digit sales growth in certain developing
markets in the region, such as the Middle East.
Asia-Pacific
Sales growth in the region remained buoyant, although the rate of growth
slowed during the course of the year. The strategic importance to the Group of
the market in China was underlined by the continued expansion of the Group`s
distribution network there. Sales in the region now represent 27 per cent of
total sales.
Americas
The Americas region reported a 12 per cent sales decrease for the year: the
modest sales decrease in the first six months was followed by a very
significant slowdown during the second half of the year as the economic
difficulties there impacted consumer confidence and purchasing power. Sales in
the Americas represent 16 per cent of total sales.
Japan
The Japanese market remained challenging throughout the year, with sales in
local currency terms 12 per cent lower than the prior year. The significant
strengthening of the yen relative to the euro during the year largely offset
this decrease in euro terms. Sales in Japan represent 13 per cent of total
Group sales.
Sales by distribution channel
in EURO March 2009 March 2008
millions re-presented
Retail 2 304 2 214 + 4 %
Wholesale 3 114 3 076 + 1 %
5 418 5 290 + 2 %
Retail
Retail sales increased by 4 per cent to EURO 2 304 million. This growth
reflected satisfactory trading at most established boutiques and the expansion
of the network of Group-owned points of sale. Despite the closure of certain
marginal boutiques, the total retail network increased by 58 to 1 370
boutiques at 31 March 2009. At the end of March 2009, the Group`s Maisons
owned 797 boutiques. A further 573 points of sale were operated under
franchise agreements; sales to franchise partners are treated as wholesale
sales.
Wholesale
Wholesale sales increased by 1 per cent. The growth in the first six months
was largely offset by the slowdown in the second six months, particularly
among external watch retailers.
Summary income statement and results from discontinued operations
in EURO millions March 2009 March 2008
re-presented
Operating profit - continuing 982 1 118
operations
Net finance (costs) / income ( 101) 47
Profit before taxation 881 1 165
Taxation ( 133) ( 194)
Share of post-tax results of 3 1
associated undertakings
Profit from continuing operations 751 972
Profit from discontinued operations 325 592
Net profit 1 076 1 564
Attributable to shareholders 1 075 1 565
Attributable to minority interests 1 ( 1)
Net profit 1 076 1 564
Net finance charges amounted to EURO 101 million. The charges primarily relate
to realised and unrealised losses on foreign exchange derivatives used to
hedge the Group`s net currency exposure. Financial income earned on deposits
during the year was partly offset by structural borrowing costs. Compared to
the prior year`s net income of EURO 47 million, the change primarily reflects
the impact of exchange rates on derivative hedging instruments.
The Group has a number of small investments which are classified as associated
companies. The Group`s share of the results of these smaller investments
amounted to a profit of EURO 3 million.
The Group`s effective taxation rate was 15.7 per cent compared with 16.9 per
cent last year. The effective taxation rate, which excludes the post-tax
results from associates, in general reflects the level of corporate taxes in
Switzerland. The lower effective taxation rate compared to the prior year
reflects the decrease in profitability during the second six months of the
year, particularly in the Americas, Germany and Japan.
Discontinued operations
Until 20 October 2008, the Group`s principal associated company was British
American Tobacco plc (`BAT`). Following the separation of the Group`s former
19.5 per cent interest in BAT from that date, the Group`s interest in BAT has
been treated as a discontinued operation.
The Group`s share of the results of BAT decreased from EURO 609 million in the
prior year to EURO 355 million in the year under review. The decrease
primarily reflected the inclusion of six months and 20 days of attributable
profit from BAT in the year under review but a full twelve months contribution
in the prior year. In addition to the shorter accounting period, other changes
impacting the result include the Group`s effective interest in the BAT result,
which had increased due to the share buy-back programme carried out by BAT
from 19.1 per cent at April 2007 to 19.5 per cent upon separation, the higher
reported profit of BAT in sterling terms and foreign exchange translation
effects. The Group`s share of results from BAT is reported net of taxation and
minority interests. Further information in respect of British American Tobacco
can be obtained from that company`s website: www.bat.com.
Losses from other discontinued operations amounted to EURO 30 million (2008:
EURO 17 million). Management is actively involved in the disposal of two small
business units, including Montegrappa.
Richemont`s total diluted earnings per share decreased from EURO 2.750 to EURO
1.916. From continuing operations, Richemont`s diluted earnings per share
decreased by 22 per cent from EURO 1.710 to EURO 1.337.
Cash flow
in EURO millions March March
2009 2008
re-
presented
Operating profit including losses from
discontinued operations 951 1 101
Depreciation, amortisation and other
items, net 229 134
Increase in working capital
( 361) ( 267)
Cash generated from operations
819 968
Dividends received from associate
343 325
Net interest received
36 41
Taxation paid
( 179) ( 171)
Net acquisitions of tangible fixed assets
( 293) ( 265)
Net acquisitions of intangible assets
( 43) ( 30)
Other investing activities, net
( 127) ( 102)
Net cash inflow before financing
activities 556 766
Dividends paid to shareholders
( 438) ( 701)
Ordinary dividend
( 438) ( 364)
Special dividend -
( 337)
Increase/(decrease) in borrowings and
other financing activities ( 59) 69
Distribution of discontinued operations, -
net of cash disposed of ( 351)
Net cash flow in respect of treasury
units and shares ( 84) ( 37)
Exchange rate effects
( 32) 51
Increase/(decrease) in cash and cash
equivalents ( 408) 148
Cash and cash equivalents at the
beginning of the year 1 771 1 623
Cash and cash equivalents at end of year
(1) 1 363 1 771
Borrowings
( 541) ( 525)
Net cash at the end of the year
822 1 246
The Group`s net cash position at 31 March 2009 was EURO 822 million compared
with EURO 1 246 million twelve months earlier. The decrease in net cash
largely reflects the distribution of EURO 351 million to Reinet as part of the
Group restructuring. In other respects, cash generated from the luxury goods
business during the year, after capital investments and taxation payments, was
more than offset by the payment of ordinary dividends to unitholders in
September 2008 and the acquisition of Roger Dubuis.
Cash generated from operations totalled EURO 819 million for the year. The
increase in working capital was largely due to higher inventories of finished
goods and movements in year-end creditor balances. The increase in
inventories, which followed the slowdown in the second six months, was limited
by the measures taken to reduce manufacturing output.
Dividends received from the Group`s associate, BAT, comprised the final
dividend in respect of its financial year ended 31 December 2007 and the
interim dividend for the 2008 financial year. The total cash received,
amounting to EURO 343 million, was transferred to Reinet as part of the
restructuring in October 2008 and is included in the figure reported above as
a distribution of discontinued operations.
Net acquisitions of tangible fixed assets amounted to EURO 293 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 largely reflect the acquisition of a controlling interest in the
Roger Dubuis business.
In order to hedge executive stock option grants, the Group exercised options
to purchase former Richemont units for a consideration of EURO 45 million and
bought further shares and call options over Richemont `A` shares. The cost of
these purchases was partly offset by proceeds from the exercise of stock
options by executives and the disposal of excess BAT and Reinet shares
following the Group`s restructuring.
(1) Cash and cash equivalents are as per the consolidated cash flow statement
appended to this report.
Summarised balance sheet
in EURO millions 31 March 31 March 2008
2009 re-presented
Non-current assets
Fixed assets 1 534 1 207
Investment in associated 14 3 008
undertakings
Other non-current assets 628 499
2 176 4 714
Net current assets 2 028 1 827
Net operating assets 4 204 6 541
Net cash 822 1 246
Cash and cash equivalents 1 363 1 771
Borrowings ( 541) ( 525)
Other non-current liabilities ( 191) ( 168)
4 835 7 619
Equity
Shareholders` equity 4 832 7 615
Minority interests 3 4
4 835 7 619
Following the Group restructuring, shareholders` equity was significantly
reduced. The balance sheet at 31 March 2009 no longer reflects the carrying
value of BAT shares (2008: EURO 2 998 million) or the cash and other smaller
non-luxury investments attributed to Reinet on 20 October 2008. The carrying
value of BAT was formerly included in associated undertakings.
Other non-current assets include shares in BAT and Reinet held to hedge
liabilities arising from modifications to the Group`s long-term stock option
scheme. Following the restructuring, holders of vested options over the former
Richemont `A` unit received instead options over the new Richemont `A` share
and over shares in BAT and Reinet. This treatment of vested options was in
line with the treatment received by external unitholders. Unvested options
over the former Richemont `A` unit were replaced by options over the new
Richemont `A` share only. In both cases, there was no change in the value of
the related benefit. Richemont `A` shares held in treasury are reported as a
deduction from shareholders` equity.
Net current assets increased by EURO 201 million compared to March 2008. The
value of net inventories increased by EURO 346 million to EURO 2 422 million.
The inventory increase reflects an increase in finished goods as well as the
acquisition of Roger Dubuis and exchange rate effects. As a result, the
inventory rotation rate has slowed by 2.3 months to 18.7 months. The increase
in inventories was partly offset by an increase in current liabilities,
largely relating to derivative financial instruments to hedge foreign exchange
rates and share option exposures.
At 31 March 2009, net cash amounted to EURO 822 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, yen, US dollars, Hong Kong dollars and Chinese renminbi.
Borrowings reflect the financing of net operating assets in the countries
concerned.
Shareholders` equity amounted to EURO 4 832 million, net of the cost of
repurchased treasury shares and related instruments. These treasury shares are
held as a hedge against the exercise of executive share options. At 31 March
2009, the Group held 17.5 million treasury shares, representing 3.4 per cent
of the total number of the `A` bearer shares in issue, plus the right to
acquire a further 3 million shares.
Proposed cash dividend
The Board has proposed an ordinary dividend of CHF 0.30 per share.
The dividend will be paid as Gross Net
follows: dividend Withholding payable
per share tax at 35% per
share
Ordinary dividend
Compagnie Financiere Richemont CHF 0.300 CHF 0.105 CHF 0.195
SA, Switzerland
The dividend will be payable following the Annual General Meeting, which is
scheduled to take place on Wednesday, 9 September 2009. The currently
anticipated dividend payment dates are as follows:
`A` share dividend: Monday, 14 September 2009.
The dividend in respect of Richemont `A` shares is payable in Swiss francs.
South African Depository Receipt dividend: Friday, 25 September 2009.
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 Swiss francs to non-CMA residents.
Norbert Platt Richard Lepeu
Group Chief Executive Officer Group Finance Director
Compagnie Financiere Richemont SA
Geneva, 14 May 2009
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Extracts from the audited consolidated financial statements
at 31 March 2009
Consolidated balance sheet
at 31 March 2009 2008
re-
presented
Assets Notes EURO m EURO m
Non-current assets
Property, plant and equipment 1 148 975
Intangible assets 386 232
Investments in associated 2 14 3 008
undertakings
Deferred income tax assets 305 257
Financial assets held at fair value 143 68
through profit or loss
Other non-current assets 180 174
2 176 4 714
Current assets
Inventories 8 2 422 2 076
Trade and other receivables 672 641
Derivative financial instruments 18 72
Prepayments and accrued income 80 108
Assets of disposal groups held for 11 -
sale
Cash at bank and on hand 2 032 2 094
5 235 4 991
Total assets 7 411 9 705
Equity and liabilities
Equity
Share capital 334 334
Participation reserve - 645
Treasury shares ( 195) ( 268)
Hedge and share option reserves 90 176
Cumulative translation adjustment 124 ( 348)
reserve
Retained earnings 4 479 7 076
Total shareholders` equity 4 832 7 615
Minority interest 3 4
Total equity 4 835 7 619
Liabilities
Non-current liabilities
Borrowings 77 246
Deferred income tax liabilities 78 59
Retirement benefit obligations 39 42
Provisions 40 52
Other long-term liabilities 34 15
268 414
Current liabilities
Trade and other payables 545 563
Current income tax liabilities 172 188
Borrowings 188 12
Derivative financial instruments 123 8
Provisions 117 95
Accruals and deferred income 218 216
Short-term loans 276 267
Bank overdrafts 669 323
2 308 1 672
Total liabilities 2 576 2 086
Total equity and liabilities 7 411 9 705
Consolidated income statement for the year ended 31 March
2009 2008
re-
presented
Continuing operations Notes EURO m EURO m
Sales 1 5 418 5 290
Cost of sales (1 988) (1 875)
Gross profit 3 430 3 415
Selling and distribution (1 235) (1 177)
expenses
Communication expenses ( 644) ( 608)
Administrative expenses ( 542) ( 522)
Other operating (expense) / 3 ( 27) 10
income
Operating profit 982 1 118
Finance costs 4 ( 228) ( 114)
Finance income 4 127 161
Share of post-tax profit of 2 3 1
associated undertakings
Profit before taxation 884 1 166
Taxation 5 ( 133) ( 194)
Profit from continuing 751 972
operations
Discontinued operations
Profit from discontinued 6 325 592
operations (net of tax)
Net profit 1 076 1 564
Attributable to:
Shareholders 1 075 1 565
Minority interest 1 ( 1)
1 076 1 564
Earnings per share for profit
and profit from discontinued
operations attributable to
shareholders during the year
(expressed in EURO per share)
Basic:
- from continuing operations 7 1.340 1.734
- from discontinued operations 7 0.581 1.055
1.921 2.789
Diluted:
- from continuing operations 7 1.337 1.710
- from discontinued operations 7 0.579 1.040
1.916 2.750
Consolidated statement of changes in equity for the year ended 31 March
Equity attributable to shareholders
Cumulative
translation
Shareholders` Treasury Other adjustment
capital shares reserves reserve
EURO m EURO m EURO m EURO m
Balance at 31 March 979 ( 264) 151 113
2007
Adoption of IAS 38 - - - -
(amendment)
Balance at 1 April 979 ( 264) 151 113
2007
Currency translation - - - ( 461)
adjustments
Cash flow hedges:
- net gains - - 31 -
- recycle to income - - ( 13) -
statement
Net share of expense
of associated
undertakings - - - -
recognised directly
in equity
Tax on items - - ( 24) -
recognised directly
in equity
Net income /
(expense) recognised
directly in equity - - ( 6) ( 461)
Net profit/(loss) - - - -
Total recognised - - ( 6) ( 461)
income/(expense)
Net share of
transactions of
associated
undertakings with - - - -
their equity holders
Net changes in - ( 4) - -
treasury shares
Employee share - - 31 -
option scheme
Dividends paid - - - -
Balance at 31 March 979 ( 268) 176 ( 348)
2008
Currency translation - - - 57
adjustments
Cash flow hedges:
- net losses - - ( 41) -
- recycle to income - - ( 12) -
statement
Net share of income
of associated
undertakings
recognised directly
in equity
(discontinued - - - -
operations)
Tax on items - - ( 4) -
recognised directly
in equity
Net income /
(expense) recognised
directly in equity - - ( 57) 57
Net profit - - - -
Total recognised - - ( 57) 57
income/(expense)
Net share of
transactions of
associated
undertakings with
their equity holders
(discontinued - - - -
operations)
Net changes in - 73 - -
treasury shares
Employee share - - ( 29) -
option scheme
Dividends paid - - - -
Minorities acquired - - - -
in business
combinations
Partial liquidation ( 645) - - 415
of Group
Balance at 31 March 334 ( 195) 90 124
2009
Consolidated statement of changes
in equity for the year ended 31
March (continued)
Minority Total
Equity interest equity
attributable to
shareholders
Retained
earnings Total
EURO m EURO m EURO m EURO m
Balance at 31 March 2007 6 532 7 511 2 7 513
Adoption of IAS 38 ( 27) ( 27) - ( 27)
(amendment)
Balance at 1 April 2007 6 505 7 484 2 7 486
Currency translation - ( 461) 3 ( 458)
adjustments
Cash flow hedges:
- net gains - 31 - 31
- recycle to income - ( 13) - ( 13)
statement
Net share of expense of
associated
undertakings recognised ( 87) ( 87) - ( 87)
directly in equity
Tax on items recognised - ( 24) - ( 24)
directly in equity
Net income / (expense)
recognised
directly in equity ( 87) ( 554) 3 ( 551)
Net profit/(loss) 1 565 1 565 ( 1) 1 564
Total recognised 1 478 1 011 2 1 013
income/(expense)
Net share of transactions
of associated
undertakings with their ( 173) ( 173) - ( 173)
equity holders
Net changes in treasury ( 33) ( 37) - ( 37)
shares
Employee share option - 31 - 31
scheme
Dividends paid ( 701) ( 701) - ( 701)
Balance at 31 March 2008 7 076 7 615 4 7 619
Currency translation - 57 - 57
adjustments
Cash flow hedges:
- net losses - ( 41) - ( 41)
- recycle to income - ( 12) - ( 12)
statement
Net share of income of 0
associated undertakings
recognised directly in
equity
(discontinued operations) 101 101 - 101
Tax on items recognised - ( 4) - ( 4)
directly in equity
Net income / (expense)
recognised
directly in equity 101 101 - 101
Net profit 1 075 1 075 1 1 076
Total recognised 1 176 1 176 1 1 177
income/(expense)
Net share of transactions
of associated
undertakings with their
equity holders
(discontinued operations) ( 72) ( 72) - ( 72)
Net changes in treasury ( 7) 66 - 66
shares
Employee share option - ( 29) - ( 29)
scheme
Dividends paid ( 438) ( 438) - ( 438)
Minorities acquired in - - ( 2) ( 2)
business combinations
Partial liquidation of (3 256) (3 486) - (3 486)
Group
Balance at 31 March 2009 4 479 4 832 3 4 835
Consolidated cash flow statement
for the year ended 31 March
2009 2008
Note EURO m EURO m
Cash flows from operating activities
Cash flow generated from operations 9 819 968
Interest received 73 82
Interest paid ( 37) ( 41)
Dividends from associated undertaking 343 325
Taxation paid ( 179) ( 171)
Net cash generated from operating 1 019 1 163
activities
Cash flows from investing activities
Acquisition of subsidiary undertakings
and other businesses, net of
cash acquired ( 126) ( 145)
Acquisition of associated undertakings ( 3) ( 1)
Acquisition of property, plant and ( 305) ( 271)
equipment
Proceeds from disposal of property, plant 12 6
and equipment
Acquisition of intangible assets ( 44) ( 33)
Proceeds from disposal of intangible 1 3
assets
Acquisition of other non-current assets ( 59) ( 44)
Proceeds from disposal of other non- 61 88
current assets
Net cash used in investing activities ( 463) ( 397)
Cash flows from financing activities
Proceeds from borrowings 108 179
Repayment of borrowings ( 162) ( 107)
Dividends paid ( 438) ( 701)
Distribution of discontinued operations, ( 351) -
net of cash disposed of
Payment for treasury shares ( 98) ( 80)
Proceeds from sale of treasury shares 14 43
Capital element of finance lease payments ( 5) ( 3)
Net cash used in financing activities ( 932) ( 669)
Net change in cash and cash equivalents ( 376) 97
Cash and cash equivalents at beginning of 1 771 1 623
year
Exchange (losses)/gains on cash and cash ( 32) 51
equivalents
Cash and cash equivalents at end of year 1 363 1 771
Notes to the consolidated financial statements
31 March 2009
General information
On 20 October 2008, the de-twinning of the shares of Compagnie Financiere
Richemont SA (`the Company`) and the participation certificates of Richemont
SA was effected. The participation certificates of Richemont SA have been
converted into ordinary shares and are traded in the name of Reinet
Investments SCA (`Reinet`) on the Luxembourg stock exchange and are no longer
directly related to the Company.
Accounting policies and basis of preparation
These consolidated financial statements of the Company are for the year ended
31 March 2009. They have been prepared in accordance with International
Financial Reporting Standards (`IFRS`) and are consistent with the
corresponding prior year period.
The financial statements are presented in millions of euros; the euro
represents the functional and presentational currency of the Group.
Where necessary, comparative figures have been adjusted to conform with
changes in presentation in the current year.
specialist watchmakers comprise Piaget, A. Lange & Sohne, Jaeger-LeCoultre,
Vacheron Constantin, Officine Panerai, IWC, Baume & Mercier and Roger Dubuis.
* Writing Instrument Maison - business whose primary activity includes the
design, manufacture and distribution of writing instruments, namely Montblanc.
* Leather and Accessories Maisons - businesses whose principal activities
include the design and distribution of leather goods and other accessories,
being Alfred Dunhill and Lancel.
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
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 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 years ended 31 March are as follows:
Sales Inter-segment
sales
2009 2008 2009 2008
re- re-
presented presented
Sales EURO m EURO m EURO EURO m
m
Jewellery Maisons 2 762 2 657 1 1
Specialist Watchmakers 1 437 1 378 12 7
Writing Instrument 595 637 1 1
Maison
Writing Instrument ( 8) ( 12) - -
Maison - discontinued
operations
Leather and Accessories 294 309 - -
Maisons
Other Businesses 338 321 163 105
5 418 5 290 177 114
Total segment sales
2009 2008
re-presented
Sales EURO m EURO m
Jewellery Maisons 2 763 2 658
Specialist Watchmakers 1 449 1 385
Writing Instrument Maison 596 638
Writing Instrument Maison - discontinued ( 8) ( 12)
operations
Leather and Accessories Maisons 294 309
Other Businesses 501 426
5 595 5 404
2009 2008
re-presented
Operating result from continuing EURO m EURO m
operations
Jewellery Maisons 777 765
Specialist Watchmakers 287 374
Writing Instrument Maison 69 126
Leather and Accessories Maisons ( 10) ( 5)
Other Businesses ( 1) 16
Corporate ( 140) ( 158)
Operating profit 982 1 118
Finance costs -228 -114
Finance income 127 161
Operating profit before share of results 881 1 165
of associated undertakings
Share of post-tax profit of associated 3 1
undertakings
Profit before taxation 884 1 166
Taxation ( 133) ( 194)
Profit from continuing operations 751 972
Profit from discontinued operations 325 592
Net profit 1 076 1 564
(a) Primary reporting format - business segments (continued)
Net segment assets at 31 March are as follows:
Segment assets
2009 2008
re-presented
Net segment assets EURO m EURO m
Jewellery Maisons 1 995 1 759
Specialist Watchmakers 1 436 1 004
Writing Instrument Maisons 462 443
Leather and Accessories 201 178
Maisons
Other Businesses 411 459
Corporate 555 503
5 060 4 346
Investments in associated 14 3 008
undertakings
Cash and cash equivalents 2 032 2 094
Short-term loans and - -
borrowings
Retirement benefit - -
obligations
Deferred and current income 305 257
tax, net
7 411 9 705
Segment liabilities
2009 2008
Net segment assets EURO m EURO m
Jewellery Maisons ( 292) ( 295)
Specialist Watchmakers ( 201) ( 164)
Writing Instrument Maisons ( 80) ( 86)
Leather and Accessories Maisons ( 50) ( 60)
Other Businesses ( 91) ( 111)
Corporate ( 363) ( 233)
( 1 077) ( 949)
Investments in associated - -
undertakings
Cash and cash equivalents ( 669) ( 323)
Short-term loans and borrowings ( 541) ( 525)
Retirement benefit obligations ( 39) ( 42)
Deferred and current income ( 250) ( 247)
tax, net
( 2 576) ( 2 086)
Net segment assets
2009 2008
re-presented
Net segment assets EURO m EURO m
Jewellery Maisons 1 703 1 464
Specialist Watchmakers 1 235 840
Writing Instrument Maisons 382 357
Leather and Accessories Maisons 151 118
Other Businesses 320 348
Corporate 192 270
3 983 3 397
Investments in associated 14 3 008
undertakings
Cash and cash equivalents 1 363 1 771
Short-term loans and borrowings ( 541) ( 525)
Retirement benefit obligations ( 39) ( 42)
Deferred and current income 55 10
tax, net
4 835 7 619
Other segment information for the
years ended 31 March is as
follows:
Depreciation/
Items related to Capital amortisation
expenditure charge
property, plant, 2009 2008 2009 2008
equipment
and intangible EURO EURO EURO m EURO m
assets m m
Jewellery Maisons 105 107 74 63
Specialist 86 61 43 31
Watchmakers
Writing Instrument 34 43 31 21
Maisons
Leather and 25 25 12 11
Accessories Maisons
Other Businesses 52 36 30 19
Corporate 48 39 28 29
350 311 218 174
Items related to Impairment
charge
property, plant, 2009 2008
equipment
and intangible EURO EURO
assets m m
Jewellery Maisons 1 -
Specialist 1 -
Watchmakers
Writing Instrument - -
Maisons
Leather and - -
Accessories Maisons
Other Businesses 3 -
Corporate 1 -
6 -
Share option costs
2009 2008
Other non-cash items EURO m EURO m
Jewellery Maisons 6 6
Specialist Watchmakers 5 5
Writing Instrument Maisons 2 2
Leather and Accessories 1 1
Maisons
Other Businesses 1 1
Corporate 16 16
31 31
(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
2009 2008
re-presented
EURO m EURO m
Europe 2 363 2 284
France 500 493
Switzerland 288 257
Germany, Italy and Spain 611 681
Other Europe 964 853
Asia 2 166 1 994
China/Hong Kong 921 790
Japan 692 699
Other Asia 553 505
Americas 889 1 012
USA 662 775
Other Americas 227 237
5 418 5 290
Segment assets at 31 March
2009 2008
re-presented
EURO m EURO m
Europe 3 793 3 244
France 542 505
Switzerland 2 245 1 895
Germany, Italy and Spain 487 488
Other Europe 519 356
Asia 815 671
China/Hong Kong 357 236
Japan 286 292
Other Asia 172 143
Americas 452 431
USA 379 341
Other Americas 73 90
5 060 4 346
Capital expenditure
2009 2008
EURO m EURO m
Europe 236 194
France 26 25
Switzerland 137 92
Germany, Italy and Spain 31 30
Other Europe 42 47
Asia 85 75
China/Hong Kong 53 34
Japan 14 30
Other Asia 18 11
Americas 29 42
USA 24 36
Other Americas 5 6
350 311
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
EURO m EURO m EURO m
At 1 April 2007 3 497 9 3 506
Exchange adjustments ( 523) ( 1) ( 524)
Share of post-tax profit - 1 1
Discontinued operations 609 - 609
Dividends received ( 325) - ( 325)
Acquisition of associated - 1 1
undertakings
Other equity movements arising
from:
- expenses recognised directly in ( 87) - ( 87)
equity
- transactions with equityholders ( 173) - ( 173)
At 31 March 2008 2 998 10 3 008
Exchange adjustments 20 ( 1) 19
Share of post-tax profit - 3 3
Discontinued operations 355 - 355
Dividends received ( 343) - ( 343)
Acquisition of associated - 3 3
undertakings
Other equity movements arising
from:
- expenses recognised directly in 101 - 101
equity
- transactions with equityholders ( 71) ( 1) ( 72)
Indirect disposal on partial (3 060) - (3 060)
liquidation of parent group
At 31 March 2009 - 14 14
Investments in associated undertakings at 31 March 2009 include goodwill of
EURO 5 million (2008: EURO 2 200 million).
British American Tobacco plc (`BAT`)
The summarised financial information in respect of the Group`s share of
results of its principal associated undertaking, BAT, till the date of Group`s
restructuring is as follows:
Period to Year to
20 October 2008 31 March 2008
EURO m EURO m
Operating profit 519 826
After:
Share of other expense ( 8) ( 27)
Finance costs ( 63) ( 137)
Finance income 15 53
Share of post-tax profit of 62 134
associates
Profit before taxation 533 876
Taxation ( 150) ( 223)
Net profit 383 653
Attributable to:
Shareholders` equity 355 609
Minority interest 28 44
383 653
The Group`s share of results and retained reserves of BAT for the six-month
period to 30 September 2008 have been derived from accounts drawn up to that
date, and for the period from 1 October to 20 October 2008 from estimates by
management using the average daily profit of BAT for the preceding six-month
period.
Changes in the Group`s percentage holding of BAT during the years ended 31
March 2009 and 2008 relate to the share buy-back programme carried out by BAT.
The following table indicates the percentages applied to BAT`s profits:
For the period to 20 October 2008
Percentage
1 April 2008 to 30 June 2008 19.4
1 July 2008 to 20 October 2008 19.5
For the year ended 31 March 2008
1 April 2007 to 30 June 2007 19.1
1 July 2007 to 31 March 2008 19.3
On 20 October 2008 the Group effectively disposed of its entire holding in BAT
through the partial liquidation of Richemont SA (note 6).
The market capitalisation of BAT ordinary shares at 20 October 2008 was GBP 34
303 million (31 March 2008: GBP 38 126 million). The fair value of the Group`s
effective interest of 19.5 per cent in BAT ordinary shares at that date was
EURO 8 664 million (31 March 2008: effective interest: 19.3 per cent; fair
value: EURO 9 250 million).
3. Other operating (expense) / income
2009 2008
EURO m EURO m
Royalty income - net 16 15
Amortisation of intangible assets acquired ( 13) ( 3)
on business combinations
Other expenses ( 30) ( 2)
( 27) 10
4. Net finance (costs) / income
2009 2008
Finance income: EURO m EURO m
Interest income on bank and other deposits 73 82
Dividend income on financial assets at fair 1 6
value through profit or loss
Net gain in fair value of financial assets - 9
at fair value through profit or loss
Net foreign exchange gains on monetary 53 -
items
Mark-to-market adjustment in respect of - 64
hedging activities
Finance income 127 161
Finance costs:
Interest expense:
- bank borrowings ( 37) ( 35)
- other financial expenses ( 1) ( 1)
Net loss in fair value of financial assets ( 18) -
at fair value through profit or loss
Mark-to-market adjustment in respect of ( 172) -
hedging activities
Net foreign exchange losses on monetary - ( 78)
items
Finance costs ( 228) ( 114)
Net finance (costs) / income ( 101) 47
Foreign exchange gains resulting from effective hedge derivative instruments
of EURO 12 million (2008: gains of EURO 13 million) were reflected in cost of
sales during the year. Gains and losses on all non-hedge derivatives, as well
as the ineffective portion of hedge derivatives, are included in net finance
(costs) / income.
5. Taxation
Taxation charge in the income statement:
2009 2008
re-presented
EURO m EURO m
Current tax 152 204
Deferred tax ( 19) ( 10)
(credit)/charge
133 194
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 2009 and 2008 were 15.7
per cent and 16.9 per cent respectively.
6. Discontinued operations
British American Tobacco (`BAT`)
In their Extraordinary General Meeting held on 9 October 2008 the shareholders
of Compagnie Financiere Richemont SA approved the restructuring of its
business by splitting its luxury goods businesses from its other interests,
which include its interest in BAT and other assets, including cash of EURO 351
million.
The de-twinning of the shares of the Company and the participation
certificates of Richemont SA was effected on 20 October 2008. As part of the
restructuring, Richemont SA distributed to the Company its entire holdings in
the share capital of the entities holding the luxury goods businesses in
compensation of the cancellation of the share capital of Richemont SA, 100 per
cent held by the Company. The cancellation of the shares of Richemont SA
represents a disposal to the unitholders of the residual interests of
Richemont SA which comprised principally its interest in BAT and other assets.
The deconsolidation of Richemont SA generates no gain or loss through profit
or loss as it represents a partial liquidation of Richemont SA in the context
of a Group restructuring.
In addition to BAT, management has authorised and is actively involved in the
disposal of two small business units.
The results and cash flows of the discontinued operations include the share of
post tax profit and dividends received from BAT, and the two business units
mentioned above. Management considers the net costs and cash flows of other
assets disposed of to be immaterial.
Results of discontinued operations 2009 2008
EURO m EURO m
Sales 9 12
Cost of sales ( 21) ( 19)
Gross loss ( 12) ( 7)
Selling and distribution expenses ( 3) ( 4)
Communication expenses ( 2) ( 6)
Administrative expenses ( 1) -
Other operating income ( 12) -
Operating profit ( 30) ( 17)
Finance costs - -
Finance income - -
Share of post-tax profit of associated 355 609
undertakings
Profit before taxation 325 592
Taxation - -
Profit from discontinued operations 325 592
Cash flow generated from / (used in) 2009 2008
discontinued operations
EURO m EURO m
Net cash generated from operating 335 314
activities (operating)
Disposal of discontinued operations net of (351) -
cash disposed of (financing)
( 16) 314
Effect of disposal on the financial position of 2009
the Group
EURO m
Investment in associated undertaking 3 060
Financial assets held at fair value through 76
profit or loss
Other non-current assets 3
Deferred income tax liabilities ( 1)
Current income tax liabilities ( 1)
Accruals and deferred income ( 2)
Cash 351
7. Earnings per share
7.1. Basic
Basic earnings per share is calculated by dividing the profit attributable to
shareholders by the weighted average number of shares in issue during the
year, excluding shares purchased by the Company and held in treasury.
2009 2008
Profit attributable to shareholders of 750 973
the Company (EURO millions)
Profit from discontinued operations
attributable to shareholders
of the Company (EURO millions) 325 592
1 075 1 565
Weighted average number of shares in 559.5 561.1
issue (millions)
7.2. Diluted
Diluted earnings per share is calculated adjusting the weighted average number
of shares outstanding, which assumes conversion of all dilutive potential
shares. The Company has only one category of dilutive potential shares: share
options.
The calculation is performed for the share options to determine the number of
shares that could have been acquired at fair value (determined as the average
annual market share price of the Company`s shares) based on the monetary value
of the subscription rights attached to outstanding share options. The number
of shares calculated as above is compared with the number of shares that would
have been issued assuming the exercise of the share options.
2009 2008
Profit attributable to shareholders of the 750 973
Company (EURO millions)
Profit from discontinued operations attributable 325 592
to shareholders of the Company (EURO millions)
1 075 1 565
Weighted average number of shares in issue 559.5 561.1
(millions)
Adjustment for share options (millions) 1.5 8.0
Weighted average number of shares for diluted 561.0 569.1
earnings per share (millions)
8. Inventories
2009 2008
EURO m EURO m
Raw materials and work in 819 803
progress
Finished goods 1 603 1 273
2 422 2 076
The cost of inventories recognised as an expense and included in cost of sales
amounted to EURO 1 763 million (2008: EURO.1 713 million).
The Group reversed EURO 68 million (2008: EURO 24 million) of a previous
inventory write-down during the year as the goods were sold at an amount in
excess of the written down value. The amount reversed has been credited to
cost of sales.
The Group recognised EURO 124 million (2008: EURO 75 million) in the write-
down of inventory as a charge to cost of sales.
9. Cash flow generated from operating activities
2009 2008
re-
presented
EURO m EURO m
Operating profit 951 1 101
Depreciation and impairment of property, 175 139
plant and equipment
Amortisation and impairment of intangible 49 35
assets
Loss on disposal of property, plant and 1 1
equipment
Profit on disposal of intangible assets - ( 2)
(Decrease)/ Increase in provisions ( 11) 2
Decrease in retirement benefit ( 5) ( 60)
obligations
Non-cash items 20 19
Increase in inventories ( 218) ( 308)
Decrease/(increase) in trade debtors 21 ( 11)
Increase in other receivables, ( 15) ( 6)
prepayments and accrued income
(Decrease)/increase in current ( 154) 58
liabilities
Increase in long-term liabilities 5 -
Cash flow generated from operations 819 968
10. Share-based payment
Share option scheme
The Group has a long-term share-based compensation plan whereby executives are
awarded options to acquire shares at the market price on the date of grant.
Awards under the share 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. The executive must
remain in the Group`s employment until vesting. The options granted as from
2008 onwards include a performance condition correlated to other luxury goods
companies upon which vesting is conditional.
During the year ended 31 March 2009, awards of 5 069 241 options were granted
at a weighted average exercise price of CHF21.20 per share. Options in respect
of 265 521 shares were exercised during the year at an average exercise price
of CHF11.03 per share.
Modification during the year under review
On 20 October 2008 the Company split its luxury goods businesses from its
other interests resulting in the de-twinning of the existing Richemont units.
The de-twinning process impacted the value and the number of stock options
awarded to executives. Richemont unit options, which had vested but were not
yet exercised at the date of the restructuring, have been converted into
options over Richemont shares, options over BAT shares and options over Reinet
shares. The exchange ratio used, determined at market prices at close of
business on the date of de-twinning, was calculated to preserve the economic
benefits of the Richemont option holders. Richemont unit options which had not
vested at the date of the restructuring were converted in their entirety into
options over Richemont shares.
The fair value of the outstanding options immediately before and after the
modification was recalculated using the binomial model. The significant inputs
into the model were the risk free interest rates set as at the date of the
modification, the dividend yield based on historical values ignoring any
special dividends (a zero dividend yield and an estimated share price were
used for Reinet), an expected option life between zero and seven years and an
early exercise assumption based on expected rational behaviour, and the
seniority of the management and the relative values of the BAT share price
(GBP17.14) and the CFR unit price (CHF 42.90) at the date of modification. The
volatility for BAT was based on a historic six-year average. The historic
volatility and estimated price of the new Richemont share was determined by
decomposing the Richemont unit price into the component parts of the luxury
goods businesses, and BAT and other assets. The volatility of Reinet was based
on nine comparative listed companies.
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 2009 March 2008
Average
United States dollar 1.42 1.42
Japanese yen 143.07 161.59
Swiss franc 1.56 1.64
Pound sterling 0.84 0.71
31 March 2009 31 March 2008
Closing
United States dollar 1.33 1.58
Japanese yen 130.92 157.82
Swiss franc 1.51 1.57
Pound sterling 0.93 0.80
Statutory Information
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 and traded on the SIX Swiss Exchange, (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
"CFRJ.J" / Bloombergs "CFR:SJ" / ISIN CH0045159024).
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 was 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 Richemont `A` share on 31 March 2009 was CHF 17.78
and the market capitalisation of the Group`s `A` shares on that date was CHF 9
281 million.
Over the preceding twelve months, the highest closing price of the `A` share
equivalent was CHF 30.04 (former `A` unit: CHF 68.80) on 19 May 2008, and the
lowest closing price of the `A` share was CHF 14.23 on 3 March 2009.
The consolidated financial statements have been audited by
PricewaterhouseCoopers SA, Switzerland. That firm`s unqualified audit report
is available for inspection at the registered office of Richemont in Bellevue
Geneva, Switzerland.
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
(c) Richemont 2009
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
2009 was 12.489; this compares with a rate of 10.105 during the prior year.
in ZAR millions March 2009 March 2008
re-
presented
Sales 67 665 53 455 + 27 %
Operating profit 12 264 11 297 + 9 %
Profit from continuing 9 379 9 822 - 5 %
operations
Net profit from discontinued 4 059 5 982 - 32 %
operations
Net profit 13 438 15 804 - 15 %
Analysed as follows
Net profit attributable to 13 426 15 814
shareholders
Net profit attributable to 12 ( 10)
minority interests
13 438 15 804
Earnings per depositary
receipt from
continuing operations - ZAR 1.6698 ZAR 1.7280 - 3 %
diluted basis
Operating profit in the year under review included one-off charges of ZAR 987
million or EURO 79 million. The comparative figure in the prior year was ZAR
71 million or EURO 7 million.
The Group`s share of the results of its former associate, British American
Tobacco, is included within discontinued operations in the table above.
Subject to approval of the shareholders at the annual general meeting,
scheduled to take place on 9 September 2009, it is currently anticipated that
the dividend will be paid to Richemont Depository Receipt holders on 25
September 2009. The rand dividend amount per Depository Receipt will be
calculated by reference to the Swiss franc/rand exchange rate prevailing on
the currency conversion date in September 2009.
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, 28
September 2001 and 7 August 2008. 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.
Date: 14/05/2009 07:31:01 Produced by the JSE SENS Department.
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