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Luxury goods group Richemont to adopt IFR standards

Oct '05
Leading luxury goods group Richemont will adopt International Financial Reporting Standards (IFRS) for financial report.

In accordance with the listing requirements of the Swiss Stock Exchange (SWX), Richemont take up International Financial Reporting Standards (IFRS) in place of generally accepted accounting principles in Switzerland (Swiss GAAP) for the preparation of its consolidated financial statements for the year ending 31 March 2006.

These financial statements will include restated comparatives for the year ended 31 March 2005. This announcement describes the effects of the transition to IFRS on the year ended 31 March 2005.

The main changes to the Group's reported results arising from the transition relate to:

• The reversal of goodwill amortisation in respect of its investment in British American Tobacco plc (BAT) and the recognition of BAT's IFRS adjustments;

• A charge in respect of the Group's employee unit option plan;

• A net charge in respect of foreign exchange movements, due to a change in the classification of intercompany financing.

The following summarises the impact of the transition to IFRS on the Group's previously reported Swiss GAAP financial statements. Further details are provided on pages 3 to 9 and in the Appendix to this press release, which includes a reconciliation of Swiss GAAP adjusted results to IFRS as adjusted.

Sales are marginally reduced due to the reclassification of certain selling costs and royalty income. Operating profit is increased by € 56 million to € 561 million, primarily due to a reclassification of the gain on disposal of 0.6 per cent of the Group's effective interest in BAT (€ 76 million), offset by a charge for employee unit options (€ 31 million).

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