| Thu 8 Jun 2006, 8:26 | | Richemont - Audited results for the year ended 31 |
|
RCH
RCH
Richemont - Audited results for the year ended 31 March 2006
Richemont Securities Ag
(Incorporated in Switzerland)
Sharecode: RCH
ISIN: CH0013157380
("Richemont")
Audited results for the year ended 31 March 2006
Richemont, the Swiss luxury goods group, announces its audited results for the
year ended 31 March 2006. The Group"s full year results are presented for the
first time in compliance with International Financial Reporting Standards
("IFRS"). The March 2005 comparative figures presented in this document have
been restated to reflect the IFRS reporting framework.
Financial highlights
- Sales increased by 17 per cent to EUR 4 308 million.
- Underlying operating profit from the luxury goods businesses, excluding
- non-recurring net disposal gains, increased by 47 per cent to EUR 713
- million. Including non-recurring items, operating profit increased to EUR
741 million.
- Underlying net profit attributable to unitholders, including the Group"s
- share of the results of British American Tobacco before non-recurring
items,
- increased by 36 per cent to EUR 1 130 million. Including the significant
- impact of non-recurring items in both years, net profit attributable to
- unitholders declined to EUR 1 094 million.
The highlights above focus on the underlying trends in the Group"s businesses.
Key results prepared on a full IFRS basis, including net disposal gains and
non-recurring items, are presented below.
Sales
Sales at the Group"s jewellery Maisons, Cartier and Van Cleef & Arpels,
increased by 15 per cent and the specialist watchmaking division reported
particularly strong growth of 22 per cent.
Operating profit
Excluding non-recurring net disposal gains in both periods, underlying
operating profit from the Group"s luxury goods businesses increased by 47 per
cent to EUR 713 million. Gains on the disposal of Hackett and on the sale and
leaseback of a retail property resulted in operating profit for the year
increasing to EUR 741 million.
British American Tobacco ("BAT")
Excluding the impact of non-recurring items from both periods, the Group"s
equity accounted share of the post-tax profit of BAT increased by 10 per cent
to EUR 544 million. Including such non-recurring items reported by BAT in both
periods - in particular the very significant gain made on the restructuring of
its operations in the United States in the prior year - the Group"s share of
BAT"s earnings fell by 39 per cent to EUR 486 million.
Net profit attributable to unitholders
Attributable net profit, including the results of Richemont"s luxury goods
business and the Group"s share of the results of BAT, declined by 10 per cent
to EUR 1 094 million. The positive underlying trend in both the luxury
business and BAT"s results was offset by the non-recurrence of the significant
gains reflected in the prior year, largely linked to the interest in BAT. On
an underlying basis, excluding the impact of non-recurring items from both
periods, attributable profit increased by 36 per cent to EUR 1 130 million.
Cash position
Cash generated from the Group"s luxury goods operations was EUR 774 million for
the year, compared to EUR 481 million in 2005. Net cash at 31 March 2006, after
payment of the ordinary and special dividends of EUR 553 million in September
2005, increased to EUR 884 million.
Dividend
The proposed dividend for the year amounts to EUR 0.60 per unit, an increase of
20 per cent compared to last year. In addition, the Board has also proposed a
further special dividend amounting to EUR 0.50 per unit. The dividend for the
year will therefore amount to EUR 1.10 per unit in total.
Group results
March 2006
IFRS
in EUR millions Underlying Non-recurring
items
Sales 4 308 - 4 308
Operating profit 713 28 741
Net profit - parent and
subsidiaries 586 22 608
Share of post-tax profit of
associate 544 ( 58) 486
Net profit attributable to
unitholders 1 130 ( 36) 1 094
Earnings per unit - diluted
basis EUR 2.015 - EUR 1.951
Dividend per unit EUR 0.60
Special dividend per unit EUR 0.50
Total dividend per unit EUR 1.10
March 2005
IFRS
in EUR millions Underlying Non-recurring
items
Sales 3 671 - 3 671
Operating profit 485 76 561
Net profit - parent and
subsidiaries 338 76 414
Share of post-tax profit of
associate 493 305 798
Net profit attributable to
unitholders 831 381 1 212
Earnings per unit - diluted
basis EUR 1.498 - EUR 2.185
Dividend per unit EUR 0.50
Special dividend per unit EUR 0.50
Total dividend per unit EUR 1.00
Sales and operating profit by business segment are analysed below.
Non-recurring items - operating profit
In the current year, the non-recurring items in operating profit, amounting
to EUR 28 million, mainly relate to the disposal gain on Hackett in June 2005
and a gain realised on the disposal of a retail property during the second
half of the year. After taxes, these gains amounted to EUR 22 million. In
the comparative year, the non-recurring item reflects the gain of
EUR 76 million on the partial indirect disposal of a 0.6 per cent interest
in British American Tobacco ("BAT") ordinary shares.
Non-recurring items - share of associate
Non-recurring items reported by BAT resulted in a swing of EUR 363 million in
terms of Richemont"s share of the results of its associate as between the prior
year and the year ended 31 March 2006.
In the current year, the non-recurring items in the Group"s share of the
post-tax profit reported by BAT amounted to a net charge of EUR 58 million.
These non-recurring items include restructuring charges and gains on the
disposal of subsidiaries, non-current investments and brands. In the
comparative year, the Group"s share of non-recurring net gains reported by BAT
amounted to EUR 305 million. This significant net gain stemmed largely from the
gain arising on the merger of BAT"s US business with that of R.J. Reynolds.
Earnings per unit
On a diluted basis, earnings per unit decreased from EUR 2.185 to EUR 1.951.
Excluding the impact of non-recurring items in both periods, earnings per unit
on a diluted basis increased by 35 per cent from EUR 1.498 to EUR 2.015.
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
This has been an excellent year for Richemont; we saw strong demand across all
of our principal markets. Sales grew by 17 per cent to EUR 4.3 billion, a
record for the Group. In terms of operating profit, Richemont"s luxury goods
businesses grew by 32 per cent to EUR 741 million and, excluding the impact of
non-recurring gains from the results of both years, underlying operating profit
would have shown growth of 47 per cent. All of our executives and employees are
to be commended on the contribution that they have made to achieving these
excellent results.
In addition to our luxury businesses, we have seen a strong performance from
British American Tobacco ("BAT"). Before non-recurring items in both the
current and prior year, Richemont"s share of BAT"s results increased by 10 per
cent to EUR 544 million in the year under review.
Richemont"s attributable profit for the year fell by 10 per cent to EUR 1 094
million, the significant improvement in trading results for the year being
offset by the non-recurrence of the significant gains reported in connection
with the investment in BAT in the comparative period. Excluding these
significant one-off impacts, however, the Group"s bottom-line result would have
shown an increase of 36 per cent to EUR 1 130 million for the year.
Whilst Richemont received EUR 247 million in dividends from BAT, the luxury
goods businesses have also demonstrated excellent cash generating capacity.
Reflecting higher profitability and the strict control of working capital, the
luxury businesses generated some EUR 500 million in free cash flow, after
capital expenditure and taxes, during the year. As a result, the Group"s net
cash reserves at 31 March 2006 rose to EUR 884 million.
Dividends
In the light of the good results and the Group"s strong financial position, the
Board has decided to recommend an increase in the ordinary dividend of 20 per
cent, taking it to EUR 0.60 per unit, and to pay a further special dividend.
The proposed special dividend this year will be EUR 0.50 per unit, bringing the
total payment for the year to EUR 1.10. The dividends will be paid principally
by Richemont SA, Luxembourg - which will pay EUR 1.05 per unit - with Compagnie
Financiere Richemont SA paying EUR 0.05 per unit.
The Maisons
Once again, Cartier has performed strongly. Its new jewellery lines, such as
the Caresses d"orchidees and Pasha ranges, capture the spirit of Cartier and
have sold well. The highlight of its year was the re-opening of the magnificent
13 rue de la Paix store in Paris, the true spiritual home of Cartier. Van Cleef
& Arpels celebrates its 100th anniversary in 2006 and, having seen an excellent
performance as the brand gathered momentum last year, we look forward to the
current year with confidence.
The watch businesses enjoyed a very good year, with sales increasing by 22 per
cent, resulting in strong growth in profitability. All of the watchmakers
performed well, but special praise must go to Vacheron Constantin in its 250th
anniversary year and to A.Lange & Sohne and IWC, which both showed
particularly strong growth over the year.
Montblanc continues to benefit from the broadening of its product ranges and
the extension of its retail distribution. Whilst writing instruments are at the
heart of the Maison, leather goods lines and watches have become established
product categories. The more recent launch of ladies jewellery has also proved
to be most successful.
Over the years, Alfred Dunhill has, to some extent, lost its intrinsic
character. Whilst sales are increasing and its products are highly regarded, it
has lacked a clear identity and business focus. It has also suffered from
significant procurement and supply chain problems. Steps have now been taken to
implement a realignment of the business, recognising the changed dynamics and
which will focus on Alfred Dunhill"s core business competencies in leather
goods, menswear and accessories. The business is being expanded in important
markets. Alfred Dunhill has moved quickly to take direct control over the
distribution of its products in mainland China, for example, and has recently
bought 30 stores from its franchise partners in key locations such as Beijing
and Shanghai. Complementing the anticipated growth in Asia, the wholesale
business in Europe will be expanded with a new shop-in-shop concept and
steps are being taken to expand menswear product ranges. This year, Dunhill
will also extend the reach of its e-commerce platform, which was successfully
launched in the United Kingdom in 2005.
The emphasis is currently on establishing a sound foundation for Alfred
Dunhill, which can serve as a base on which to build the business in the years
to come.
Fully justifying the confidence placed in it, Chloe has had another highly
successful year. Sales more than doubled as the popularity of the brand"s
ready-to-wear clothing, leather and accessory lines is recognised in the
market.
Current trading and outlook for the year ahead
We have enjoyed an excellent year and I am pleased to be able to report that
the first two months of the current financial year have also seen strong
demand for our Maisons" products. Sales over the two months increased by
18 per cent, with strong demand seen in all regions.
Although equity and commodity markets were very strong during the last
financial year, we saw something of a reality check in May. At this stage, it
is impossible to say how the global economy may develop during the remainder of
the current year and what the impact may be on demand for luxury products.
Equally, having enjoyed a year of relative stability in currencies, we are
monitoring closely the recent strengthening of the euro against the dollar.
We continue to see increasing demand for the Group"s products in established
markets as well as the growth of consumer awareness and demand for luxury
products in new markets. Considerable value is placed on the traditional skills
of our craftsmen whether it be in the art of fine jewellery, in watchmaking or
in writing instruments. Linked to these skills, there is no substitute for the
heritage and recognition that the Maisons enjoy.
Key to Richemont"s values is the commitment to creativity, design and
innovation. Complementing that commitment, the Group offers the infrastructure
and resources to allow our managers to grow their businesses for the long-term.
They, in turn, recognise that it is their duty to build the Maisons not only
for tomorrow or the next year but for generations to come.
Johann Rupert
Executive Chairman
Geneva, 8 June 2006
Business Review
Overview
in EUR millions March 2006 March 2005
Sales 4 308 3 671 +17%
Cost of sales (1 588) (1 415)
Gross profit 2 720 2 256 +21%
Net operating expenses (1 979) (1 695) +17%
Selling and distribution expenses (1 000) (893) +12%
Communication expenses (503) (414) +21%
Administration expenses (509) (468) +9%
Other operating income 33 80 -59%
Operating profit 741 561 +32%
The sales and results for the year ended March 2006 have been prepared under
IFRS (International Financial Reporting Standards). Accordingly, the
comparative figures have been restated to conform with IFRS. A reconciliation
of the March 2005 comparative figures as previously reported to IFRS was
published in October 2005 and in the interim financial statements.
Sales increased by 17 per cent to EUR 4 308 million, with strong growth
throughout the period in all major product areas and in all regions.
The gross margin percentage increased by some two percentage points to 63.1 per
cent, reflecting changes in the product and distribution mix, as well as higher
utilisation rates in manufacturing. As reported in the interim report, the
gross margin percentage also increased as a consequence of inventory provision
releases linked to the introduction of IFRS during the first six months of the
year. The increase in sales and the improved margin percentage led to a 21 per
cent increase in gross profit to EUR 2 720 million.
Net operating expenses increased by 17 per cent, primarily due to increases in
selling and distribution expenses and communication costs. Communication costs
increased by 21 per cent reflecting higher levels of investments by all the
Maisons. However, as a percentage of sales, communication costs were just 0.4
percentage points higher at 11.7 per cent. Compared to the prior
period,administration expenses also increased albeit to a lesser degree. Net
operating expenses included stock option charges amounting to EUR 36 million
(2005: EUR 31 million), reflecting the introduction of IFRS 2 Share-based
Payment.
Other operating income for the year under review included the following
non-recurring gains: EUR 11 million relating to the disposal of the Hackett
subsidiary in June 2005 and EUR 19 million primarily relating to a Cartier
asset sale-and-leaseback transaction. The total of these and other items
amounted to a net gain of EUR 28 million. In the comparative year, the partial
indirect disposal of a 0.6 per cent interest in British American Tobacco
ordinary shares gave rise to a gain of EUR 76 million reflected in other income
of EUR 80 million.
Operating profit increased by 32 per cent to EUR 741 million. Excluding the net
non-recurring gains described above, the underlying operating profit from the
Group"s luxury businesses increased by 47 per cent to EUR 713 million, compared
to EUR 485 in the prior year and the operating margin increased by 3.4
percentage points to 16.6 per cent.
Analysis of sales and operating results by business area
Sales and the operating results of the Group"s main areas of activity were as
follows:
in EUR millions March 2006 March 2005
Sales
Jewellery Maisons 2 227 1 938 +15%
Specialist watchmakers 1 063 870 +22%
Writing instrument Maisons 497 424 +17%
Leather and accessories Maisons 283 259 +9%
Other businesses 238 180 +32%
Total sales 4 308 3 671 +17%
Operating results
Jewellery Maisons 616 456 +35%
Specialist watchmakers 227 145 +57%
Writing instrument Maisons 83 58 +43%
Leather and accessories Maisons (38) (41) +7%
Other businesses 22 2 -
910 620 +47%
Corporate costs (169) (59) +186%
Central support services (154) (132) +17%
Other operating income / (expense) (15) 73 -
Operating profit 741 561 +32%
Further analysed as follows:
Underlying operating profit from luxury
business 713 485 +47%
Non-recurring items - luxury business 28 - -
Operating profit from luxury business 741 485 +53%
Gain on partial disposal of interest in
BAT - 76 -
Operating profit 741 561 +32%
In the table above, those Maisons which are principally engaged in a specific
business area have been grouped together. Accordingly, 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 segment.
Following the introduction of IFRS 2 Share-based Payment, charges for stock
options have been allocated, in both periods, to operating costs within the
relevant business areas and central support services.
Jewellery Maisons
With double-digit growth in all regions, jewellery Maisons sales increased by
15 per cent. During the year, Cartier successfully launched the Caresse
d"orchidees, Panthere and Pasha jewellery collections, as well as new models
from the Maison"s Pasha and Tank watch lines. The Maison"s historical roots in
Parisian high jewellery were marked by the restoration of its 13 Rue de la Paix
flagship boutique, while the contemporary edge that the Maison has always stood
for was embodied in the audacious Aoyama boutique in Tokyo. Van Cleef & Arpels"
continuing development reflected product launches such as the Pierres de
Caractere high jewellery collection and Secret Miroir des Eaux watch.
The segment as a whole generated an operating profit of EUR 616 million and an
operating margin of 27.7 per cent, 4.2 percentage points above the prior year"s
level. The increase in operating profit included one-off disposal gains
amounting to EUR 19 million.
Specialist Watchmakers
The Group"s specialist watchmakers reported a 22 per cent increase in sales and
an increase in the operating margin from 16.7 per cent in the comparative year
to 21.4 per cent. The rate of growth reflects developments across all regions,
the highest rate of growth being seen in the Americas region.
The good growth attests to the success of new products launched at the Geneva
Salon International de Haute Horlogerie in April 2005. Piaget"s Possession
watch collection uses motifs from the Maison"s renowned jewellery line of the
same name, whilst Jaeger LeCoultre"s latest Minute Repeater and Compressor
Extreme World Chronograph demonstrated the Maison"s technical expertise. IWC"s
new models to mark the 50th anniversary of the legendary Ingenieur watch were a
great success. Panerai enjoyed continued success in the high-end sport segment
with both established lines and new models. Sales through Panerai"s new Beverly
Hills boutique were particularly good. Double-digit sales growth at Baume &
Mercier also reflects the success of new models, including the Diamant for
women, and restyled models such as the Riviera, first launched in 1973.
A.Lange & Sohne delighted watch connoisseurs with its Lange 1 TimeZone and
Tourbograph Pour le Merite models, as did Vacheron Constantin, which marked its
250th anniversary of uninterrupted production with unique items including the
Tour de L"Ile model: the most complicated wristwatch produced in a limited
edition series.
Writing Instrument Maisons
Richemont"s Writing Instrument Maisons, Montblanc and Montegrappa, reported
total sales growth of 17 per cent. This increase in sales partly reflects
Montblanc"s growth as a retailer, with one third of the Maison"s sales now
being made directly to customers through the Group"s own network. This network
increased by 45 boutiques in the final quarter of the year following the
takeover of existing stores in China. Despite the higher costs associated with
retail activities, operating profit increased by 43 per cent and the operating
margin increased from 13.7 per cent to 16.7 per cent.
Since January, Montblanc has been celebrating its 100th anniversary with
special events and products, centenary editions featuring a diamond cut in the
form of the Maison"s white star signet.
Leather and Accessories Maisons
Alfred Dunhill"s strong growth in the Asia-Pacific region offset flat sales in
Europe and Japan, leading to an overall 8 per cent increase in sales. Sales of
leather goods, the Maison"s main product line, increased by 19 per cent, but
overall operating losses increased to EUR 30 million. This reflected provisions
linked to poor performance in the accessories division and management changes.
Lancel opened its new flagship boutique on the Champs-Elysees in Paris in time
for Christmas 2005, representing the latest step on the Maison"s way back to
its prestige position in the French market. Despite the poor economic climate
in France, the Maison"s principal market, Lancel achieved double-digit sales
growth, aided by expansion in Japan and other international markets. Operating
losses of EUR 8 million were half those of the comparative year.
Other businesses
Excluding the impact of the disposal of Hackett, which was sold in June 2005,
sales of the Group"s other businesses increased by 66 per cent over the prior
year.
Chloe"s outstanding success continues, with sales more than doubling despite
the strong growth seen already in the comparative year. Very strong demand for
new product lines, for example the Paddington bag and See by Chloe, new store
openings and strong wholesale sales contributed to this success.
Operating profit
Operating profit before corporate costs totalled EUR 910 million, an increase
of 47 per cent over the comparative period. This reflects the increase in
sales, a higher gross margin contribution and continuing cost control. As a
result, the operating margin before corporate costs increased from 17 per cent
to 21 per cent. Central support services represent strategic management as well
as marketing and functional support, legal services, manufacturing and
logistics, intellectual property, finance, human resources and information
technology together with central marketing initiatives.
Good trading results have resulted in an improvement in the operating profit
margin from 15.3 per cent to 17.2 per cent. Excluding the disposal gains and
similar items from both years, the operating margin from luxury businesses
increased from 13.2 per cent to 16.6 per cent during the year under review.
Sales by region
Movement at:
Constant Actual
exchange exchange
in EUR millions March 2006 March 2005 rates rates
Europe 1 811 1 580 +14% +15%
Japan 723 639 +15% +13%
Asia-Pacific 899 755 +14% +19%
Americas 875 697 +21% +26%
4 308 3 671 +16% +17%
Europe
European markets accounted for 42 per cent of Group sales, the three most
important markets in the region being France, Italy and Switzerland. European
sales increased by 15 per cent, the strong growth rate reflecting good
performances in most major markets and very high growth in the Middle East and
Russia. In contrast, sales in the UK market were flat.
Japan
Jewellery and watch brands benefited from a return of consumer confidence in
Japan; overall sales in the country increased by 13 per cent during the year.
Asia-Pacific
Double-digit sales growth in most major markets, despite demanding comparative
figures, reflected very strong demand for watches in particular. Sales in
China, representing 13 per cent of regional sales, increased by 48 per cent at
historic rates. The high rate of growth reflects the Group"s continuing
investment in this market, including the establishment of distribution
subsidiaries and more than 400 points of sale in mainland China.
Americas
Sales growth in the Americas region reflected the continuing strength of
consumer confidence in the United States during the period, with most brands
reporting double-digit growth. The region now accounts for 20 per cent of Group
sales.
Sales by distribution channel
in EUR millions March 2006 March 2005
Retail 1 762 1 509 +17%
Wholesale 2 546 2 162 +18%
4 308 3 671 +17%
Retail
Retail sales increased by 17 per cent to EUR 1 762 million, reflecting both
better trading at established boutiques and an increase in the number of points
of sale owned by the Group. Excluding Hackett and Old England, the total retail
network increased by 165 to 1 075 boutiques; of the increase, 64 stores were
opened by the Group and 101 by partners. At the end of March, the Group"s
Maisons owned 610 boutiques, with a further 465 points of sale being operated
by franchise partners.
Wholesale
Driven by demand for the Group"s watch products in particular, wholesale sales
were particularly strong, showing an overall increase of 18 per cent.
Summary income statement and results of associate
in EUR millions March 2006 March 2005
Operating profit 741 561
Finance (costs) / income 5 (48)
746 513
Share of post-tax results of associated
undertaking 486 798
Before non-recurring (expenses) / income 544 493
Share of non-recurring (expenses) / income (58) 305
Profit before taxation 1 232 1 311
Taxation (136) (97)
Net profit 1 096 1 214
Attributable to unitholders 1 094 1 212
Attributable to minority interests 2 2
Net profit 1 096 1 214
Net finance income amounting to EUR 5 million includes net interest income, net
foreign exchange gains and fair value adjustments. In the prior year, net
finance cost of EUR 48 million primarily reflected net foreign exchange losses
on intra-group financing.
Excluding the Group"s share of the results of its investment in British
American Tobacco, the Group"s effective taxation rate was 18.2 per cent
compared with 18.9 per cent last year. The rate reflects the significant
improvement in the Group"s pre-tax profit and the generally low level of
corporate taxes in Switzerland compared to other jurisdictions.
Associated company - British American Tobacco
For the year ended 31 March 2006, the Group"s share of the results of British
American Tobacco decreased to EUR 486 million. The reduction largely
reflects the significant and non-recurring income reported by British
American Tobacco in the prior year in respect of the merger of its North
American operations with those of R.J. Reynolds to form Reynolds American,
in which British American Tobacco now holds 42 per cent of the equity.
Excluding this and other non-recurring income and expense from both years,
the Group"s share of the results of British American Tobacco would have
increased by 10 per cent to EUR 544 million.
The following table presents the Group"s effective interest in BAT applied in
the current and the prior year.
2005-06 2004-05
% %
1 April to 31 May 18.4 19.7
1 June to 30 June 18.4 18.7
1 July to 30 September 18.5 18.7
1 October to 31 December 18.6 18.8
1 January to 28 February 18.6 18.8
1 March to 31 March 18.6 18.3
The Group"s interest in the prior year fluctuated principally as a result of
the conversion of the British American Tobacco preference shares into ordinary
shares on 28 May 2004 upon their sale to third party investors and the indirect
sale in March 2005 of a 0.6 per cent interest in British American Tobacco
shares to Remgro Limited. Other movements for that year and those of the
current year were the result of the share buy-back programme carried out by
British American Tobacco.
British American Tobacco reports its results in sterling. As the average
euro: sterling exchange rate, at 0.682, was the same for the past two years,
there was no direct impact on the Group"s share of British American Tobacco"s
results due to exchange rate movements.
In cash flow terms, the Group received dividends totalling EUR 247 million
during the year (2005: EUR 267 million).
In British American Tobacco"s financial year to 31 December 2005, its adjusted,
diluted earnings per share, a good indicator of its underlying performance,
grew by 17 per cent to 89.34 pence per share. This increase benefited from the
improved underlying operating performance and reduced net finance costs as well
as the impact of the formation of Reynolds American and the share buy-back
programme.
In British American Tobacco"s quarter to 31 March 2006, its adjusted diluted
earnings per share grew by 14 per cent as a result of the increase in the
profit from operations, the improved contribution from associated companies and
the benefit of the share buy-back programme, partially offset by higher
taxation and minority interests.
The following commentary is condensed from British American Tobacco"s annual
report for the year ended 31 December 2005.
British American Tobacco cigarette sales volumes from subsidiaries decreased by
1 per cent to 678 billion from the prior year due to the merger of British
American Tobacco"s US business with R.J. Reynolds to form Reynolds American as
well as the sale of Etinera, an Italian distribution business. However,
excluding the impact of these transactions, there was good organic volume
growth from subsidiaries of 2 per cent. The four global drive brands - Dunhill,
Kent, Lucky Strike and Pall Mall - performed well with an overall growth of 9
per cent on a "like for like" basis. Associates" volumes increased from 167
billion to 232 billion and, with the inclusion of these, total British American
Tobacco volumes would have been 910 billion (2004: 853 billion).
British American Tobacco"s profit from operations was 36 per cent lower at GBP 2
420 million, mainly due to the impact in 2004 of a significant GBP 1 389 million
gain on the Reynolds American merger. Excluding the merger of its US business
with R.J. Reynolds and the sale of Etinera, on a "like for like" basis, British
American Tobacco"s profit from operations would have been 9 per cent higher, or
5 per cent at constant rates of exchange. This "like for like" information
provides a better understanding of the subsidiaries" trading results. The
strong profit performance reflected higher profit in all regions, except
America-Pacific.
In Europe, profit increased by GBP 34 million to GBP 784 million, with
particularly strong growth from Russia and Germany. The integration of the
Smoking Tobacco and Cigars business in 2005, other cost savings and the positive
impact of the change in trade terms in Italy also contributed to the result.
Excluding a net GBP 30 million gain as a result of the sale of Etinera at the
end of 2004, partly offset by the consequent change in terms of trade, profit on
a "like for like" basis would have increased by GBP 64 million or 9 per cent.
Volumes were 2 per cent higher at 244 billion with growth in Russia, Romania and
Poland, partly offset by declines in Italy, Germany, Switzerland and Ukraine.
In Asia-Pacific, profit rose by GBP 36 million to GBP 531 million as good
performances in Australasia and Pakistan, a benefit in the first quarter from
the timing of an excise payment in South Korea and good results from many of
its other markets more than covered the reductions in Malaysia and Vietnam.
Volumes at 137 billion were 4 per cent higher, as strong increases in Pakistan
and Bangladesh were partially offset by declines in South Korea, Vietnam and
Malaysia.
In Latin-America, profit increased by GBP 82 million to GBP 530 million as good
performances across the region reflected higher volumes and margins, further
helped by stronger currencies in many of the markets. Volumes at 149 billion
increased slightly as growth in many markets was partly offset by declines
in Mexico and Argentina.
Profit in the Africa and Middle East region grew by GBP 74 million to GBP 434
million, mainly driven by South Africa and reduced losses from Turkey. Volumes
grew by 5 per cent to 103 billion with strong growth from the Middle East
markets and Turkey.
On a "like for like" basis, the America-Pacific regional profit declined by
GBP 54 million to GBP 436 million, with lower contributions from both Canada and
Japan. Increased volumes in Japan were more than offset by a decrease in Canada
leading to an overall decline of 2 per cent. As the comparative period included
in the US tobacco businesses now merged with R.J. Reynolds and included in
associates, the reported regional volumes were 34 per cent lower at 45 billion
and reported profit was GBP 203 million down.
British American Tobacco"s share of the post tax results of its own associates
increased by GBP 266 million to GBP 392 million, reflecting the inclusion of GBP
244
million for Reynolds American, following its formation in July 2004. On a
proforma US GAAP basis, as if the combination of the R.J. Reynolds domestic US
tobacco business with Brown & Williamson had been completed as of 1 January
2004, Reynolds American reported that operating profit for the year increased
by 35 per cent and net income rose by 29 per cent. These results demonstrate
the success of the business combination. The higher income principally
reflected improved pricing and merger synergies.
Further information in respect of British American Tobacco can be obtained
from that company"s website: www.bat.com.
Analysis of attributable net profit
in EUR millions March 2006 March 2005
Parent and subsidiaries
Net profit before non-recurring (expenses)/
income 586 338
Non-recurring income 22 76
Attributable net profit from parent and
subsidiaries 608 414
Share of post-tax profit of associate - British
American Tobacco
Net profit before non-recurring (expenses)/
income 544 493
Non-recurring (expenses) / income (58) 305
Net profit - share of associate 486 798
Attributable net profit of the Group 1 094 1 212
Analysed as follows:
Parent, subsidiaries and share of associate
before non-recurring items 1 130 831
Non-recurring (expenses) / income (36) 381
Attributable net profit of the Group 1 094 1 212
Earnings per unit excluding non-recurring
(expenses) / income
Basic EUR 2.043 EUR 1.517
Diluted basis EUR 2.015 EUR 1.498
During the year the Group realised non-recurring income of EUR 28 million,
being the net disposal gains within its luxury business described earlier. Net
of taxation, this non-recurring income amounted to EUR 22 million. In the prior
year there were no such items within the Group"s luxury business. However, in
the prior year the Group realised a gain of EUR 76 million in respect of the
partial indirect disposal of British American Tobacco ordinary shares.
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 EUR 58 million
in the year under review. This primarily reflected restructuring charges, net
of gains on the disposal of subsidiaries, non-current investments and brands.
In the comparative year, the non-recurring net gain of EUR 305 million
primarily reflected gains on the disposal of subsidiaries, non-current
investments and brands, reduced by the impact of restructuring charges. The
most significant of these disposal gains arose in the quarter ended 30
September 2004 and related to the agreement to combine British American
Tobacco"s US business, Brown & Williamson, with R.J. Reynolds, as detailed
previously.
Excluding non-recurring items from both years, attributable net profit in the
year to 31 March 2006 would have been EUR 1 130 million compared to EUR 831
million in the prior year, representing an increase of 36 per cent.
Excluding non-recurring items, Richemont"s fully diluted earnings per unit
would have increased by 35 per cent from EUR 1.498 to EUR 2.015.
Cash flow
in EUR millions March 2006 March 2005
Operating profit 741 561
Depreciation and other non-cash items 159 57
Earnings before interest, tax and depreciation 900 618
Increase in working capital (126) (137)
Cash generated from operations 774 481
Dividends received from associate 247 267
Net interest income 2 5
Taxation paid (85) (79)
Net acquisitions of fixed assets (189) (127)
Proceeds from disposal of BAT preference shares - 828
Proceeds from indirect disposal of BAT ordinary
shares - 179
Other investing activities, net (4) (5)
Net cash inflow before financing activities 745 1 549
Dividends paid to unitholders (553) (219)
Normal dividend (276) (219)
Special dividend (277) -
Decrease in borrowings and other financing
activities (43) (227)
Net proceeds from sale of treasury units 90 44
Exchange rate effects (6) 30
Increase in cash and cash equivalents 233 1 177
Cash and cash equivalents at the beginning of the
year 1 183 6
Cash and cash equivalents at end of year (1) 1 416 1 183
Borrowings (532) (566)
Net cash at the end of the year 884 617
The Group"s net cash position increased from EUR 617 million at 31 March 2005
to EUR 884 million at 31 March 2006. The increase largely reflected the net
cash inflow before financing activities of EUR 745 million, partly offset by
the payment of dividends in September 2005. Dividend payments included a
special dividend amounting to EUR 277 million, or EUR 0.50 per unit.
The net cash inflow from operations totalled EUR 774 million for the year, the
increase in earnings before interest, tax and depreciation being partially
offset by increases in inventories and debtors. The increase in debtors was
broadly in line with wholesale sales growth. Dividends received from British
American Tobacco comprised the final dividend in respect of its financial year
ended 31 December 2004, received in April and the interim dividend for the 2005
financial year, received in September. Total dividends received in the prior
year included EUR 32 million in respect of the final dividend on British
American Tobacco preference shares, which were disposed of in June 2004.
Within investing activities in the prior year, proceeds from the disposal of
the British American Tobacco preference shares amounted to EUR 828 million.
This represented the realisation of the second and final tranche of the
preference shares issued by British American Tobacco as part of the
consideration for the merger with Rothmans International in 1999. Proceeds from
the indirect disposal of ordinary shares in British American Tobacco to Remgro
Limited, the Group"s joint venture partner, in March 2005 amounted to EUR 179
million.
Treasury units were sold in connection with the exercise of stock options by
executives, resulting in a net cash inflow of EUR 90 million.
(1) Cash and cash equivalents are as per the consolidated cash flow statement
detailed later in this report.
Summarised balance sheet
in EUR millions 31 March 2006 31 March 2005
Non-current assets
Fixed assets 809 733
Investment in associated undertakings 3 347 3 218
Other non-current assets 450 416
4 606 4 367
Net current assets 1 476 1 462
Net operating assets 6 082 5 829
Net cash 884 617
Cash and cash equivalents 1 416 1 183
Borrowings (532) (566)
Other non-current liabilities (185) (165)
6 781 6 281
Equity
Unitholders" equity 6 773 6 275
Minority interests 8 6
6 781 6 281
The Group"s interest in British American Tobacco ordinary shares amounted to
18.6 per cent at 31 March 2006. British American Tobacco"s market
capitalisation on that date, based on 2 092 million ordinary shares in issue,
amounted GBP 29 161 million. The fair value of the Group"s investment in British
American Tobacco therefore amounted to GBP 5 437 million or EUR 7 960 million at
31 March 2006.
Net current assets were in line with the prior year-end at EUR 1 476 million.
Net inventories increased by 7 per cent to EUR 1 623 million; the increase
being largely offset by increases in current liabilities, while year-end trade
debtors increased by some 18 per cent, reflecting both the seasonality of
wholesale sales and the growth seen during the latter part of the year. The
increases in inventories and debtors were largely offset by increases in
current liabilities, primarily relating to current tax liabilities and trade
creditors.
Net cash amounted to EUR 884 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.
Proposed dividend
The Board has proposed a dividend of EUR 0.60 per unit, an increase of 20 per
cent over the prior year"s level.
In addition, the Board has proposed that a further special dividend of EUR 0.50
should be paid to unitholders. The dividends will be payable following the
Annual General Meeting in September 2006.
The dividend(s) will be
paid as follows: Gross dividend Withholding Net payable
per unit tax @ 35% per unit
Ordinary dividend
Richemont SA, Luxembourg EUR 0.5500 - EUR 0.5500
Compagnie Financiere
Richemont SA, Switzerland EUR 0.0500 (EUR 0.0175) EUR 0.0325
EUR 0.6000 (EUR 0.0175) EUR 0.5825
Special dividend
Richemont SA, Luxembourg EUR 0.5000 - EUR 0.5000
EUR 1.1000 (EUR 0.0175) EUR 1.0825
Annual General Meeting
The Annual General Meeting of shareholders of Compagnie Financiere Richemont SA
will be held at 10:00 AM on Thursday 14th September 2006 at the Group"s offices
in Bellevue, Geneva.
Norbert Platt Richard Lepeu
Chief Executive Officer Group Finance Director
Compagnie Financiere Richemont SA
Geneva, 8 June 2006
Extracts from the audited
consolidated financial statements
at 31 March 2006
Consolidated balance sheet at 31 March
2006 2005
ASSETS Note EUR m EUR m
Non-current assets
Property, plant and equipment 742 681
Intangible assets 67 52
Investments in associated undertakings 1 3 347 3 218
Deferred income tax assets 261 227
Financial assets held at fair
value through profit or loss 25 36
Other non-current assets 164 153
4 606 4 367
Current assets
Inventories 1 623 1 522
Trade and other receivables 602 520
Derivative financial instruments 7 15
Prepayments and accrued income 127 116
Cash at bank and in hand 1 628 1 409
3 987 3 582
Total assets 8 593 7 949
EQUITY AND LIABILITIES
Equity
Share capital 334 334
Participation reserve 645 645
Treasury units (408) (560)
Hedge and unit option reserves 72 59
Cumulative translation adjustment reserve 38 24
Retained earnings 6 092 5 773
Total Unitholders" equity 6 773 6 275
Minority interest 8 6
Total equity 6 781 6 281
LIABILITIES
Non-current liabilities
Borrowings 158 155
Deferred income tax liabilities 33 34
Retirement benefit obligations 101 97
Provisions 51 34
343 320
Current liabilities
Trade and other payables 404 352
Current income tax liabilities 202 120
Borrowings 50 4
Derivative financial instruments 11 3
Provisions 85 63
Accruals and deferred income 181 173
Short-term loans 324 407
Bank overdrafts 212 226
1 469 1 348
Total liabilities 1 812 1 668
Total equity and liabilities 8 593 7 949
Consolidated income statement
for the year ended 31 March
2006 2005
Notes EUR m EUR m
Sales 4 308 3 671
Cost of sales (1 588) (1 415)
Gross profit 2 720 2 256
Selling and distribution expenses (1 000) (893)
Communication expenses (503) (414)
Administrative expenses (509) (468)
Other operating income 33 80
After:
Net gain from sale of subsidiary undertaking 2 11 -
Gain on partial disposal of share
of associated undertaking - 76
Operating profit 741 561
Finance costs 3 5 (48)
Share of post-tax profit of associated
undertakings 1 486 798
After:
Share of other (expense) / income
of associated undertakings 1 (58) 305
Profit before taxation 1 232 1 311
Taxation 5 (136) (97)
Net profit 1 096 1 214
Attributable to:
Unitholders 1 094 1 212
Minority interest 2 2
1 096 1 214
Earnings per unit for profit attributable to
Unitholders during
the year (expressed in EUR per unit)
- basic 4 1.978 2.212
- diluted 4 1.951 2.185
Consolidated statement of changes in equity
Equity attributable to Unitholders
Unitholders Treasury Other
capital units reserves
EUR m EUR m EUR m
Balance at 31 March 2004 979 (590) 44
Currency translation adjustments - - -
Transfer of hedge reserve on
settlement
of net investment hedge - - (28)
Cash flow hedges:
- net gains - - 24
- recycle to income statement - - (12)
Net share of BAT equity movements - - -
Net income / (expense) recognised
directly in equity - - (16)
Net profit - - -
Total recognised income / (expense) - - (16)
Net changes in treasury units - 30 -
Employee unit option scheme - - 31
Dividends paid - - -
Balance at 31 March 2005 979 (560) 59
Adoption of IAS 32 and IAS 39 * - - 5
Balance at 1 April 2005 979 (560) 64
Currency translation adjustments - - -
Cash flow hedges:
- net losses - - (29)
- recycle to income statement - - 3
Net share of BAT equity movements - - -
Net income / (expense) recognised
directly in equity - - (26)
Net profit - - -
Total recognised income / (expense) - - (26)
Net changes in treasury units - 152 -
Employee unit option scheme - - 34
Dividends paid - - -
Balance at 31 March 2006 979 (408) 72
Equity attributable to Unitholders
Cumulative
translation
adjustment Retained
reserve earnings Total
EUR m EUR m EUR m
Balance at 31 March 2004 - 4 605 5 038
Currency translation adjustments (9) - (9)
Transfer of hedge reserve on settlement
of net investment hedge 28 - -
Cash flow hedges:
- net gains - - 24
- recycle to income statement - - (12)
Net share of BAT equity movements - 154 154
Net income / (expense) recognised
directly in equity 19 154 157
Net profit - 1 212 1 212
Total recognised income / (expense) 19 1 366 1 369
Net changes in treasury units 5 21 56
Employee unit option scheme - - 31
Dividends paid - (219) (219)
Balance at 31 March 2005 24 5 773 6 275
Adoption of IAS 32 and IAS 39 * - (5) -
Balance at 1 April 2005 24 5 768 6 275
Currency translation adjustments 14 - 14
Cash flow hedges:
- net losses - - (29)
- recycle to income statement - - 3
Net share of BAT equity movements - (155) (155)
Net income / (expense) recognised
directly in equity 14 (155) (167)
Net profit - 1 094 1 094
Total recognised income / (expense) 14 939 927
Net changes in treasury units - (62) 90
Employee unit option scheme - - 34
Dividends paid - (553) (553)
Balance at 31 March 2006 38 6 092 6 773
Minority Total
interest equity
EUR m EUR m
Balance at 31 March 2004 4 5 042
Currency translation adjustments - (9)
Transfer of hedge reserve on settlement
of net investment hedge - -
Cash flow hedges:
- net gains - 24
- recycle to income statement - (12)
Net share of BAT equity movements - 154
Net income / (expense) recognised
directly in equity - 157
Net profit 2 1 214
Total recognised income / (expense) 2 1 371
Net changes in treasury units - 56
Employee unit option scheme - 31
Dividends paid - (219)
Balance at 31 March 2005 6 6 281
Adoption of IAS 32 and IAS 39 * - -
Balance at 1 April 2005 6 6 281
Currency translation adjustments - 14
Cash flow hedges:
- net losses - (29)
- recycle to income statement - 3
Net share of BAT equity movements - (155)
Net income / (expense) recognised
directly in equity - (167)
Net profit 2 1 096
Total recognised income / (expense) 2 929
Net changes in treasury units - 90
Employee unit option scheme - 34
Dividends paid - (553)
Balance at 31 March 2006 8 6 781
* In April 2005 the International Accounting Standards Board issued an
amendment to International Accounting Standard 39 Financial Instruments:
Recognition and Measurement, relating to the application of hedge accounting
for highly probable forecast intragroup transactions. The early application of
this amendment by the Group has resulted in an equity restatement between the
hedge reserve and retained earnings at 1 April 2005 of EUR 5 million.
Consolidated cash flow statement
for the year ended 31 March
2006 2005
Note EUR m EUR m
Cash flows from operating activities
Cash flow generated from operations 6 774 481
Interest income 37 57
Interest paid (35) (20)
Dividends from associated undertakings 247 235
Income tax paid (85) (79)
Net cash generated from operating activities 938 674
Cash flows from investing activities
Acquisition of subsidiary undertakings, net of
cash acquired (7) (1)
Proceeds from disposal of subsidiary undertakings 15 -
Acquisition of property, plant and equipment (210) (160)
Proceeds from disposal of property, plant and
equipment 44 41
Acquisition of intangible assets (24) (8)
Proceeds from disposal of intangible assets 1 -
Proceeds from disposal of
preference shares of associated undertaking - 828
Proceeds from the partial disposal of
share of associated undertaking - 179
Acquisition of other non-current assets (39) (23)
Proceeds from disposal of other non-current assets 27 19
Net cash (used in)/generated from investing
activities (193) 875
Cash flows from financing activities
Net repayment of borrowings (39) (223)
Dividends paid (553) (219)
Payment for treasury units - (25)
Proceeds from sale of treasury units 90 69
Capital element of finance lease payments (4) (4)
Net cash used in financing activities (506) (402)
Net increase in cash and cash equivalents 239 1 147
Cash and cash equivalents at beginning of year 1 183 6
Exchange (losses)/ gains on cash and cash
equivalents (6) 30
Cash and cash equivalents at end of year 1 416 1 183
Notes to the consolidated financial statements
31 March 2006
Accounting policies and basis of preparation
These consolidated financial statements of the Company are for the year ended
31 March 2006. They have been prepared in accordance with International
Financial Reporting Standards (`IFRS").
The financial statements are presented in millions of euros; the euro
represents the measurement currency of the Group.
Note 1 - Investments in associated undertakings
BAT Other Total
EUR m EUR m EUR m
At 1 April 2004 2 666 - 2 666
Exchange differences (66) - (66)
Share of post-tax profit 798 - 798
Dividends received (235) - (235)
Indirect disposal of effective interest (99) - (99)
Dilution in percentage holding on conversion
of preference shares 228 - 228
Other equity movements (74) - (74)
At 31 March 2005 3 218 - 3 218
Exchange differences 41 - 41
Share of post-tax profit 486 - 486
Dividends received (247) - (247)
Transfer from unlisted investments - 4 4
Other equity movements (155) - (155)
At 31 March 2006 3 343 4 3 347
Investments in associated undertakings at 31 March 2006 include goodwill of
EUR 2 510 million (2005: EUR 2 547 million).
British American Tobacco
The summarised financial information in respect of the Group"s share of
results, assets and liabilities of its principal associated undertaking,
British American Tobacco, is as follows:
2006 2005
EUR m EUR m
Operating profit 731 710
Share of post-tax profit of
BAT"s associated undertakings 110 69
Share of other (expense)/income (58) 305
Finance costs (69) (73)
Profit before taxation 714 1 011
Taxation (191) (178)
Net profit 523 833
Minority interest (37) (35)
Share of post-tax profit 486 798
Richemont"s share of other (expense)/income of its associated undertaking in
the year ended 31 March 2005 arose primarily from the gain on sale of certain
of BAT"s subsidiaries and investments partially offset by restructuring costs
incurred by BAT.
Accounts are drawn up at 31 March of each year in respect of BAT, and the
Group"s share of results and retained reserves is derived therefrom. Summarised
financial information regarding the BAT group appearing in such accounts is as
follows:
Extract from consolidated financial statements
2006 2005
GBPm GBPm
Shareholders" equity 6 996 6 245
Revenue 9 515 10 240
Profit from operations 2 689 2 562
Attributable profit for the year 1 795 2 905
Total assets and liabilities are taken from BAT"s latest published financial
statements, which are drawn up to 31 December. No significant transactions or
events have occurred since that date, which would materially change the amounts
disclosed.
31 December 2005 31 December 2004
GBPm GBPm
Total assets 19 047 17 775
Total liabilities (12 170) (11 658)
Richemont accounts for its effective interest in BAT under the equity method.
The Group holds an effective interest of 18.6 per cent in BAT. The Group has
joint control of an entity holding 28.7 per cent of BAT and this joint venture
has the ability to exert significant influence over BAT, including
representation on the Board of Directors. Thus, Richemont considers BAT to be
an associated undertaking.
Changes in the Group"s percentage holding of BAT during the year ended 31 March
2006 relate to the share buy-back programme carried out by BAT during the year.
The changes in the year ended 31 March 2005 reflect the conversion of the BAT
preference shares into ordinary shares on 28 May 2004, the indirect sale by the
Group of BAT shares to its joint venture partner Remgro Limited in February
2005 and the share buy-back programme carried out by BAT during the year.
The following table indicates the percentages applied to BAT"s profits:
For the year ended 31 March 2006: Percentage
1 April 2005 to 30 June 2005 18.4
1 July 2005 to 30 September 2005 18.5
1 October 2005 to 31 March 2006 18.6
For the year ended 31 March 2005: Percentage
1 April 2004 to 31 May 2004 19.7
1 June 2004 to 30 September 2004 18.7
1 October 2004 to 31 December 2004 18.8
1 January 2005 to 28 February 2005 18.8
1 March 2005 to 31 March 2005 18.3
The market capitalisation of BAT ordinary shares at 31 March 2006 was
GBP 29 161 million (2005: GBP 19 935 million). The fair value of the Group"s
effective interest of 18.6 per cent in BAT ordinary shares at that date was
EUR 7 960 million (2005: effective interest 18.3 per cent, fair value
EUR 5 292 million).
BAT has contingent liabilities in respect of litigation regarding product
liability, overseas taxation and guarantees in various countries. Despite the
quality of defences judged by BAT to be available, there is a possibility that
its results of operations or cash flows could be materially affected by the
outcomes of such matters, which could give rise to a consequent effect on the
Group"s share of results and attributable net assets.
Other
Since 31 January 2006, the Group has held a 32.8 per cent share of equity in
Net-A-Porter Ltd, a company incorporated in the United Kingdom. The Group"s
investment in this company was previously classified in `Other investments".
The Group"s share of this associated undertaking was recorded for the first
time under the equity method at 31 March 2006 and was determined with reference
to its audited accounts for the year ended 31 January 2006. Therefore, the
Group has not recognised any amount in the consolidated income statement to 31
March 2006 in respect of its share of results from Net-A-Porter. The principal
activity of Net-A-Porter is the online retailing of women"s designer branded,
read-to-wear fashion, shoes and accessories.
Note 2 - Other operating income
2006 2005
EUR m EUR m
Royalty income - net 15 16
Gain on partial disposal of share of associated undertaking - 76
Net gain on disposal of subsidiary undertaking 11 -
Other income /(expense) 7 (12)
33 80
Note 3 - Finance costs
2006 2005
EUR m EUR m
Interest expense:
- bank borrowings (20) (16)
- other financial expenses (3) (1)
Interest income:
- other 24 21
Fair value gains on financial instruments (1) (2)
Foreign exchange gains/(losses)
- on monetary items 26 (51)
- on hedged derivatives (8) 1
- on other derivatives (13) -
5 (48)
Note 4 - Earnings per unit
4.1 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 year,
excluding units purchased by the Company and held in treasury.
2006 2005
Profit attributable to Unitholders of the Company
(EUR millions) 1 094 1 212
Weighted average number of units in issue (millions) 553.2 547.9
Basic earnings per unit (EUR per unit) 1.978 2.212
4.2 Diluted
Diluted earnings per unit is calculated adjusting the weighted average number
of units outstanding to assume 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.
2006 2005
Profit attributable to Unitholders of the
Company (EUR millions) 1 094 1 212
Weighted average number of units in issue (millions) 553.2 547.9
Adjustment for unit options (millions) 7.7 6.9
Weighted average number of units for diluted earnings per
unit (millions) 560.9 554.8
Diluted earnings per unit (EUR per unit) 1.951 2.185
Note 5 - 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 years ended 31 March 2006 and 2005 were 18.2 per cent and
18.9 per cent respectively.
Note 6 - Cash generated from operations
2006 2005
EUR m EUR m
Operating profit 741 561
Depreciation and impairment of property, plant & equipment 115 130
Amortisation of intangible assets 19 15
Profit on disposal of property, plant & equipment (19) (11)
Increase/(decrease) in provisions 15 (14)
Increase/(decrease) in retirement benefit obligations 4 (14)
Non cash items 25 (49)
Increase in inventories (118) (127)
Increase in trade debtors (67) (16)
Increase in other receivables, prepayments and accrued
income (27) (16)
Increase in current liabilities 86 22
Cash flow generated from operations 774 481
Exchange rates
The results of the Group"s subsidiaries and its associate 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 the associate
have been translated into euros at the closing rates set out below.
Exchange rates Year to Year to
against the Euro March 2006 March 2005
Average
United States dollar 1.22 1.26
Japanese yen 137.70 135.18
Swiss franc 1.55 1.54
Pound sterling 0.68 0.68
31 March 2006 31 March 2005
Closing
United States dollar 1.21 1.30
Japanese yen 142.77 138.96
Swiss franc 1.58 1.55
Pound sterling 0.70 0.69
Statutory Information
Shares of Compagnie Financiere Richemont SA are indivisibly twinned with
participation certificates issued by its wholly-owned subsidiary Richemont SA,
Luxembourg to form Richemont "A" and "B" units. Richemont "A" units are listed
on the SWX Swiss Exchange and traded on the virt-x market (Reuters
"CFR.VX"/Bloombergs "CFR VX"/ISIN CH0012731458) and are included in the Swiss
Market Index ("SMI") of leading stocks. Depository receipts in respect of
Richemont "A" units are traded on the Johannesburg Stock Exchange, operated by
JSE Limited (Reuters "RCHJ.J"/Bloombergs "RCH SJ").
The closing price of a Richemont "A" unit on 31 March 2006 was CHF 62.50 and
the market capitalisation of the Group"s "A" units on that date was CHF 32 625
million (EUR 20 649 million). Over the preceding twelve months, the highest
closing price of an "A" unit was CHF 63.20 (30 March 2006), and the lowest CHF
35.30 (28 April 2005).
Compagnie Financiere Richemont SA Richemont SA
Registered office: Registered office:
8 Boulevard James-Fazy 35 Boulevard Prince Henri
1201 Geneva L-1724 Luxembourg
Switzerland Tel: (+352) 22 42 10
Fax: (+352) 22 42 19
At the Annual General Meeting to be held in September 2006, shareholders will
be asked to approve the transfer of the registered office to the Company"s new
headquarters at:
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@richemont.com
secretariat@richemont.com
press.office@richemont.com
Richemont 2006
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 year-end results expressed in
rand. The average euro/rand exchange rate prevailing during the year ended 31
March 2006 was 7.7895; this compares with a rate of 7.8592 during the prior
year.
March 2006
in rand millions Underlying Non-recurring IFRS
items
Sales 33 557 - 33 557
Operating profit 5 554 218 5 772
Net profit - parent and subsidiaries 4 565 171 4 736
Share of post-tax profit of
associate 4 237 (452) 3 785
Net profit attributable to
unitholders 8 802 (281) 8 521
Earnings per Depository Receipt -
diluted basis R 1.57 - R 1.52
March 2005
in rand millions Underlying Non-recurring IFRS
items
Sales 28 851 - 28 851
Operating profit 3 812 597 4 409
Net profit - parent and subsidiaries 2 656 597 3 253
Share of post-tax profit of
associate 3 875 2 397 6 272
Net profit attributable to
unitholders 6 531 2 994 9 525
Earnings per Depository Receipt -
diluted basis R 1.18 - R 1.72
Percentage changes in rand terms % movement
in underlying results
Sales +16%
Operating profit +46%
Net profit - parent and subsidiaries +72%
Net profit attributable to unitholders +35%
Earnings per Depositary receipt - diluted basis +33%
As in previous years the dividend will be payable to Depository Receipt holders
within 28 days of the Annual General Meeting. The relevant dates will be
published on SENS in due course. The rand amount per Depository Receipt will be
calculated by reference to the euro/rand exchange rate prevailing on the
currency conversion date in September 2006.
Richemont Securities AG Depository Receipts are issued subject to the terms of
the Deposit Agreement dated 25 August 1988 as amended on 18 December 1992 and
28 September 2001 and, by holding Depository Receipts, investors acknowledge
that they are bound by the terms of the Deposit Agreement. Copies of the
Deposit Agreement may be obtained by investors from Richemont Securities AG or
Computershare Limited.
8 June 2006
Sponsor
RAND MERCHANT BANK(A division of FirstRand Bank Limited)
Date: 08/06/2006 08:28:01 AM Produced by the JSE SENS Department
