Richemont drops mooted shareholder loyalty scheme to preserve cash
SWISS luxury goods group Richemont yesterday postponed the issuance of warrants under its proposed shareholder loyalty scheme to simplify its capital structure.
Richemont, which owns brands such as Cartier, said it removed the plan – initially aimed at compensating shareholders for the Covid-19-linked dividend cut – from the agenda only hours before its annual general meeting.
The group said it wanted to study the possibility of cancelling its depository receipt programme in South Africa.
“The contemplated simplified structure is intended to reduce administrative complexity and facilitate cross-border trading in Richemont A shares between investors on the Swiss Exchange and the JSE,” said the group.
Last month, Richemont committed to potentially establishing a shareholder loyalty scheme in a bid to provide warrants to investors who can convert them into newly created stock after three years. The scheme was designed to compensate investors after the group halved its dividend to 1 Swiss franc (R18.37) per share in a measure to preserve cash during the Covid-19 crisis.
Chairperson Johann Rupert said at the time that the board had decided it was possible to retain an extra liquidity buffer with a reduced dividend level while awarding shareholders a supplementary benefit that would allow them to capture any ultimate improvement in global conditions.
The group said its board would submit a revised proposal on the matter at an extraordinary general meeting of shareholders to be held later this year.
It said its operating profit for the year to the end of March fell 22 percent, mainly due to the pandemic.
Profit for the year had tumbled 67 percent to € 931 million (R18.5 billion), reflecting the impact of the non-recurrence of a post-tax non-cash accounting gain of € 1.37bn on the revaluation of the Yoox Net-a-Porter (Ynap) shares held before the tender offer and net foreign exchange losses on monetary items.
In 2018, Richemont took online fashion giant YNAP after acquiring 95 percent of the company’s available shares as part of its ambitions to solidify its leadership position in the online space. The net cash position remained strong at € 2.39bn in March.
Rupert said Cartier was established in 1847 and had survived two world wars, while Vacheron Constantin began manufacturing watches in its current premises in Geneva in 1755.
Richemont shares closed 2.37 percent lower at R111.67 on the JSE yesterday.