Compagnie Financiere Richemont Sa · SIX:CFR
Compagnie Financiere Richemont Sa — Richemont — FY2005 Earnings Presentation
55 slides from Compagnie Financiere Richemont Sa's earnings presentation, June 2005
Slide 1: Richemont
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Slide 2: Agenda
LEILe RSIS Overview Johann Rupert Strategic Objectives and Business Overview Norbert Platt Results Richard Lepeu Conclusion Johann Rupert RicHEMONT
Slide 3: Overview
Overview Lé] [hl Sales Operating profit Net profit Earnings per unit- fully diluted basis Cash flow from operations RicHEMONT
Slide 4: Strategic Objectives and Business Overview
Strategic Objectives and Business Overview
Slide 5: Objectives: the Maisons
Objectives: the Maisons [x] wl Greater autonomy of the Maisons, greater accountability Vertical organisation to reach into the markets RicHEMONT
Slide 6: Objectives: Regions
Objectives: Lé] [hl Richemont’s Global Infrastructure Regions to focus on support services Streamlined & improved support infrastructure for our Maisons Maisons’ creative autonomy increased RicHEMONT
Slide 7: Objectives: IT
Objectives: IT [<] (h] Install a common and efficient IT system Standardise and improve business processes Outsource infrastructure technology RicHEMONT
Slide 8: Objectives: the Regions
Objectives: the Regions [x] wl 4 major platforms to provide support functions ia to the brands
Slide 9: Growth drivers
Growth drivers IL.) EIR Innovative products and creative marketing New patterns Increased wealth Increased internationalisation RicHEMONT
Slide 10: Objectives: Portfolio Optimisation
Nurture our major brands Grow and turn around our niche brands with potential Potential disposals Objectives: Portfolio Optimisation [x] wl RicHEMONT 10
Slide 11: Jewellery Maisons
Jewellery Maisons Double digit growth Continued creativity in all segments and price points Strong performance of emblematic collections Pasha 42 Panthére Tankissime 11
Slide 12: Jewellery Maisons
Jewellery Maisons The Bund, Shangt¥ai Dazzling PR events Accelerated roll out of the new boutique spirit Venice, Italy > Te) tet ‘ondation Cartier 20 year celebration 12
Slide 13: Jewellery Maisons
Jewellery Maisons Secret 100th anniversary Strong creativity Development of the watch offer Breakeven Van Cleef & Arpels 13
Slide 14: Specialist Watchmakers
Specialist Watchmakers Special H Limelight Berlingot 14
Slide 15: Specialist Watchmakers
Specialist Watchmakers Ingenieur Automatic OFFICINE PANERAI FIRENZE 1860 Luminor, Arktos 15
Slide 16: Specialist Watchmakers
Specialist Watchmakers Lange 1 Time Zone Master Compressor Extreme World Chronograph 16
Slide 17: Specialist Watchmakers
Specialist Watchmakers Tour de I'lle 17
Slide 18: Writing Instrument Manufacturers
Writing Instrument Manufacturers Significant growth, especially in Asia Good growth in writing instruments Strong foothold in leather and watches Increasing appeal to women —— StarWalker Sport Lady Night Flight Leather TimeWalker GMT RICHEMONT 18
Slide 19: Leather & Accessories
Leather & Accessories Mutine brodee LANCEL Signs of recovery Strong interest from Asian and American wholesalers Expansion of external POS in Russia and China Breakeven postponed by a few months Promenade Dina 19
Slide 20: Other businesses
Other businesses Fashion leader status Very strong growth Phoebe Philo awarded Designer of the Year 20
Slide 21: Review of Results
Review of Results _ Sales and gross margin Operating contribution and net profit IFRS Cash flow 21
Slide 22: Sales and Operating Profit
Sales and Operating Profit RAL] wl jem 20 Sales 3375 Gross profit 2 092 Net operating expenses Administration Communication Operating profit 62.0% 64.4% 53.2% 50.8% 13.6% 8.8% P| 2004 2005 2004 2005 2004 2005 Gross margin Net op expenses Operating margin RiIcCHEMONT 22
Slide 23: Currencies
Currencies Average euro exchange rates vs RicHEMONT 23
Slide 24: Sales
Sales As reported LEILe RSIS At constant rates RicHEMONT 24
Slide 25: Month Rolling Sales
12 Month Rolling Sales 12 month rolling sales to May 2005 10% 7% 20% 15% in Europe in Japan in Asia-Pacific in Americas LEILe RSIS RicHEMONT 25
Slide 26: Sales by Region
Sales by Region Americas 19% Asia-Pacific 21% Europe 43% RicHEMONT 26
Slide 27: Gross Margin
Gross Margin 67.0% 66.0% Currency Manufacturing capacity Product mix Network mix Geography 1999 2000 2001 2002 LEILe RSIS saeco GAD reser sess sss 62.6% 2003 64.4% 62.0% 2004 2005 RicHEMONT 27
Slide 28: Operating Expenses
Operating Expenses hala en | Netcr overees | 1 at 53.2% 50.8% 2004 2005 Net op expenses 42.4% 39.6% 2004 2005 Administration 11.1% 10.8% 1 2004 2005 Communication RicHEMONT 28
Slide 29: Operating Expenses
Operating Expenses [x] wl Operating Expenses as % of sales 9 55% 53% 51% 45% 5% y 3 HN Communication expenses WBA Administration Expenses, of which 2003 2004 2005 WIA Corporate costs Breakdown of Administration Expenses Selling & distribution L_= hz, Other administration Bie Total administration } 1
Slide 30: Sales by Business Area
Sales by Business Area LEILe RSIS Leather & Accessories T% Writing Instruments 11% Specialist Watchmakers 24% 5%, Jewellery Maisons 53% RicHEMONT 30
Slide 31: Operating Profit by Business Area
Operating Profit by Business Area Jewellery Maisons Specialist Watchmakers Writing Instruments Leather & Accessories Other businesses 20% 24% Margin Contribution 12% 17% 14% 14% Leather & Other Accessories 16% - 15% 8% 2% 2004 2005 Gp 2005 Writing Instruments 2004 == 2005 Specialist Watchmakers Jewe
Slide 32: Earnings — Profit After Tax
Earnings — Profit After Tax Net investment expense Profit before tax Taxation Profit after tax 2004 2005 Taxation rate 2004 2005 Profitability 32
Slide 33: Net Profit
Net Profit Net profit - Subsidiaries Net profit - BAT Net profit - Group RicHEMONT 33
Slide 34: British American Tobacco
British American Tobacco Effective interest at 31 March 05 (390 m ordinary shares) RicHEMONT 34
Slide 35: IFRS: 2005 Anticipated Impact
IFRS: 2005 Anticipated Impact [x] wl IFRS 2— Share-based payments IAS 28 — Associates IAS 21 — Foreign exchange rates IAS 38 — Intangible assets IAS 12 — Income taxes IAS 19 — Employee benefits IAS 18 — Revenue RicHEMONT 35
Slide 36: Cash Flow from Operations
Cash Flow from Operations RAL] wl Non-cash items Movement in working capital Cash flow from operations Ba Operating profit 4 RicHEMONT 36
Slide 37: Free Cash Flow
Free Cash Flow IL.) EIR Cash flow from operations Net acquisition of fixed assets Taxation paid Net investment income/(expense) Free cash flow from Subsidiaries Dividends received from BAT Total Free cash inflow a RicHEMONT 37
Slide 38: Net Capital Expenditure
Net Capital Expenditure 150m 2000 230m 2001 308 m 2002 180m 2003 LEILe RSIS 118m 127m 2004 2005 RicHEMONT 38
Slide 39: Net Capital Expenditure
Net Capital Expenditure Renovation of Cartier flagship store 13 rue dela Paix, Paris LEILe RSIS €127m riitium Retail 27m Manufacturing Other RICHEMONT 39
Slide 40: Net Cash
Net Cash LIS) Free cash inflow Dividends paid Investing activities Financing activities Foreign exchange effects Net cash generated Net cash / borrowings RicHEMONT 40
Slide 41: Dividends
Dividends + 25% +15% +16% + 25% 0.300 1997 1998 1999 2000 2001 2002 2003 2004
Slide 42: Conclusion
Conclusion 42
Slide 43: Focus on leather and accessories
ee Focus on leather and accessories WS Gross margin up 0.8 points led by leather | Strong growth in Asia-Pacific, particularly in China Motorities™ 43
Slide 44: Conclusion
Conclusion Sustained sales + 13% Creativity and attractiveness Improved gross margin to 64.4% Pricing power Contained costs + 5% Down to 51% of Group sales Strong cash flow LEILe RSIS RICHEMONT 44
Slide 45: Conclusion
Conclusion RICHEMONT 45
Slide 46: Appendix
Appendix 46
Slide 47: Percentage Change at Constant Rates: Previous Methodology
and Actual Rates: Previous Methodolo Percentage Change at Constant Rates [x] Wat! gy Q3 sales at actual rates = 9-month sales at the 9 months average rate to 31 Dec 04 less 6-month sales at 6 months average rate to 30 Sept 04 Q3 sales at constant rates = 9-month sales at the 9 months average rate le
Slide 48: Percentage Change at Constant Rates: New Methodology
Percentage Change at Constant Rates and Actual Rates: New Methodology Q3 sales at actual rates = unchanged Q3 sales at constant rates LEILe RSIS = Current year 9-month sales less 6-month sales at prior year 12-month average rate compared against Prior year 9-month sales less 6-month sales at prior y
Slide 49: Average Exchange Rates
Average Exchange Rates April — Sept 04 6 months LEILe RSIS RicHEMONT 49
Slide 50: Sales in Europe and Middle East
Sales in Europe and Middle East at Constant Exchange Rates LEILe RSIS RICHEMONT 50
Slide 51: Sales in Asia-Pacific
Sales in Asia-Pacific [x] rr at Constant Exchange Rates RICHEMONT 51
Slide 52: Sales in Americas
Sales in Americas at Constant Exchange Rates LEILe RSIS RICHEMONT 52
Slide 53: Inventory
Inventory IL REI Re) Total Rotation (cost of goods sold) RicHEMONT 53
Slide 54: Retail Network
Retail RetailNetwork Network + + = Of which 2004 Internal External Total 2005 internal Internal 552 25 + 25 577 External 313 51 + 51 364 Total 865 25 51 + 76 941 Cartier 212 -3 + 15 + 12 224 154 Montblanc 228 + 13 +6 + 19 247 154 Alfred Dunhill 158 +8 +7 + 15 173 81 Lancel 122 -5 +1 -4 118 65 Van Cl
Slide 55: Richemont
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