In accordance with the articles of incorporation of both companies, shares issued by Compagnie Financière Richemont SA have been twinned with participation certificates issued by its wholly-owned subsidiary Richemont SA, Luxembourg to form Richemont 'A' and 'B' units. There are 522 000 000 'A' bearer units and 52 200 000 'B' registered units in issue. Richemont 'A' bearer units are listed on the SWX Swiss Exchange and traded on virt-x, whilst the 'B' registered units are not listed and are held by Compagnie Financière Rupert.
Each 'A' bearer share in Compagnie Financière Richemont SA with a par value of SFr 1.00 is twinned with one participation certificate in Richemont SA of no par value to form one Richemont 'A' unit in bearer form. Every ten 'B' registered shares in Compagnie Financière Richemont SA with a par value of SFr 0.10 each are twinned with one registered participation certificate in Richemont SA with no par value to form one 'B' unit, issued in registered form.
Holders of 'A' and 'B' units enjoy equal dividend rights. In prior years, dividends have not been declared in respect of the share capital issued by Compagnie Financière Richemont SA. Rather, Richemont SA, Luxembourg has distributed dividends in respect of the participation certificates in issue. In respect of the financial year ended 31 March 2005, Compagnie Financière Richemont SA has also proposed to distribute a dividend.
The units were split on a one hundred-to-one basis with effect from 12 November 2001. No other changes to the capital structure have been effected over the last three years.
At 31 March 2005, Richemont's market capitalisation, based on a closing price of SFr 37.55 per unit and a total of 522 000 000 'A' equity units in issue, was SFr 19 601 million. The overall valuation of the Group at the year end, including both the listed 'A' units and unlisted 'B' units, was SFr 21 561 million.
In respect of the financial year ended 31 March 2005, a dividend of € 1.00 per unit has been proposed. This comprises the regular dividend of € 0.50 per unit, together with a special dividend of € 0.50 per unit. The regular dividend will be paid jointly by Richemont SA, Luxembourg - which will pay € 0.46 per unit - and Compagnie Financière Richemont SA - which will pay € 0.04 per unit. The special dividend will be paid by Richemont SA, Luxembourg.
Over the course of the period from March 1999 to 31 March 2005, the Group has repurchased a total of 29 845 960 'A' units through the market in support of equity-based incentive schemes for executives. In February 2004, the Board of Compagnie Financière Richemont SA approved the buy-back of a further 10 000 000 units over the period to February 2006. Of this programme, 5 000 000 units had been purchased up to 31 March 2004 and are reflected in the aggregate figure of 29 845 960 units referred to above. During the year under review, the Group did not buy back any further units. However, the Group expanded its programme to hedge obligations under the Richemont stock option plan, by purchasing over-thecounter call options over 4 000 000 units. Up to March 2005, executives had exercised options over 5 877 352 units, resulting in a balance of 23 968 608 'A' units held by the Group at 31 March 2005.
The reserve for treasury units, which forms an element of unitholders' equity in the consolidated balance sheet, decreased by a net € 30 million as a consequence of the exercise of options by executives and the consequent delivery of 'A' units from the Group to the executives.
Shares in Compagnie Financière Richemont SA have been indivisibly twinned with participation certificates issued by Richemont SA, Luxembourg to form Richemont 'A' and 'B' units.
Holders of Richemont units may attend and vote at meetings of shareholders of Compagnie Financière Richemont SA. They may attend in person or may appoint the Company or a third party to represent them at the meeting.
There is no limit on the number of units that may be held by any given party nor any restriction on the voting rights attaching to those units.
The statutes of Richemont SA provide that holders of participation certificates may vote on all issues which have a direct bearing on the participation certificate capital. They may attend in person or may appoint the Company or a third party to represent them at any such meeting. Compagnie Financière Richemont SA holds the entire issued share capital of Richemont SA. Accordingly, participation certificate holders have no right to attend meetings of shareholders of Richemont SA, Luxembourg.
Richemont 'A' and 'B' units have equal rights to share in dividends and capital. As a consequence, however, of the differing nominal values of the 'A' and 'B' shares in Compagnie Financière Richemont SA, each 'B' unit conveys the right, in normal circumstances, to 10 votes at meetings of shareholders of Compagnie Financière Richemont SA, whereas each 'A' unit conveys the right to one vote at such a meeting. Richemont 'B' units, which represent 9.1 per cent of the Group's equity, therefore control 50 per cent of the votes at meetings of shareholders of Compagnie Financière Richemont SA. The 'B' registered units are entirely held by Compagnie Financière Rupert. In accordance with Swiss company law, certain resolutions relating to the capital structure of the Company, the transfer of its registered office or its dissolution, require the approval of two thirds of the shares represented at the meeting and an absolute majority of the nominal share capital.
The general meeting of shareholders of Compagnie Financière Richemont SA is the ultimate decision-making forum of the Company. Resolutions of the general meeting are generally passed by an absolute majority of the votes represented at the meeting. As detailed above, certain resolutions may require the approval of two thirds of the shares represented at the meeting and an absolute majority of the nominal share capital.
The Annual General Meeting in respect of the financial year ended 31 March 2005 will be held on 15 September 2005 in Geneva. The agenda for that meeting is set out on page 108 of this report. The notice period and agenda in respect of the meeting follow the requirements of Swiss company law. Holders of a minimum of one million 'A' units, which reflects a holding of 'A' shares in Compagnie Financière Richemont SA with a nominal value of SFr 1 million, may request that an item be placed on the agenda for the meeting. Such requests must be submitted, in writing, at least 20 days in advance of the deadline for publication of the formal notice convening the meeting.
Richemont Securities SA, a wholly-owned subsidiary of Compagnie Financière Richemont SA, acts as depository for the issuance, transfer and cancellation of Richemont South African Depository Receipts ('DRs'), which are traded on the JSE Securities Exchange South Africa. DRs trade in the ratio of 10 DRs to each Richemont 'A' unit. The terms and conditions applicable to DRs are set out in the Deposit Agreement entered into between Richemont Securities SA, as Depository, and Compagnie Financière Richemont SA and Richemont SA, Luxembourg, as issuers.
In its capacity as depository, Richemont Securities SA holds one 'A' unit in safe custody for every 10 DRs in issue. Richemont Securities SA's interest in the 'A' units that it holds is therefore non-beneficial. At 31 March 2005, Richemont Securities SA held 160 543 267 Richemont 'A' units, representing some 31 per cent of the 'A' units, in safe custody in respect of DRs in issue.
Dividends received by Richemont Securities SA are payable in rand to South African residents. Dividends are converted upon receipt by Richemont Securities SA and remitted to the holders of DRs.
Holders of DRs issued by Richemont Securities SA are not entitled to attend the shareholders' meeting or to vote in person. Rather, DR holders are canvassed as to their voting instructions by Richemont Securities SA, which then represents the holders as their proxy at the Annual General Meeting.
Bank of New York operates a sponsored ADR programme in respect of Richemont 'A' units, the ADRs trading in a 1:1 ratio with the underlying units. Richemont ADRs are traded over-the-counter in the United States.
Due to limited interest in this programme, the Board of Compagnie Financière Richemont SA has decided that it should be withdrawn. Bank of New York will contact holders of ADR's in order to ensure that the programme is terminated in a satisfactory manner.
Richemont's listed 'A' units are issued in bearer form. Accordingly, there is no register of shareholdings and there are no restrictions on transfers of unit holdings, transfers being effected by the delivery of the relevant unit certificate. Unit certificates embody both the share certificate in respect of Compagnie Financière Richemont SA and the related participation certificate in respect of Richemont SA. Given this indivisible twinning of shares in Compagnie Financière Richemont SA with participation certificates issued by Richemont SA, which is reflected in the statutes of both companies, a transfer of shares cannot be effected without the corresponding transfer of the related participation certificate.
Transfers of the unlisted 'B' registered shares in Compagnie Financière Richemont SA, which are held solely by Compagnie Financière Rupert, must be approved by the Board of Directors of the Company.
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