R CONTENTS ICHEMONT 1 Financial Highlights 2 Group Structure 3 Chairman’s Statement 4 Directors and Company Information 6 Chief Executive’s Review • 9 Brand Review 33 Financial Review A Quality is never NNUAL 49 Consolidated Financial Statements “ 73 Company Financial Statements 83 Principal Group Companies 84 Five Year Record R 88 Notice of Meeting EPORT AND an accident, it is “Quality is never an accident, it is A always the result of intelligent effort.” CCOUNTS always the result of John Ruskin (1819–1900) 2000 intelligent effort.” ISBN 3-9522050-0-1 Internet: www.richemont.com Annual Report and Accounts 2000 R CONTENTS ICHEMONT 1 Financial Highlights 2 Group Structure 3 Chairman’s Statement 4 Directors and Company Information 6 Chief Executive’s Review • 9 Brand Review 33 Financial Review A Quality is never NNUAL 49 Consolidated Financial Statements “ 73 Company Financial Statements 83 Principal Group Companies 84 Five Year Record R 88 Notice of Meeting EPORT AND an accident, it is “Quality is never an accident, it is A always the result of intelligent effort.” CCOUNTS always the result of John Ruskin (1819–1900) 2000 intelligent effort.” ISBN 3-9522050-0-1 Internet: www.richemont.com Annual Report and Accounts 2000 19894 Rmt R&A ’00 01-08 17/7/00 1:13 pm Page 1 1 Richemont is a Swiss luxury goods group managed with a view to the long-term development of successful international brands. In addition to its luxury goods businesses, Richemont also holds strategic investments in the tobacco industry and in direct retailing. All amounts in euros 2000 1999 Sales 2 924.2 m 2 318.1 m + 26.1% Operating profit 534.1 m 390.4 m + 36.8% Attributable profit* 782.6 m 675.2 m + 15.9% Earnings per unit* 137.04 117.59 + 16.5% Dividend per unit 24.00 20.80 + 15.4% Sales ( m) Operating profit ( m) Earnings per unit () 2 924 534 137.04 117.59 2 318 99.46 2 205 390 355 1 879 68.08 1 777 311 66.70 294 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 *Attributable profit and earnings per unit have been presented on an adjusted basis, excluding exceptional items and goodwill amortisation. On a reported basis, including exceptional items and goodwill amortisation, attributable profit and earnings per unit amounted to 2 981.9 million (1999: 473.3 million) and 520.06 (1999: 82.43), respectively. 19894 Rmt R&A ’00 01-08 17/7/00 1:13 pm Page 2 2 GROUP STRUCTURE RICHEMONT LUXURY GOODS CARTIER • VAN CLEEF & ARPELS • PIAGET • VACHERON CONSTANTIN OFFICINE PANERAI • BAUME & MERCIER • LANCEL • MONTBLANC ALFRED DUNHILL • SEEGER • HACKETT • PURDEY • SULKA OLD ENGLAND • CHLOÉ • SHANGHAI TANG ASSOCIATED COMPANIES TOBACCO PRODUCTS DIRECT RETAILING AND E-COMMERCE BRITISH AMERICAN TOBACCO HANOVER DIRECT Shares of Compagnie Financière Richemont AG are indivisibly twinned with participation certificates issued by its wholly-owned subsidiary Richemont SA to form Richemont units. Richemont units are traded on the Swiss Stock Exchange. Depositary receipts in respect of Richemont units are traded on the Johannesburg Stock Exchange; American Depositary Receipts are traded over the counter in New York and are quoted on SEAQ International in London. 19894 Rmt R&A ’00 01-08 17/7/00 1:13 pm Page 3 3 CHAIRMAN’S STATEMENT Following the merger of Rothmans International and British American Tobacco, which was completed in June of last year, Richemont’s operations are now largely focused on its luxury goods businesses. considerable premium to the prevailing market price. Richemont nevertheless remains the single largest shareholder in the enlarged BAT. Our colleague, Joseph Kanoui, has played a hugely important role over almost 30 years in bringing Richemont’s luxury goods businesses, in particular Cartier, to the unparalleled position that they enjoy today. Last September, Mr Kanoui indicated his decision to retire from his position as Chairman and Chief Executive of Vendôme Luxury Group, although we are fortunate that he will remain as our colleague on the board of Nikolaus Senn chairman Richemont in a non-executive capacity. The board would like to record its thanks to him for his important I am pleased to be able to report that, once again, the contribution to the Group and looks forward to his Group’s luxury goods businesses have shown excellent continuing input in the years to come. growth in terms of sales and operating profit, which grew The Group’s success today is derived, in part, from by 26.1 per cent and 36.8 per cent, respectively, during the strength of its brands but also from the commitment, the year. expertise and enthusiasm of its staff. On behalf of Factoring in the results of the Group’s associated shareholders, I thank them for their enormous companies – being principally the investment in British contribution to this year’s successes. American Tobacco – attributable profit of the Group as a whole grew by 15.9 per cent to 782.6 million and earnings per unit on a fully diluted basis increased by 16.5 per cent to 137.04. In consequence, the board proposes to increase the level of dividend to 24.00 per Nikolaus Senn unit, some 15.4 per cent above the euro equivalent of the CHAIRMAN £ 13.50 paid last year. Compagnie Financière Richemont AG Richemont is committed to maintaining and indeed 7 June 2000 developing its position as one of the world’s leading luxury goods companies. The Group does, however, continue to hold an effective interest of just over 21 per cent in British American Tobacco, notwithstanding the decision to exercise the right to put a part of its preference shareholding back to BAT in June 2000. This right, which was negotiated in exchange for a restriction on the voting rights attaching to the preference shares, has allowed the Group to realise a price per share that represents a 19894 Rmt R&A ’00 01-08 17/7/00 1:13 pm Page 4 4 DIRECTORS AND COMPANY INFORMATION COMPAGNIE FINANCIÈRE RICHEMONT AG The board of Compagnie Financière Richemont AG is composed of non-executive directors, together with the Chief Executive and Finance Director. Nikolaus Senn Yves-André Istel Chairman Mr Istel is Vice Chairman of Rothschild Inc., and has been Dr Senn, aged 73, is Honorary Chairman of the former a director of Rothschild & Cie since 1993. He also serves Union Bank of Switzerland. He enjoyed a long and on the boards of several other public companies and successful career with the bank and also served on the non-profit institutions. He is 64 years of age. Mr Istel is a boards of many leading Swiss and international companies. member of the Audit Committee. He is Chairman of the Compensation Committee. Joseph Kanoui Jean-Paul Aeschimann Mr Kanoui, aged 63, has been a director of the Company Deputy Chairman since its foundation in 1988. He served as Chairman of Maître Aeschimann, aged 66, is Chairman of the Audit Cartier Monde SA for many years and was Chairman and Committee and a member of the Compensation Chief Executive of Vendôme Luxury Group up until his Committee. He is an attorney at the Bar of Geneva and is retirement in January 2000. Mr Kanoui is Chairman of also a director of Reuters SA and Barclays Bank (Suisse) SA. the Investment Committee. Johann Rupert Alan Quasha* Chief Executive Aged 50, Mr Quasha has been closely associated with the Mr Rupert, aged 50, has had an extensive career in Group since its formation in 1988 and served as a director international business and finance. In addition to his role of Richemont SA from that time until 1999. He is as Chief Executive of Richemont, Mr Rupert is a member Chairman of Hanover Direct Inc. and is Chairman of of the board of British American Tobacco p.l.c. and is Quadrant Management Inc., an investment management Chairman of Rembrandt Group Limited. Mr Rupert is a business based in New York. member of the Compensation Committee. Lord Renwick Jan du Plessis Lord Renwick, aged 62, formerly served as British Finance Director Ambassador to South Africa and the United States and is Aged 46, Mr du Plessis has been Finance Director of the now Deputy Chairman of Robert Fleming Holdings Group since its formation in 1988. He also served as Limited and Chairman of Robert Fleming Inc. He is a Finance Director of Rothmans International from 1990 to member of the Audit Committee. He also serves on the 1996 and is a member of the boards of British American boards of a number of other public companies including Tobacco p.l.c. and Hanover Direct Inc. British Airways p.l.c. Leo Deschuyteneer Ernst Verloop Mr Deschuyteneer, aged 69, is a director of Sofina SA, Mr Verloop is 73. He is a former executive director of a leading Belgian investment company, and has been Unilever. He served on the board of Rothmans International involved in a non-executive capacity with the Group’s for a number of years and has also been a director of a luxury goods businesses for many years. He is a member number of other Dutch and international companies. of the Audit Committee. Alan Grieve Lord Douro* Company Secretary Aged 54, Lord Douro served as Deputy Chairman of *Lord Douro and Mr Quasha have been nominated for election to Vendôme Luxury Group from its foundation in 1993 up the board at the annual meeting of shareholders to be held in to 1999. He was a member of the European Parliament September 2000. from 1979 to 1989 and is currently Chairman of Sun Life and Provincial Holdings plc.