| Fri 17 Nov 2006, 8:00 | | Richemont Securities AG - Unaudited interim result |
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RCH
RCH
Richemont Securities AG - Unaudited interim results
RICHEMONT SECURITIES AG
(Incorporated in Switzerland)
Sharecode: RCH
ISIN: CH0013157380
("Richemont")
UNAUDITED INTERIM RESULTS
Richemont, the Swiss luxury goods group, announces its unaudited results for
the six-month period ended 30 September 2006.
in EUR millions September 2006 September 2005
Parent and subsidiaries
Sales 2 303 1 990 + 16 %
Operating profit 436 334 + 31 %
Net profit 371 270 + 37 %
Share of post-tax profit of
associate -
British American Tobacco
Before non-recurring expenses 313 278 + 13 %
Non-recurring expenses ( 39) ( 19) -
Net profit - share of associate 274 259 +6%
Net profit of the Group 645 529 + 22 %
Earnings per unit - diluted
basis EUR 1.141 EUR 0.942 + 21 %
Group sales increased by 16 per cent to EUR 2 303 million. The overall
growth reflected strong trading in all regions and double-digit sales
increases at almost all of the Group"s Maisons.
Operating profit from Richemont"s luxury goods businesses increased by 31
per cent to EUR 436 million. The significant increase reflected strong
sales growth, good margins and a controlled increase in expenses.
Net profit from the parent and subsidiaries increased by 37 per cent to EUR
371 million.
The Group"s share of the post-tax profit of its associated company,
British
American Tobacco, increased by 6 per cent to EUR 274 million. The Group"s
share of the underlying post-tax profit from BAT before non-recurring
items increased by 13 per cent.
Group net profit increased by 22 per cent to EUR 645 million and earnings
per unit on a diluted basis increased by 21 per cent to EUR 1.141.
Excluding non-recurring gains and charges from the results for both
periods, the net profit of the Group increased by 27 per cent from EUR 537
million to EUR 684 million.
Cash generated by operations was EUR 235 million for the six-month period.
In addition, the Group received dividends totalling EUR 278 million from
BAT
during the period. Net cash at 30 September 2006, after payment of the
ordinary and special dividends of EUR 613 million, amounted to EUR 601
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
The Group"s results for the first half of the year are excellent; all of the
Maisons have performed well. These results have been achieved against a
background of generally good economic conditions in most of our principal
markets.
Richemont"s sales increased by 16 per cent and margins have improved,
resulting in operating profit increasing by 31 per cent to EUR 436 million
for the six-month period. Turnover has been driven by strong growth in retail
sales.
Sales of jewellery, a business area where Richemont is very well placed, have
increased by 20 per cent. Growth in operating expenses was restricted to 9
per cent, below the rate of increase in sales; costs are being closely
monitored.
Operating performance
All of the Maisons have performed well in terms of sales. Losses were more
than halved at Alfred Dunhill and Lancel and profitability improved across
the other
Maisons.
The Jewellery Maisons - Cartier and Van Cleef & Arpels - saw sales increase
by 13 per cent, with an excellent performance by Van Cleef & Arpels, albeit
from a much smaller base than Cartier. Cartier saw strong demand for its high
jewellery lines, in particular, as well as the Love jewellery range and new
watches such as La Dona and the Pasha Seatimer.
Sales of the Group"s Specialist Watchmakers grew by 14 per cent during the
period, with excellent performances reported by Panerai, A. Lange & Sohne and
Piaget. Following the marked success of its 250th anniversary in 2005,
Vacheron
Constantin"s sales grew more modestly than its peers during the period, as
anticipated.
For the Swiss watch industry as a whole, the growth in sales in recent years
has led to a strong increase in demand for high quality mechanical movements.
Richemont is working with other industry participants in terms of training
programmes for new watchmakers and is expanding the Maisons" manufacturing
capacity. However, the growth in demand may lead to future capacity
constraints in the industry which could limit growth in certain product areas
over the next few years.
The Writing Instrument Maisons saw sales increase by 24 per cent. Montblanc
benefited from sales of new products and special editions linked to its
centenary year and the Maison"s first silver jewellery line for women as well
as the further extension of its retail distribution network. Montblanc is now
certainly established as a global luxury goods business.
The performance of the Leather and Accessories businesses has been
encouraging.
At Alfred Dunhill, sales increased by some 11 per cent. The retail
distribution network in China, which was acquired at the beginning of the
year, has contributed to this growth. Operating losses at the Maison have
been significantly reduced during the period under review. Lancel also saw
its sales increase and its losses reduced during the period.
After a year of dramatic growth last year, Chloe has once again doubled its
sales during the period under review. This achievement can be attributed to
the uniqueness of Chloe"s designs and the broadening of its product ranges,
complemented by further retail store openings.
Reflecting the balanced geographic spread of Richemont"s businesses, all
regions reported good growth during the period.
The Asia-Pacific region has continued to show the strongest performance with
growth of 18 per cent at actual exchange rates. Group sales in China grew by
64 per cent during the period, complementing the good growth seen in more
established markets in the region.
Sales in Europe increased by 18 per cent, with excellent performances in
France and the United Kingdom supported by very strong growth in new markets
such as Russia and Eastern Europe. The Americas also performed well, with
sales growing by 17 per cent in euro terms at actual exchange rates. In
Japan, growth of 14 per cent in local currency terms - driven by particularly
good performances from Van Cleef & Arpels, IWC, Panerai and Montblanc - was
reduced to 6 per cent at actual exchange rates as a consequence of the
progressive weakening of the yen against the euro during the period.
British American Tobacco
Excluding restructuring charges and one off items in both periods, the
Group"s share of BAT"s results increased by 13 per cent in euro terms
compared to the first six months of last year and BAT contributed some EUR
274 million to the Group"s net profit for the period. BAT management continue
to develop the business and to eliminate costs from its operations.
Over the last six months, our interest of just under 20 per cent in BAT has
generated dividends of EUR 278 million for Richemont and the board of BAT has
committed to return a high proportion of profits to shareholders each year.
Outlook for the year
During the first half of the year Richemont has benefited from strong demand
in its major markets. The Group has a globally diversified clientele and has
demonstrated its capacity to develop quickly in new market areas - for
example in China and Russia - at the same time as achieving good growth in
established markets.
The high rate of growth seen during the first six months has eased in the
month of October, with overall sales growing by 11 per cent at actual
exchange rates.
Whilst the Asia-Pacific region and the Americas both continued to grow at 17
per cent, sales in Europe grew by 10 per cent. In Japan sales grew by 10 per
cent in local currency terms but on translation into euros sales were only
marginally above October 2005 figures.
The growth in retail sales seen during the first six months has been
maintained indicating continued strong consumer demand.
Whilst it is dangerous to read too much into the results of any one month,
the October figures are reasonably encouraging in the run up to the important
pre- Christmas trading season. However, the strong performance seen in the
second half of last year does mean that the comparative figures are
challenging.
Within the organisation, we will continue to monitor costs closely, with a
view to optimising operating margins and, overall, I remain confident that
the Group"s performance for the year as a whole will be significantly ahead
of last year.
Johann Rupert
Executive Chairman
Geneva, 17 November 2006
Business Review
Overview
in EUR millions September 2006 September 2005
Sales 2 303 1 990 + 16 %
Cost of sales ( 840) ( 715)
Gross profit 1 463 1 275 + 15 %
Net operating expenses (1 027) ( 941) +9%
Selling and distribution
expenses ( 515) ( 466) + 11 %
Communication expenses ( 262) ( 235) + 11 %
Administration expenses ( 248) ( 238) +4%
Other expense ( 2) ( 2) -
Operating profit 436 334 + 31 %
Sales of luxury goods increased by 16 per cent to EUR 2 303 million, with
strong growth throughout the period and in all regions. This performance
reflected both the strength of the Group"s Maisons, and a generally benign
global economic environment.
The gross margin percentage during the period was 63.5 per cent. The gross
margin percentage in the prior period was 64.1 per cent, which included the
release of certain inventory provisions linked to the introduction of IFRS.
The release of these provisions contributed 0.7 percentage points to the
comparable gross margin percentage, which also benefited from foreign
exchange hedging gains.
Net operating expenses increased by 9 per cent overall, or 8 per cent
excluding the EUR 11 million non-recurring disposal gain relating to Hackett
during the comparative period.
The main increases in operating expenses were in selling and distribution
expenses and communication costs. The increase in selling and distribution
expenses is in line with the increased value of sales and the expansion of
the Group"s own worldwide retail network. Communication costs increased by 11
per cent but, as a percentage of sales, were marginally lower than the prior
period at some 11.4 per cent of sales.
Administration expenses increased by 4 per cent but decreased as a percentage
of sales.
Net operating expenses included stock option charges amounting to EUR 16
million (September 2005: EUR 17 million).
Included in other expense for the comparative period is an accounting gain of
EUR 11 million relating to the disposal of Hackett in June 2005. This gain
was offset by other expenses in the period.
Operating profit increased by 31 per cent to EUR 436 million. Excluding the
disposal gain in the comparative period, the underlying rate of increase was
35 per cent. The underlying operating margin increased by 2.7 percentage
points to 18.9 per cent for the period under review.
Analysis of sales and operating results by business area
Sales and the operating results of the Group"s main areas of activity were
as follows:
in EUR millions September 2006 September 2005
Sales
Jewellery Maisons 1 170 1 038 + 13 %
Specialist Watchmakers 597 522 + 14 %
Writing Instrument Maisons 257 208 + 24 %
Leather and Accessories Maisons 136 124 + 10 %
Other Businesses 143 98 + 46 %
Total sales 2 303 1 990 + 16 %
Operating results
Jewellery Maisons 328 283 + 16 %
Specialist Watchmakers 140 118 + 19 %
Writing Instrument Maisons 39 28 + 39 %
Leather and Accessories Maisons ( 12) ( 26) + 54 %
Other Businesses 15 ( 2) -
510 401 + 27 %
Corporate costs ( 74) ( 67) + 10 %
Central support services ( 67) ( 74) - 9 %
Other (expenses)/income ( 7) 7 -
Operating profit 436 334 + 31 %
Jewellery Maisons
Sales by the Jewellery Maisons increased by 13 per cent, with double-digit
growth reported by both Cartier and Van Cleef & Arpels. These strong
performances were supported by new product launches, including Cartier"s new
La Dona watch collection and the expansion of its Love jewellery range. Van
Cleef & Arpels continued to celebrate its first centenary with unique high
jewellery pieces.
For the segment as a whole, operating profit increased by 16 per cent to EUR
328 million, representing an operating margin of 28 per cent.
Specialist Watchmakers
The Group"s seven specialist watchmaking Maisons reported a 14 per cent
increase in sales and a 19 per cent increase in operating profit. As a
consequence, the operating margin increased to 23 per cent.
The increase in sales was across all regions reflecting the development of
new markets and good trading in established markets. The continuing double-
digit growth rate is also a reflection of the innovative talents within each
of the
Maisons and the new models presented at the annual Salon International de
Haute Horlogerie in Geneva. Panerai"s sales growth rate was the highest of
the specialist watchmakers, with success across its entire collection;
including the Radiomir GMT 8 days power reserve. A. Lange & Sohne also
performed very well, capitalising on the growing premium watch market with
new models including Datograph Perpetual. Piaget presented the Polo
Tourbillon Relatif, a highly technical model. Jaeger-LeCoultre"s new Squadra
marks the 75th anniversary of the iconic Reverso watch and is contributing to
the Maison"s growing client base. Other successful collections during the
period included IWC"s redesigned Pilot"s watch and Baume & Mercier"s Classima
Executive range of timepieces. Vacheron Constantin"s sales in the comparative
period last year benefited significantly from the Maison"s 250th anniversary
products. Despite that boost to sales, Vacheron Constantin"s sales for the
first six months of the current year were above those of the comparative
period.
Writing Instrument Maisons
The substantial increase in sales within Richemont"s writing instrument
Maisons included the impact of Montblanc"s 100th anniversary products, the
launch of its ladies" jewellery collection and the successful expansion of
the retail network, including the takeover of 45 points of sale in China
towards the end of the previous financial year. Despite the higher operating
costs associated with such retail activities, operating profit increased by
39 per cent and the Maisons" operating margin increased to 15 per cent.
Leather and Accessories Maisons
Sales at Alfred Dunhill increased by 11 per cent, stemming from the takeover
of certain retail points of sale in China at the start of the current
financial year.
In terms of products, the Maison"s sales growth was strongest in leather
goods, which now account for some 40 per cent of Alfred Dunhill"s global
sales. The Maison"s operating losses were half those reported in the
comparative period at EUR 10 million.
Sales at Lancel increased by 10 per cent, largely due to successful launches
in European markets. The Maison"s losses were significantly reduced, in line
with expectations.
Other businesses
The high growth rate reflects Chloe"s success in women"s fashion and leather
goods, as well as that Maison"s growing retail network. Sales at Chloe
doubled in the six-month period.
Excluding the sales of Hackett and Old England, both businesses having been
sold during the past 18 months, sales of the Group"s other businesses,
including Chloe, would have increased by 63 per cent.
Corporate costs
Corporate costs 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.
Overall, corporate costs increased by 10 per cent to EUR 74 million. However,
the prior year"s comparative figure included gains of EUR 20 million in
respect of the disposal of Hackett and foreign exchange hedging. Excluding
these items, costs declined by 9 per cent, mainly due to cost control and
timing issues. Other income and expenses moved from income of EUR 7 million
in the comparative period to a charge of EUR 7 million in the period under
review, largely due to the non-recurrence of the gains referred to above.
Operating profit
Operating profit for the period increased by 31 per cent to EUR 436 million.
The improvement in trading has resulted in a 2.1 percentage point improvement
in the operating profit margin from 16.8 per cent to 18.9 per cent. Excluding
the gain on the disposal of Hackett, the underlying operating margin in the
comparative period would have been 16.2 per cent, implying a 2.7 percentage
point increase in the current period.
Sales by region
Movement at:
Constant Actual
exchange exchange
in EUR millions September 2006 September 2005 rates rates
Europe 975 827 + 18 % + 18 %
Japan 351 331 + 14 % + 6 %
Asia-Pacific 499 422 + 20 % + 18 %
Americas 478 410 + 19 % + 17 %
2 303 1 990 + 18 % + 16 %
Europe
Sales in European markets, which accounted for 42 per cent of sales,
increased by 18 per cent. France is the largest single market in the region,
with sales of EUR 230 million during the period, reflecting growth of 20 per
cent. Sales growth in the UK was also very strong.
Japan
In Japan, the 14 per cent increase in yen terms was largely offset by
movements in the yen-euro exchange rate, leading to a reported increase for
the period of just 6 per cent at actual exchange rates.
Asia-Pacific
Demand remained strong in the Asia-Pacific region, with combined sales in the
important markets of Hong Kong and mainland China up by 25 per cent to EUR
276 million. This strong performance partly reflects the Group"s continuing
investment in the Chinese market, including the development of its own retail
network. The expansion of the retail network in China contributed some EUR 21
million to sales growth.
Americas
The continuing strength of consumer confidence in the United States during
the period contributed to double-digit sales growth for many of the Group"s
Maisons. Sales in the United States amounted to EUR 377 million during the
period, an increase of 19 per cent.
Sales by distribution channel
in EUR millions September 2006 September 2005
Retail 904 757 + 19 %
Wholesale 1 399 1 233 + 13 %
2 303 1 990 + 16 %
Retail
Retail sales showed good growth over the period, increasing by 19 per cent to
EUR 904 million. The total retail network increased by 28 in the six-month
period to 1,103 boutiques. Included within the net increase were 55 internal
stores either opened by or transferred to the Group, and 27 external
boutiques
were either closed by partners or transferred to the Group. The majority of
these transfers related to Alfred Dunhill"s takeover of retail activities in
China. Sales in the period also included the positive impact of some 50
Montblanc boutiques acquired in the final quarter of the previous financial
year.
At the end of September, the Group"s Maisons owned 665 boutiques, with a
further 438 points of sale being operated by franchise partners.
Wholesale
Wholesale sales remained strong throughout the first six months and all
regions reported double-digit growth before currency effects.
Summary income statement and results of associate
in EUR millions September 2006 September 2005
Operating profit 436 334
Finance costs 9 -
445 334
Share of post-tax results of associated
undertaking 274 259
Before non-recurring expenses 313 278
Share of non-recurring expenses (39) (19)
Profit before taxation 719 593
Taxation (74) (64)
Net profit 645 529
Net financial income amounted of EUR 9 million in the period under review.
Interest income on deposits was largely offset by interest on borrowings.
Excluding its share of the results of its investment in British American
Tobacco, the Group"s effective taxation rate was 16.6 per cent, reflecting
the anticipated full year rate. The reduction in the effective taxation rate
compared to the prior period was largely due to the recognition of specific
deferred tax assets.
Associated company - British American Tobacco (`BAT")
For the six-month period ended 30 September 2006, the Group"s share of the
results of BAT increased to EUR 274 million. Excluding non-recurring items
from
the Group"s share of the results of its associates, attributable profit
increased by 13 per cent. Non-recurring items include restructuring costs,
impairment charges, and asset disposal gains and losses.
The results in the period reflected an 18.8 per cent interest in BAT"s
results for the three months to June 2006 and an 18.9 per cent interest for
the three months to September 2006. The results for the prior period
reflected an 18.4 per cent interest in BAT"s results for the three months to
June 2005 and an 18.5 per cent interest for the three months to September
2005. The increase in the Group"s interest reflects the impact of BAT"s own
share buy-back programme.
Richemont does not participate in the buy-back programme.
As a U.K.-based company, BAT reports in sterling. The average sterling-euro
exchange rate during the period was in line with the average rate in the
comparative six-month period. Accordingly, the exchange rate impact on the
Group"s share of BAT"s sterling-denominated results was minimal.
In cash flow terms, during the six months under review, Richemont received
dividends totalling EUR 278 million (2005: EUR 247 million) from BAT.
BAT has a 31 December year-end but reports to its shareholders on a quarterly
basis. The following commentary is condensed from BAT"s financial report for
the nine months ended 30 September 2006.
BAT"s reported profit from operations was 2 per cent higher at GBP 1 944
million. However, profits from operations would have been 8 per cent higher,
or 6 per cent at comparable rates of exchange, if exceptional items and the
impact arising from the change in terms of trade following the sale of
Etinera, an Italian distribution business, were excluded, with all regions
except Europe contributing to this good growth. This like-for-like
information provides a better understanding of the subsidiaries" trading
results.
Tobacco product volumes from BAT"s subsidiaries increased by 1 per cent to
509 billion on both a reported and a like-for-like basis. BAT"s reported
revenue for the nine months ended 30 September rose by 5 per cent to GBP 7
251 million. On a like-for-like basis, revenue increased by 6 per cent or 4
per cent at comparable rates of exchange. This volume and revenue growth was
achieved across a broad spread of markets. The four global drive brands
achieved impressive overall volume growth of 16 per cent on a like-for-like
basis. Kent volumes grew by 16 per cent and Dunhill rose by 5 per cent, but
Lucky Strike volumes declined by 4 per cent, mainly as a result of lower
industry volumes in Germany and Japan. There were good share growth
performances in a number of key markets. Pall Mall continued its exceptional
growth, with an increase of 37 per cent.
In Europe, profit at GBP 594 million was GBP 22 million lower than last year
as a
result of very competitive trading conditions in a number of markets and the
inclusion in the comparative period of a one-off benefit, resulting from the
change in terms of trading following the sale of Etinera. Excluding this
benefit, profit decreased by GBP 8 million, with strong growth from Russia,
Italy and France, more than offset by declines in Germany, Spain, Poland and
Ukraine.
Regional volumes on a like-for-like basis were 1 per cent higher at 184
billion, with growth in Russia, Spain and Hungary partly offset by declines
in Italy, Germany and Ukraine.
In Asia-Pacific, regional profit rose by GBP 48 million to GBP 466 million,
mainly attributable to strong performances in Australia, Malaysia, South
Korea and New Zealand. Volumes at 106 billion were 3 per cent higher as
strong increases in Pakistan, Bangladesh, South Korea and Vietnam were
partially offset by declines in Malaysia and Indonesia.
Profit in Latin America increased by GBP 69 million to GBP 447 million due to
good performances across the region coupled with strong local currencies.
Volumes also grew in many of the markets contributing to an overall increase
of 3 per cent to 113 billion.
Profit in the Africa and Middle East region grew by GBP 54 million to GBP 362
million, mainly driven by South Africa, Nigeria and Iran, as well as reduced
losses in Turkey. Volumes declined by 2 per cent to 74 billion, as a result
of Turkey, the Levant and supply chain problems in West Africa and the
Caucasus, partly offset by increases in Iran, Egypt and the Gulf.
The profit from the America-Pacific region increased by GBP 5 million to GBP
332
million, with a strong performance in Japan offsetting the lower profit
contribution from Canada. Volumes were down 1 per cent to 33 billion as
higher volumes from Japan were more than offset by the decline in Canada.
BAT"s share of the post-tax results of its own associates" increased by GBP
71
million to GBP 348 million. Excluding exceptional items, BAT"s share of the
post-tax results of its associates increased by GBP 58 million to GBP 331
million. The contribution from Reynolds American, excluding the benefit from
the favourable resolution of tax matters in 2006 and restructuring costs in
2005, was GBP 42 million higher mainly due to improved pricing, cost
reductions, the timing of promotional spending and the impact of the stronger
US dollar. Reynolds American acquired Conwood, the second largest
manufacturer of smokeless tobacco products in the U.S., for US$ 3.5 billion
on 31 May 2006. Reynolds American reported that on a proforma basis, as if it
had been owned since the beginning of 2005, Conwood delivered strong gains in
volume, share and operating income for the nine months to 30 September 2006.
In the nine months to September 2006 BAT"s adjusted earnings per share rose
by 13 per cent compared to the prior year as the higher net finance costs and
minority interests were more than offset by the improvement in profit from
operations, the share of associates" post-tax results, a lower tax rate and
the benefit from the share buy-back programme.
Further information in respect of British American Tobacco can be obtained
from that company"s website:
www.bat.com.
Analysis of net profit
in EUR millions September 2006 September 2005
Parent and subsidiaries
Net profit before non-recurring
(expenses) / income 371 259
Gain from sale of subsidiary undertaking - 11
Net profit from parent and subsidiaries 371 270
Share of post-tax profit of associate -
British American Tobacco
Net profit before non-recurring expenses 313 278
Non-recurring expenses (39) (19)
Net profit - share of associate 274 259
Net profit of the Group 645 529
Analysed as follows:
Parent, subsidiaries and share of
associate before non-recurring items 684 537
Non-recurring expenses (39) (8)
Net profit of the Group 645 529
Earnings per unit excluding non-recurring
expenses
Basic EUR 1.229 EUR 0.973
Diluted basis EUR 1.210 EUR 0.956
In the prior period, the EUR 11 million gain from the sale of a subsidiary
undertaking, included in net profit from the parent and its subsidiaries,
related to the disposal of Hackett, a UK-based menswear and accessories
brand.
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 39
million in the period under review (2005: EUR 19 million). Non-recurring
items include restructuring costs, impairment charges, and asset disposal
gains and losses.
Excluding all such non-recurring items from both periods, net profit in the
six months to 30 September 2006 would have been EUR 684 million compared to
EUR 537 million in the prior period, representing an increase of 27 per cent.
On the same basis, diluted earnings per unit would have increased by 27 per
cent from EUR 0.956 to EUR 1.210.
Cash flow
in EUR millions September 2006 September 2005
Operating profit 436 334
Depreciation and other non-cash items 97 82
Earnings before interest, tax and
depreciation 533 416
Increase in working capital ( 298) ( 241)
Cash generated from operations 235 175
Dividends received from associate 278 247
Returns on investments and servicing of
finance 16 9
Taxation paid ( 97) ( 39)
Net acquisitions of fixed assets ( 72) ( 95)
Other investing activities, net ( 71) ( 4)
Net cash inflow before financing
activities 289 293
Dividends paid to unitholders ( 613) ( 553)
Normal dividend ( 335) ( 276)
Special dividend ( 278) ( 277)
Increase / (decrease) in borrowings 35 ( 67)
Proceeds from sale of treasury units, net 12 52
Other financing activities ( 2) ( 1)
Decrease in cash, cash equivalents and
short-term borrowings ( 279) ( 276)
Cash and cash equivalents at the
beginning of period 1 416 1 183
Exchange rate effects 12 ( 4)
Cash and cash equivalents at the end of
period 1 149 903
Borrowings ( 548) ( 519)
Net cash 601 384
The Group"s net cash position decreased from EUR 884 million at 31 March 2006
to EUR 601 million at 30 September 2006. The decrease largely reflected the
payment of both the normal and special dividends.
The cash generated from operations totalled EUR 235 million for the period,
the increase in operating profit being partially offset by increases in
inventories and debtors. The increase in debtors partly reflected the
significant increase in wholesale sales during the period.
The increase in the taxation payments compared to the prior period reflects
the timing of certain payments.
Dividends received from British American Tobacco comprise the final dividend
in respect of its financial year ended 31 December 2005, received in May 2006
and the interim dividend for the 2006 financial year, received in September
2006.
The dividend paid in the current period represents the dividends paid by
Compagnie Financiere Richemont SA and Richemont SA, Luxembourg for the year
ended 31 March 2006. These payments amounted to EUR 613 million, or EUR 1.10
per unit, including a special dividend of EUR 0.50 per unit. The unit
dividend was paid on 18 September 2006.
Treasury units were sold in connection with the exercise of stock options by
executives, resulting in a net cash inflow of EUR 24 million. In order to
hedge executive stock option grants in June 2006, the Group purchased call
options for a consideration of EUR 12 million. The cost of these call options
partly offset the gross proceeds from the exercise of stock options, leading
to net proceeds from the sale of treasury units of EUR 12 million.
Summarised balance sheet
in EUR millions 30 September 2006 31 March 2006
Non-current assets
Fixed assets 820 809
Investment in associated undertakings 3 352 3 347
Other non-current assets 515 450
4 687 4 606
Net current assets 1 794 1 476
Net operating assets 6 481 6 082
Net cash 601 884
Cash and cash equivalents 1 149 1 416
Borrowings ( 548) ( 532)
Other non-current liabilities ( 191) ( 185)
6 891 6 781
Equity
Unitholders" equity 6 880 6 773
Minority interests 11 8
6 891 6 781
At 30 September 2006, the Group"s interest in BAT ordinary shares amounted to
18.9 per cent and BAT"s market capitalisation, based on 2 068 million
ordinary shares in issue, amounted to EUR 44 044 million (GBP 29 862 million)
The fair value of the Group"s investment in BAT therefore amounted to EUR 8
307 million.
Details of movements in the Group"s effective interest in BAT ordinary shares
during the period are given in the notes to the consolidated interim
financial statements.
Net current assets increased by EUR 318 million compared to March 2006.
Despite an improvement in the inventory rotation rate, the value of
inventories increased by 6 per cent to EUR 1 725 million. The planned
increase partly reflects the purchase of gemstones in anticipation of trading
later in the year and the timing of product launches. Trade debtors increased
during the six months, reflecting both the seasonality of wholesale sales and
the double-digit growth in wholesale sales reported during the period under
review.
Other non-current assets included EUR 29 million in deferred taxation assets
recognised for the first time during the period under review.
At 30 September 2006, net cash amounted to EUR 601 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, dollars, Hong Kong dollars and Swiss francs.
Borrowings reflect the financing of net operating assets in the countries
concerned.
Norbert Platt Richard Lepeu
Chief Executive Officer Group Finance Director
Compagnie Financiere Richemont SA
Geneva, 17 November 2006
Unaudited consolidated interim financial statements at 30 September 2006
Consolidated balance sheet
30 September 2006 31 March 2006
ASSETS Note EUR m EUR m
Non-current assets
Property, plant and equipment 734 742
Intangible assets 86 67
Investment in associated
undertakings 3 352 3 347
5
Deferred income tax assets 279 261
Financial assets held at fair
value through profit or loss 78 25
Other non-current assets 158 164
4 687 4 606
Current assets
Inventories 1 725 1 623
Trade and other receivables 821 602
Derivative financial
instruments 12 7
Prepayments and accrued income 124 127
Cash at bank and in hand 1 433 1 628
4 115 3 987
Total assets 8 802 8 593
EQUITY AND LIABILITIES
Equity
Share capital 334 334
Participation reserve 645 645
Treasury units (366) (408)
Hedge and unit option reserves 128 72
Cumulative translation
adjustment reserve 139 38
Retained earnings 6 000 6 092
Total Unitholders" equity 6 880 6 773
Minority interest 11 8
Total equity 6 891 6 781
LIABILITIES
Non-current liabilities
Borrowings 135 158
Deferred income tax liabilities 35 33
Retirement benefit obligations 103 101
Provisions 53 51
326 343
Current liabilities
Trade and other payables 410 404
Current income tax liabilities 169 202
Borrowings 46 50
Derivative financial
instruments 5 11
Provisions 86 85
Accruals and deferred income 218 181
Short-term loans 367 324
Bank overdrafts 284 212
1 585 1 469
Total liabilities 1 911 1 812
Total equity and liabilities 8 802 8 593
The notes are an integral part of these consolidated interim financial
statements.
Consolidated income statement
Six months to Six months to
30 September 2006 30 September 2005
Notes EUR m EUR m
Sales 4 2 303 1 990
Cost of sales ( 840) ( 715)
Gross profit 1 463 1 275
Selling and distribution
expenses ( 515) ( 466)
Communication expenses ( 262) ( 235)
Administrative expenses ( 248) ( 238)
Other operating expenses 6 ( 2) ( 2)
After:
Net gain from sale of
subsidiary undertaking 6 - 11
Operating profit 436 334
Finance income 7 9 -
Share of post-tax profit
of associated
undertakings 5 274 259
After:
Share of other expense
of associated undertakings 5 ( 39) ( 19)
Profit before taxation 719 593
Taxation 9 ( 74) ( 64)
Net profit 645 529
Attributable to:
Unitholders 645 529
Minority interest - -
645 529
Earnings per unit for
profit attributable to
Unitholders
during the period
(expressed in EUR per unit)
- basic 8 1.159 0.959
- diluted 8 1.141 0.942
The notes are an integral part of these consolidated interim financial
statements.
Consolidated statement of changes in equity
Equity attributable to Unitholders
Hedge
and unit
Unitholders Treasury option
capital units reserves
Note EUR m EUR m EUR m
Balance at 1 April 2005 979 ( 560) 64
Currency translation
adjustments - - -
Cash flow hedges:
- net losses - - ( 26)
- recycle to income statement - - ( 8)
Net share of expense of
associated
undertakings recognised
directly in equity - - -
Net income / (expense)
recognised
directly in equity - - ( 34)
Net profit - - -
Total recognised income /
(expense) - - ( 34)
Net share of transactions of
associated
undertakings with their
equity holders - - -
Net changes in treasury units - 89 -
Employee unit option scheme - - 17
Dividends paid - - -
Balance at 30 September 2005 979 ( 471) 47
Balance at 1 April 2006 979 ( 408) 72
Currency translation
adjustments - - -
Cash flow hedges:
- net gains - - 14
- recycle to income statement - - 4
Net share of of expense of
associated
undertakings recognised
directly in equity - - -
Deferred taxation
on unit option scheme 9 - - 22
Net income / (expense)
recognised
directly in equity - - 40
Net profit - - -
Total recognised income - - 40
Net share of transactions of
associated
undertakings with their
equity holders - - -
Acquisition of minority
interest - - -
Net changes in treasury units - 42 -
Employee unit option scheme - - 16
Dividends paid - - -
Balance at 30 September 2006 979 ( 366) 128
Equity attributable to Unitholders
Cumulative
translation
adjustment Retained
reserve earnings Total
EUR m EUR m EUR m
Balance at 1 April 2005 24 5 768 6 275
Currency translation adjustments 20 - 20
Cash flow hedges:
- net losses - - ( 26)
- recycle to income statement - - ( 8)
Net share of expense of associated
undertakings recognised directly in
equity - 68 68
Net income / (expense) recognised
directly in equity 20 68 54
Net profit - 529 529
Total recognised income / (expense) 20 597 583
Net share of transactions of associated
undertakings with their equity holders - ( 84) ( 84)
Net changes in treasury units - ( 37) 52
Employee unit option scheme - - 17
Dividends paid - ( 553) ( 553)
Balance at 30 September 2005 44 5 691 6 290
Balance at 1 April 2006 38 6 092 6 773
Currency translation adjustments 101 - 101
Cash flow hedges:
- net gains - - 14
- recycle to income statement - - 4
Net share of expense of associated
undertakings recognised directly in
equity - ( 24) ( 24)
Deferred taxation
on unit option scheme - - 22
Net income / (expense) recognised
directly in equity 101 ( 24) 117
Net profit - 645 645
Total recognised income 101 621 762
Net share of transactions of associated
undertakings with their equity holders - ( 70) ( 70)
Acquisition of minority interest - - -
Net changes in treasury units - ( 30) 12
Employee unit option scheme - - 16
Dividends paid - ( 613) ( 613)
Balance at 30 September 2006 139 6 000 6 880
Minority Total
interest equity
EUR m EUR m
Balance at 1 April 2005 6 6 281
Currency translation adjustments - 20
Cash flow hedges:
- net losses - ( 26)
- recycle to income statement - ( 8)
Net share of expense of associated
undertakings recognised directly in equity - 68
Net income / (expense) recognised
directly in equity - 54
Net profit - 529
Total recognised income / (expense) - 583
Net share of transactions of associated
undertakings with their equity holders - ( 84)
Net changes in treasury units - 52
Employee unit option scheme - 17
Dividends paid - ( 553)
Balance at 30 September 2005 6 6 296
Balance at 1 April 2006 8 6 781
Currency translation adjustments - 101
Cash flow hedges:
- net gains - 14
- recycle to income statement - 4
Net share of expense of associated
undertakings recognised directly in equity - ( 24)
Deferred taxation
on unit option scheme - 22
Net income / (expense) recognised
directly in equity - 95
Net profit - 645
Total recognised income - 740
Net share of transactions of associated
undertakings with their equity holders - ( 70)
Acquisition of minority interest 3 3
Net changes in treasury units - 12
Employee unit option scheme - 16
Dividends paid - ( 613)
Balance at 30 September 2006 11 6 891
The notes are an integral part of these consolidated interim financial
statements.
Consolidated cash flow statement
Six months to Six months to
30 September 2006 30 September 2005
Notes EUR m EUR m
Cash flows from operating
activities
Cash flow generated from
operations 10 235 175
Interest income 29 18
Interest paid ( 13) ( 9)
Dividends from associated
undertaking 278 247
Taxation paid ( 97) ( 39)
Net cash generated from
operating activities 432 392
Cash flows from investing
activities
Acquisition of subsidiary
undertakings, net of cash
acquired ( 12) ( 4)
Proceeds from disposal of
subsidiary undertakings 6 - 15
Acquisition of associated
undertakings ( 10) -
Acquisition of property,
plant and equipment ( 61) ( 97)
Proceeds from disposal of
property, plant and
equipment 4 3
Acquisition of intangible
assets ( 17) ( 1)
Proceeds from disposal of
intangible assets 2 -
Acquisition of
non-current financial
assets held at fair value
through profit or loss ( 53) ( 9)
Acquisition of other
non-current assets ( 5) ( 17)
Proceeds from disposal of
other non-current assets 9 11
Net cash used in
investing activities ( 143) ( 99)
Cash flows from financing
activities
Net repayment of
borrowings 35 ( 67)
Dividends paid ( 613) ( 553)
Payment for treasury units ( 12) -
Proceeds from sale of
treasury units 24 52
Capital element of
finance lease payments ( 2) ( 1)
Net cash used in
financing activities ( 568) ( 569)
Net decrease in cash and
cash equivalents ( 279) ( 276)
Cash and cash equivalents
at beginning of period 1 416 1 183
Exchange gains/(losses)
on cash and cash
equivalents 12 ( 4)
Cash and cash equivalents
at end of period 1 149 903
The notes are an integral part of these consolidated interim financial
statements.
Notes to the consolidated interim financial statements 30 September 2006
1. General Information
Compagnie Financiere Richemont SA (`the Company") and its subsidiaries
(together `Richemont" or `the Group") is one of the world"s leading luxury
goods groups. The Group"s luxury goods interests encompass many of the most
prestigious names in the industry including Cartier, Van Cleef & Arpels,
Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC, A. Lange & Sohne,
Officine Panerai, Baume & Mercier, Alfred Dunhill, Montblanc, Chloe and
Lancel. In addition to its luxury goods businesses, the Group holds a
significant investment in British American Tobacco (`BAT") - one of the
world"s leading tobacco groups.
The Company is registered in Bellevue, Switzerland. Shares of the Company are
indivisibly twinned with participation certificates issued by its wholly-
owned subsidiary, Richemont SA, Luxembourg to form Richemont units. Richemont
units are listed on the Swiss Stock Exchange and traded on the virt-x market
and are included in the Swiss Market Index (`SMI") of leading stocks.
Depository receipts in respect of Richemont units are traded on the JSE
Limited (the Johannesburg Stock Exchange).
2. Basis of preparation
This interim financial information for the half year ended 30 September 2006
has been prepared in accordance with IAS 34, `Interim financial reporting".
The interim financial report should be read in conjunction with the annual
consolidated financial statements for the year ended 31 March 2006.
Where necessary, comparative figures have been adjusted to conform with
changes in presentation in the current period.
3. Accounting policies
The accounting policies adopted are consistent with those described in the
annual consolidated financial statements for the year ended 31 March 2006.
There are no new standards, amendments to standards or interpretations which
are mandatory for the financial year ending 31 March 2007 that will have a
material effect on the Group"s consolidated net income and financial
position.Additional disclosures relating to International Accounting Standard
19 Employee Benefits (Revised) will be presented in the annual consolidated
financial statements.
4. Segment information
A business segment is a group of assets and operations engaged in providing
products that are subject to risks and returns that are different from those
of other business segments. The Group has opted to use business segments as
the primary segments.
A geographical segment is engaged in providing products within a particular
economic environment that is subject to risks and returns that are different
from those of segments operating in other economic environments. The Group
uses geographical segments as the secondary segments.
(a) Primary reporting format - business segments
For the purposes of clarity and comparability of external reporting, the
Group
combines internal management units with similar risk and reward profiles into
business operating segments, which are constituted as follows:
Jewellery Maisons - brands whose heritage is in the design, manufacture and
distribution of jewellery products; these comprise Cartier and Van Cleef &
Arpels.Specialist Watchmakers - brands whose primary activity includes the
design,manufacture and distribution of precision timepieces. The Group"s
specialist watchmakers comprise Jaeger-LeCoultre, Baume & Mercier, IWC,
Vacheron Constantin, A. Lange & Sohne, Piaget and Officine Panerai.
Writing Instrument Maisons - brands whose primary activity includes the
design, manufacture and distribution of writing instruments. These are
Montblanc and Montegrappa.Leather and Accessories Maisons - brands whose
activities include the design and distribution of primarily leather goods and
other accessories, being Alfred Dunhill and Lancel.
Other Group operations mainly comprise Chloe, royalty income and other
businesses. None of these constitutes a separately reportable segment.
Amounts included within the Corporate costs category represent the Group"s
corporate operations which cannot meaningfully be attributed to the segments.
The entire product range of a particular Maison, which may include watches,
writing instruments, jewellery 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
excluding bank overdrafts, short and long-term loans.
Inter segment transactions are recorded at prices that reflect the risks and
rewards transferred and are entered into under normal commercial terms and
conditions.
The segment results for the six months ended 30 September are as follows.
Sales Inter segment sales Total segment
sales
2006 2005 2006 2005 2006 2005
Sales: EUR m EUR m EUR m EUR m EUR m EUR m
Jewellery Maisons 1 170 1 038 - 4 1 170 1 042
Specialist
Watchmakers 597 522 3 4 600 526
Writing
Instrument Maisons 257 208 2 2 259 210
Leather and
Accessories Maisons 136 124 - - 136 124
Other Businesses 143 98 45 66 188 164
2 303 1 990 50 76 2 353 2 066
Segment result
2006 2005
Segment result: EUR m EUR m
Jewellery Maisons 328 283
Specialist Watchmakers 140 118
Writing Instrument Maisons 39 28
Leather and Accessories Maisons ( 12) ( 26)
Other Businesses 15 ( 2)
Corporate costs ( 74) ( 67)
Operating profit 436 334
Finance costs 9 -
Operating profit before share of results of associated
undertakings 445 334
Share of post-tax profit of associated undertakings 274 259
Profit before taxation 719 593
Taxation (74) (64)
Net Profit 645 529
The net segment assets at 30 September are as follows.
Segment assets Segment liabilities Net segment assets
2006 2005 2006 2005 2006 2005
Net segment
assets: EUR m EUR m EUR m EUR m EUR m EUR m
Jewellery
Maisons 1 729 1 605 ( 272) ( 211) 1 457 1 394
Specialist
Watchmakers 868 808 ( 134) ( 83) 734 725
Writing
Instrument
Maisons 353 314 ( 72) ( 66) 281 248
Leather and
Accessories
Maisons 159 164 ( 50) ( 49) 109 115
Other
Businesses 184 127 ( 77) ( 60) 107 67
Corporate costs 445 422 ( 167) ( 249) 278 173
3 738 3 440 ( 772) ( 718) 2 966 2 722
Investments in
associated
undertakings 3 352 3 240
Cash and cash
equivalents 1 149 903
Short-term
loans and
borrowings ( 548) ( 519)
Retirement
benefit
obligations ( 103) ( 101)
Deferred and
current income
tax, net 75 51
Net assets 6 891 6 296
Other segmental information for
the six months to 30 September Depreciation/
Items related to Capital expenditure amortisation
charge
property, plant and equipment 2006 2005 2006 2005
and intangible assets: EUR m EUR m EUR m EUR m
Jewellery Maisons 27 38 25 23
Specialist Watchmakers 16 13 12 11
Writing Instrument Maisons 7 7 10 9
Leather and Accessories Maisons 3 5 5 3
Other Businesses 8 6 4 3
Corporate costs 16 29 11 14
77 98 67 63
Unit option costs
2006 2005
Other non-cash items: EUR m EUR m
Jewellery Maisons 3 3
Specialist Watchmakers 2 2
Writing Instrument Maisons 1 1
Leather and Accessories Maisons - 1
Other Businesses - -
Corporate costs 10 10
16 17
(b) Secondary reporting format - geographical segments
Sales, segment assets and capital expenditure in the three main geographical
areas where the Group"s business segments operate are as follows for the six
months ended 30 September:
Sales Segment assets Capital
expenditure
2006 2005 2006 2005 2006 2005
EUR m EUR m EUR m EUR m EUR m EUR m
Europe 975 827 2 500 2 335 53 66
France 230 192 489 429 8 17
Switzerland 101 94 1 262 1 228 33 37
Germany, Italy and Spain 310 270 459 433 7 6
Other Europe 334 271 290 245 5 6
Asia 850 753 750 648 16 20
Hong Kong/China 276 221 303 163 7 3
Japan 351 331 308 332 5 8
Other Asia 223 201 139 153 4 9
Americas 478 410 488 457 8 12
USA 377 317 415 374 7 11
Other Americas 101 93 73 83 1 1
2 303 1 990 3 738 3 440 77 98
Sales are allocated based on the location of the customer. Segment assets and
capital expenditure are allocated based on where the assets are located.
5. Investment in associated undertakings
BAT Other Total
EUR m EUR m EUR m
At 1 April 2005 3 218 - 3 218
Exchange differences 26 - 26
Share of net profit after minority interests 259 - 259
Dividends received ( 247) - ( 247)
Other equity movements ( 16) - ( 16)
At 30 September 2005 3 240 - 3 240
At 1 April 2006 3 343 4 3 347
Exchange differences 94 - 94
Acquisition of associated undertakings - 10 10
Share of net profit after minority interests 274 - 274
Dividends received ( 278) - ( 278)
Other equity movements ( 95) - ( 95)
At 30 September 2006 3 338 14 3 352
Investment in associated undertakings at 30 September 2006 includes goodwill
of
EUR 2 592 million (September 2005: EUR 2 568 million).
The summarised financial information in respect of the Group"s share of
results, assets and liabilities of its principal associated undertaking, BAT,
is as follows:
Six months to Six months to
30 September 2006 30 September 2005
EUR m EUR m
Operating profit 405 378
Share of post-tax profit of BAT"s
associated undertakings 62 50
Share of other expense ( 39) ( 19)
Finance costs ( 39) ( 29)
Profit before taxation 389 380
Taxation ( 93) ( 103)
Net profit 296 277
Minority interest ( 22) ( 18)
Share of post-tax profit 274 259
Richemont accounts for its effective interest in BAT under the equity method.
Changes in the Group"s percentage holding of BAT during the period reflect
the
share buy back programme carried out by BAT. The following table indicates
the
percentages applied to BAT"s profits:
For the six months ended 30 September 2006:
%
1 April 2006 to 30 June 2006 18.8
1 July 2006 to 30 September 2006 18.9
For the six months ended 30 September 2005:
1 April 2005 to 30 June 2005 18.4
1 July 2005 to 30 September 2005 18.5
6. Other operating expenses
Included in other operating expenses are royalties received of EUR 5 million
(2005: EUR 7 million). In the prior period a gain of EUR 11 million arose
from
the sale of Hackett Limited for a consideration of EUR 15 million.
7. Finance income
Six months to Six months to
30 September 2006 30 September 2005
EUR m EUR m
Interest expense:
- bank borrowings ( 15) ( 10)
- other financial expenses ( 3) -
Interest income:
- other 30 16
Fair value gains on financial
instruments 2 -
Foreign exchange gains/(losses):
- on monetary items ( 4) 14
- on hedged derivatives ( 6) ( 7)
- on other derivatives 5 ( 13)
9 -
Foreign exchange losses of EUR 4 million (2005: gains EUR 8 million) were
reflected in cost of sales during the period.
8. Earnings per unit
8.1. Basic
Basic earnings per unit is calculated by dividing the profit attributable to
Unitholders by the weighted average number of units in issue during the
period, excluding units purchased by the Group and held in treasury.
Six months to Six months to
30 September 2006 30 September 2005
Profit attributable to unitholders
(EUR millions) 645 529
Weighted average number of units in
issue (millions) 556.5 551.8
Basic earnings per unit (EUR per unit) 1.159 0.959
8.2. Diluted
Diluted earnings per unit is calculated adjusting the weighted average number
of units outstanding to assume conversion of all dilutive potential units.
The Group has only one category of dilutive potential units: unit options
issued to employees.
The calculation is performed for the unit options to determine the number of
units that could have been acquired at fair value (determined as the average
annual market unit price of the Company"s units) based on the monetary value
of the subscription rights attached to outstanding unit options. The number
of units calculated as above is compared with the number of units that would
have been issued assuming the exercise of the unit options.
Six months to Six months to
30 September 2006 30 September 2005
Profit attributable to unitholders
(EUR millions) 645 529
Weighted average number of units in
issue (millions) 556.5 551.8
Adjustment for unit options
(millions) 8.6 9.8
Weighted average number of units
for diluted earnings per
unit (millions) 565.1 561.6
Diluted earnings per unit (EUR per
unit) 1.141 0.942
9. Taxation
The average effective tax rate is calculated in respect of profit before
taxation but excluding the share of post-tax profit of associated
undertakings.The rates for the periods ended 30 September 2006 and 2005 were
16.6 per cent and 19.2 per cent respectively.
For the current and future years the Group has implemented procedures to
increase further the tax effects of the costs of share-based payments. This
together with other one-time benefits has significantly contributed to the
decrease in the effective tax rate in the period. IFRS restricts the tax
benefit from share-based payments that can be recognised through the profit
and loss, accordingly an amount of EUR 22 million is recognised directly in
equity.
10. Cash flow generated from operations
Six months to Six months to
30 September 2006 30 September 2005
EUR m EUR m
Operating profit 436 334
Depreciation of property, plant and
equipment 57 57
Amortisation of intangible assets 10 6
Profit on disposal of property,
plant and equipment ( 2) ( 1)
Increase in provisions 5 8
Increase in retirement benefit
obligations 2 4
Movement in provision for
non-current asset - 2
Non-cash items 25 6
Increase in inventories ( 116) ( 120)
Increase in trade debtors ( 210) ( 157)
Increase in other receivables,
prepayments and accrued income ( 24) ( 12)
Increase in current liabilities 52 48
Cash flow generated from operations 235 175
11. Related party transactions
Compagnie Financiere Rupert, Geneva holds 52.2 million "B" registered shares,
each comprising 10 "B" registered shares in Compagnie Financiere Richemont SA
indivisibly twinned with a "B" registered participation certificate issued by
Richemont SA Luxembourg. Compagnie Financiere Rupert therefore has an
interest
in 50 per cent of the voting rights in Compagnie Financiere Richemont SA. In
addition, Compagnie Financiere Rupert has advised that parties related to it
held a total of 160"694 Richemont "A" bearer units, or the equivalent thereof
in the form of Depository Receipts, as at 31 March 2006, representing 0.02
per cent of the voting rights of the Company.
The Group has a number of transactions and relationships with related
parties,as defined by IAS 24 Related Party Disclosures, all of which are
undertaken in the normal course of business.
Besides the Directors of the Boards of both Compagnie Financiere Richemont SA
and Richemont SA, the Group has identified the following other related
parties:
- Richemont"s associated undertakings
- Richemont"s joint venture interests
- Remgro Limited
- VenFin
- Richemont Foundations (employee and others)
There has been no significant change in the nature and magnitude of the
Related
Party arrangements during the period. Full details of related party
transactions will be included in the annual consolidated financial
statements.
12. Share-based payments
Unit option plan
The Group has a long-term unit-based compensation plan whereby executives are
awarded options to acquire units at a pre-determined price. Awards under the
unit option scheme vest over periods of three to seven years and have expiry
dates, the date after which unexercised options lapse, of between five and
ten years from the date of grant. During the period ended 30 September 2006,
awards of 3 343 800 options (2005: 4 455 100 options) were granted at a
weighted average exercise price of CHF 53.10 (2005: CHF 41.25) per unit.
Options in respect of 1 518 870 units (2005: 3 498 827 units) were exercised
during the period at an average exercise price of CHF 24.65 (2005: CHF 24.37)
per unit.
13. Dividends
In September 2006 a dividend was paid of EUR 0.60 per unit (2005: EUR 0.50
per unit), together with a special dividend of EUR 0.50 per unit (2005: EUR
0.50 per unit).
14. Post balance sheet events
In October 2006 the Group entered into an agreement to sell an interest in a
leasehold property in Europe generating a gain of EUR 17 million and to
subsequently acquire new leasehold premises at a cost of EUR 21 million.
In October 2006 the Group acquired Fabrique d"Horlogerie Minerva SA,
Switzerland, at a cost of EUR 7 million. This acquisition will have no
material effect on the Group"s consolidated net income and financial
position.
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 6 months to 6 months to
against the Euro 30 Sept 2006 30 Sept 2005
Average
United States dollar 1.27 1.24
Japanese yen 145.93 135.48
Swiss franc 1.57 1.55
Pound sterling 0.68 0.68
30 September 2006 31 March 2006
Closing
United States dollar 1.27 1.21
Japanese yen 149.59 142.77
Swiss franc 1.59 1.58
Pound sterling 0.68 0.70
Statutory Information
Shares of Compagnie Financiere Richemont SA are indivisibly twinned with
participation certificates issued by its wholly-owned subsidiary Richemont SA
to form Richemont units. Richemont "A" units are listed on the Swiss Stock
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 JSE Limited (the Johannesburg Stock Exchange) (Reuters
`RCHJ.J"/Bloombergs `RCH SJ").
The closing price of a Richemont "A" unit on 29 September 2006 was CHF 60.20
and the market capitalisation of the Group"s "A" units on that date was CHF
31 424 million (EUR 19 764 million).
Over the preceding six months, the highest closing price of an "A" unit was
CHF 65.23 (24 April), and the lowest CHF 50.48 (8 June).
Compagnie Financiere Richemont SA Richemont SA
Registered office: Registered office:
50 chemin de la Chenaie 35 Boulevard Prince Henri
1293 Bellevue, Geneva L-1724 Luxembourg
Switzerland Tel: (+352) 22 42 10
Tel: (+41) (0) 22 721 3500 Fax: (+352) 22 42 19
Fax: (+41) (0) 22 721 3550
Internet: www.richemont.com
E-mail: investor.relations@richemont.com
secretariat@richemont.com
press.office@richemont.com
Copyright 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 interim results expressed
in rand. The average euro/rand exchange rate prevailing during the period
ended 30 September 2006 was 8.6192; this compares with a rate of 7.9947
during the prior period.
in Rand millions September 2006 September 2005
Parent and subsidiaries
Sales 19 850 15 909 + 25 %
Operating profit 3 758 2 670 + 41 %
Net profit 3 198 2 158 + 48 %
Share of post-tax profit of
associate -
British American Tobacco
Before non-recurring
(expenses) / income 2 698 2 223 + 21 %
Non-recurring (expenses) /
income ( 336) ( 152) -
Net profit - share of associate 2 362 2 071 + 14 %
Net profit of the Group 5 559 4 229 + 31 %
Earnings per depository
receipt - diluted basis R 0.983 R 0.753 + 31 %
Richemont Securities AG Depository Receipts are issued subject to the terms
of
the Deposit Agreement dated 25 August 1988 as amended on 18 December 1992 and
28 September 2001 and, by holding Depository Receipts, investors acknowledge
that they are bound by the terms of the Deposit Agreement. Copies of the
Deposit Agreement may be obtained by investors from Richemont Securities AG
or
Computershare Limited.
Richemont Securities AG may appoint a depository agent or other parties to
assist in the administration of the depository receipt programme and may
provide to such agents such information as it deems to be appropriate,
including information relating to the identity of holders of depository
receipts.
17 November 2006
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 17/11/2006 08:01:14 AM Produced by the JSE SENS Department
