Compagnie Financière Tradition S.A.

And welcome to Richemont 2023 for your results presentation. Thank you to those in person for coming to Geneva. Much appreciated. And also to those of you watching the webcast. I am Sophie Cagnard, and joining today from Richemont are Johan Ruppert, chairman, Jérôme Lambert, CEO, Burkhard Grun, CFO, Cyril Vigneron, Cartier CEO, and Nicolas Boss, Van Cleef & Arpels CEO. As usual, the company announcement and financial presentation can be downloaded from richmond.com, and the replay of this video webcast will be available on our website today from 3 p.m. Geneva time. Before we begin, may I draw your attention to the disclaimer on our presentation and company announcement regarding forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. So, first, Jérôme will take you through the year's highlights and sales, and then Burkhart will review our business areas, the group's financials, and key ESG initiatives. He will then hand back to Jérôme for the conclusion, which will be followed by a Q&A session. I will now hand over to Jérôme.

Thank you, Sophie, and good morning. Ladies and gentlemen, thank you for joining us today. I'm pleased to report that notwithstanding the ongoing volatile and uncertain environment, our financial results reached several new heights this year. Sales for the year rose by 3.2 billion euros to close to 20 billion euros. having increased by 14% at constant exchange rate and 19% at actual exchange rates. Operating profits rose by €1.3 billion to €5 billion, partially benefiting from lower one-time items compared to the prior year. These strong results led to an operating margin of 25.2%, up 280 basic points year-on-year. Profit for the year from continuing operation increased by 60% to 3.9 billion euros. Cash flow from operating activities reached 4.5 billion euros and our net cash position increased by 1.8 billion euros from last September to 6.5 billion euros. The strong results achieved by our group were broad-based, sales increased across all regions, distribution channels, and business areas, with double-digit increase in almost all regions, led by particularly strong growth in Japan and Europe. Retail sales, once again, showed a marked outperformance with a solid double-digit progression, reflecting continued demand for the high-quality craftsmanship and excellence of our products. Our direct-to-client shares has increased overall to present 74%, yet another increase versus prior year, highlighting the continued transformation of our business model. And finally, through our significant growth across all business areas, the operating margin improved across all continuing business areas, as Burkhardt will detail shortly. The group further progressed on its ESG journey. Let me share a few highlights. We have reinforced our ESG platform foundation and strengthened our commitment to embedding ESG in our operation. This is evidenced by both our chief sustainability officer and chief people officer and CEO of region joining the senior executive committee this year. We phased out our PVC from our products and packaging by our target timeline and reached 97% use of renewable electricity. We have been recognized as an empire of excellence in Switzerland, France, and China. Richemont was naturally nominated for the third consecutive year as the winner of the 2022 100 Excellence Employees of China Award, as well as the 2022 Excellence in Diversity and Inclusion Award sponsored by 51Job. Let me now walk you through the group sales performance. First by region, then by distribution channel, What we saw this year is the group's strongest performance in Japan and across Europe. Japan led the way with 56% increase in sales at constant exchange rate, with strong double-digit increase across all channels and business areas. Sales in Europe were 31% higher than the previous year, driven by outstanding growth in both retail and wholesale channel, and a solid performance across all business areas, with strengths in main location led by France, Italy, and Switzerland. Sales included strong contribution from locals and benefited from inbound tourism, mainly from the US and the Middle East. In Asia Pacific, mainland China and Macau were heavily impacted by health restrictions during the year. Excluding these two locations, And Hong Kong, sales in the region rose by over 30%, with significant double increase in Southeast Asia, most notably in Australia, Singapore, and Thailand. Sales in Middle East and Africa region grew by 13%, driven by solid domestic inbound tourists spending predominantly in Dubai and in Qatar. The largest absolute contribution to group sales growth came from Europe and the Americas, with each growing by around 1 billion euros. Sales in the fourth quarter progressed by 22% year on year, with double-digit increase in all regions. On top of that, what was a very challenging comparative with the highest growth rate generated by Japan and Asia Pacific. It is worth highlighting that the first quarter also showed a significant improvement compared to the third quarter in both America and Asia-Pacific, the latter benefiting from a combination of the Chinese New Year holiday and easing of restrictions in China. Let us now turn to sales by distribution channel, starting with retail. At Constantrate, where directly operated store contributed to 68% of the group sales compared to 66% in the prior year. The solid 17% growth come from on top of a challenging comparative prior year. There were double digit increase across almost all region, notably in Europe and Japan, led by strong growth at the jewelry maison and the specialist watchmaker. Retail sales benefited from 23 new stores opening, mainly in Asia Pacific region. Fourth quarter sales posted a sharp 24% increase over the previous period. The online channel, comprising the group's online sales directly generated by the group's maison and watch finder, contributed 6% of group sales, broadly in line with the previous year. Sales rose by 6%, with growth led by double increase in America, Japan, Middle East, and Africa. Performance in the channel was fueled by robust growth in the specialist watchmaker, which showed an increase in all regions. Sales in the fourth quarter were slightly up year-on-year with pressure. Finally, wool sales Comprising 26% of whole sales, whole sales grow by 8% with strong double digit increase in all regions except Asia Pacific. And it was driven by most business areas. Fourth quarter sales significantly increase year on year while facing a very challenging comparative in the prior year period. As a consequence, the group's proportion of direct-to-client sales, which includes sales in our directly operating store and online retail sales, increased to 74% of group sales. The jury maison continued to have the highest rate of direct-to-client sales at 83%. The specialist watchmaker had the highest progression in their direct-to-client sales from 51% to 56%, sustained by the development of their retail and online capabilities. Burkhart will now take you through the year highlight by business area. Over to you, Burkhart.

Thank you, Jerome. Let me review our business areas with all numbers at actual rates and starting with the jewelry maisons. Sales increased by 21% for the year with broad-braced growth across all regions and channels. Sales were particularly strong in Japan, Europe, and in the retail channel. The fourth quarter saw a 27% increase in sales year-on-year with very strong growth across all regions. The jewelry maison's operating margin reached almost 35%, a 60 basis point improvement over the prior year. This high margin reflects the good operating leverage generated by a combination of the sharp sales increase, increased utilization of manufacturing facilities, and well-controlled costs, while continuing to invest in distribution and communication. Let us now look at the main developments during the year. The year saw strong performance across all jewelry maisons, all product segments, and all price points, especially from our maison's iconic product lines. In jewelry, this included Panthère and Trinity at Cartier, Alhambra and Fauna at Van Cleef & Arpels, and Macri and Operatul at Bucciolati. In watches, there was notable performance from Panthère and Santos at Cartier, and from extraordinary objects at Van Cleef & Arpels. In December, Cartier relaunched their iconic Grande Café jewelry collection, which was originally introduced in the 1930s by Jean Toussaint, with early signs of strong demand. Van Cleef & Arpels has continued to extend its Perlier collection both for jewelry and timepieces. Our maisons are increasing their manufacturing capacity in order to support the strong demand they are experiencing with the opening of a new manufacturing site in Italy for Cartier and the expansion of two ateliers in Italy for Bucciolati. Van Cleef & Arpels is currently investing in a new manufacturing facility in Lyon with additional manufacturing sites to be added over the coming years. Cartier has continued its store upgrade program, with 51% of stores already under its new concept, a material increase from 38% at the end of the previous year. Recent reopenings include Rue de la Paix in Paris, George Street in Sydney, and Maison Chandam in Seoul. with 11 net new store openings, reached out into new territories with a store opening in Auckland, New Zealand, and opened in new cities such as San Francisco. The five new boutiques at Buccellati included mostly openings in Asia. There have been several notable ESG initiatives during the year. Cartier's new manufacturing site in Torino assures environmental best practices. These include solar panels expected to provide 20% of the site's electrical needs and an investment into a hydroelectric power station that produces energy to power the facility in Torino as well as a new facility being built in Valencia. Van Cleef & Arpels continued its Demain Sans Main initiative to support the transmission of know-how in jewellery. And a few months ago, Pucillati achieved the RGC-COP certification and should be RGC-COC certified by December 2023. Let us now review our specialist watchmakers, where sales rose by 13% for the full year. These were double-digit increases at many maisons and across almost all regions, except for Asia-Pacific, which posted a slight reduction. By channel, both retail and online retail rose by double digits. Both quarter sales also increased by double digits, led by retail sales. The business area's operating margin was up 170 basis points to 19%. This 24% increase in operating result outpaced the rate of increase in sales, with this strong operating leverage largely due to the combination of double-digit sales growth, pricing power, as well as continued cost discipline. Let's now look at some of the key developments over the past year. There was solid performance from both iconic core collections and bestsellers, including notably the Polo at Piaget, the Verso at Jaeger-LeCoultre, Pilot's Watches at IWC, Overseas at Vacheron, Constantin, Luminor at Panerai, and Lange 1 at A. Lange & Söhne. Continued increase in direct-to-client sales, now at 56%, or 500 basis points higher than the prior year, underlines the successful retail transformation from having a majority of sales in wholesale to majority of sales directly with end clients, including the franchise monobrand boutiques that are accounted for under the wholesale channel. Proportionate sales in monobrand environment increased to close to three quarters of sales as a consequence. There have been several flagship store openings aimed at providing an elevated client experience. It would be good if the prompter would advance now. Thank you. These openings include the new IWC Taiku Hui store in Shanghai, where clients can immerse themselves in the distinctive themed environments to discover the various product collections. Vachon Constantin's reopened flagship store in the Dubai Mall offers the opportunity to interact with watchmaker onsite or browse the Vachon Constantin archives digitally in a large screen format, among other unique features. The further rollout of the innovative Time Valley multi-brand boutique concept included 16 new openings during the year, bringing the total now to 38 boutiques. New openings have taken place in China and also in other key cities such as Doha or Luzern. New formats are being tested, such as a new digital boutique in India and a first ever opening on a cruise ship. This year, the specialist watchmakers have strengthened the role of their heads of sustainability, either through recruitments or upskilling, making these positions more strategic and embedded in business decision making. All the maisons went through an ESG skills development process, including at the CEO level. Finally, let us move to the other business area, which primarily includes the group's fashion and accessories maisons, the group's unbranded watch component manufacturing and real estate activities, amongst others. Sales rose by 19% year-on-year, sustained by strong performance by the fashion and accessories maisons, while watch finder sales were negatively impacted by lower demand from the UK domestic clientele and a subdued pre-owned watch market. The growth in sales was led by very high growth rates in the Americas and Middle East and Africa. There was strength across all channels. Sales in the fourth quarter recorded a double-digit progression equally led by the Americas and the Middle East and Africa. The negative watch finder impact was more than offset by the 94 million euro profit generated by our fashion and accessories maisons due to higher sales, improved pricing power, and strong financial discipline. Overall, including all activities, the segment's operating result reached 59 million euros. Let us now look at some highlights of the past year. We've seen strong growth from collections such as the Meisterschuk writing instruments at Mont Blanc, crown sport clothing at Peter Muller and footwear at G4, and from the Brion and Tompet leather goods at Delvaux. Alaya and Chloe have been acclaimed for the new collections presented during the year, leveraging the momentum gained since the appointment of their creative directors, namely Peter Mullier and Gabriella Hurst. Another highlight has been the opening of the Mont Blanc House in Hamburg, dedicated to the Maison's purpose to inspire writing and showcase the history and heritage of writing instruments. Sales have benefited from enhancements in the retail network, namely Mont Blanc's new boutique concept in Paris, featuring a new in-store experience and key refurbishments at Chloé, with improved performance in the refurbished stores. Alaya and Delvaux have entered new regions with their first boutiques in the U.S. in New York, Soho, and in the Middle East in Dubai, respectively. Demonstrating continued progress in ESG, Chloé has introduced the Chloé Vertical Initiative. to place a unique digital ID on product labels, enabling users to trace their items from field to finished piece, and access their ownership certificate as well as care, repair, and resell information. Peter Miller has increased the use of recycled fabrics and upcycling unused products, while Chloé already used 62% of lower impact materials in its spring-summer 2023 ready-to-wear collection. Let us now turn to the group's financials, starting with gross profit, which increased significantly by 23% to 13.7 billion euros. This resulted in the gross margin rising by 200 basis points to an all-time high of 68.7%. The main drivers of the increase were a combination of more favorable geographical sales and channel mix, price increases, and higher manufacturing capacity utilization, which more than offset higher input costs. Let us now look at operating expenses, which were 17% higher than the prior year, while group sales increased by 19%, partly benefiting from lower one-time items. At constant exchange rates, operating expenses rose by 12% versus a 14% sales increase. I will now take you through the expenses by category. Selling and distribution expenses increased by 19% at actual exchange rates and by 15% at constant exchange rates, accounting for 54% of total operating expenses compared to 53% in the prior year. Most of the increase related to the development and enhancement of our retail network and the growth in retail sales, notably in Japan and South Korea, where many leases have variable rents. As a percentage of sales, selling and distribution expenses represented 23% of group sales in line with the prior year. Communication expenses were 17% higher at actual exchange rates and 12% higher at constant exchange rates to support sales. They represented close to 10% of group sales in line with a normalized 9% to 10% range. At around 1% of sales, now that YNAB is classified under discontinued operations, fulfillment expenses increased by 19% at actual exchange rates and by 13% at constant exchange rates. Administrative expenses rose by 20% and by 13% at constant exchange rates, mainly due to a stronger Swiss franc and planned investments in IT. At 8.5% of sales, administrative expenses were in line with the prior year. Other expenses of €103 million were €96 million lower than the prior year, primarily due to lower one-time items in the year under review. As a reminder, prior year numbers included charges related to the suspension of commercial activities in Russia And this year, under review, we incurred one-time charges of 66 million euros net, the main element being 55 million euros of watch finder goodwill impairment charges. The conclusion, net operating expenses as a percentage of group sales improved from 44.3% a year ago to 43.5% this year. Operating profit reached five billion euros, a new high for the group. This represents a 34% increase over the prior year and outpaced the 19% sales increase. As a result, the operating margin rose 280 basis points to 25.2% compared with 22.4% in the prior year. Let us now review the rest of the P&L items below the operating profit line, starting with financial income. Net finance costs improved to 314 million euros compared to 841 million euros in the prior year. This 527 million euro reduction was primarily related to the following items. Firstly, there were non-cash fair value adjustments of €54 million compared to €538 million in the prior year, a €484 million difference. These charges are linked to investments in a Farfetch convertible note as well as an option over additional shares in Farfetch China, whose values are driven by the variation of the underlying Farfetch share price, in addition to the group's investment in externally managed bond funds and money market funds. Secondly, net interest expenses, excluding those lease liabilities, improved by 46 million euros compared to the prior year level. And finally, a positive 56 million euro year-on-year gain on mark-to-market adjustment in respect of hedging activities was partly offset by 43 million euro increase in foreign exchange non-cash losses on monetary items. Sales at YNAB, now under discontinued operations, proved resilient given the challenging environment for digital distribution pure players, rising by 4% compared to the prior year. The operating loss at 3.6 billion euros was mainly driven by the 3.4 billion euro write-down of YNAB net assets. Over the full holding period of YNAB, the sum of both positive and negative valuation adjustments on acquisition and disposal of NAP and EUX investments amounted to a negative 1.3 billion euros. As of today, there is no change to the timing of the expected closing of the transaction previously communicated to you, this being by the end of calendar year 2023. Let us now turn to the profit for the year. Profit from continuing operations progressed significantly, rising 60% to 3.9 billion euros, with the profit margin increasing by 500 basis points to now 19.6%. The increase primarily reflected the higher operating profit and lower net finance costs just mentioned, partly offset by higher taxes. Profit for the year of 301 million euros was impacted by the 3.6 billion euro loss from discontinued operations. As indicated last November, our effective tax rate for the year for continuing operations was 18%, on the lower side of our envisaged 18 to 21% range, absent any special unforeseen items. Cash flow generated from operating activities was robust at 4.5 billion euros, reflecting a strong operating profit from continuing operations, offset by increased working capital requirements, mainly due to higher inventories to support sales growth and our further retailization of the group's businesses. Let us now turn to gross capital expenditure, which amounted to 981 million euros. As a percentage of group sales, this item reached 4.4% of sales, broadly in line with a year ago. 48% of gross capital expenditure related to point-of-sale investments, including internal and franchise boutiques, as well as external points of sale. Most of the spend was allocated to boutique renovations, upgrades, and relocations, notably at Cartier. This included renovations on Rue de la Paix in Paris, SKP Mall in Beijing, and Fifth Avenue in New York. Several additional maisons opened stores at the Chengdu SKP Mall in China, including Van Cleef & Arpels, Orchon Constantin, and Delvaux, to name just a few. Other investments, which made up 33% of CapFix, mainly related to IT spend. Finally, manufacturing accounted for the remaining 19% of gross capital expenditure, and related primarily to R&D, increased jewelry capacity and machinery, mostly at the jewelry maisons. Let us now turn to free cash flow, which amounted to €2.8 billion. The €213 million difference mainly reflected marginally lower cash from operating activities, higher capital expenditure, and the non-recurrence of the €86 million proceeds from the disposal of an investment property in the prior year. These items were partly offset by lower acquisition of other non-current assets, given that last year's numbers included the investment in the China joint venture with Alibaba and Farfetch. And now on to our balance sheet, which remains solid, with shareholders' equity accounting for 47% of the total assets. Net cash amounted to 6.5 billion euros at the 31st of March 2023, up 1.3 billion euros over the prior year as a result of the items discussed on the previous slide, and notwithstanding an 810 million euro increase in total dividend cash outflow. The board has proposed a total dividend of 3.5 Swiss francs per one A share or 10 B shares, made up of an ordinary dividend of 2.5 Swiss francs per one A share or 10 B shares, up by 11% over the prior year, and another special dividend of one Swiss franc per one A share or 10 B shares, subject, obviously, to shareholders' approval at the annual general meeting on the 6th of September, 2023. This proposed increase of the ordinary dividend and the additional special dividend reflected the group's strong results, significant cash flow generation, and robust net cash position. Let me now share an update on our ESG progress. In terms of external recognition, Richemont was acknowledged as an industry leader with an AA rating by MSCI for its low exposure and management of ESG risks, notably in terms of responsible sourcing and carbon footprint management. Richemont received a 13.9 risk rating score from the ESG rating agency Sustainalytics for its low risk exposure and strong management, positioning the group among the top 7% of the 20,000 companies rated. The group was also recognized as one of the world's best employers by Forbes for the third consecutive year. On the environment pillar of ESG, Richemont has been acknowledged by CDP for its actions in water management, improving to a B score in 2022 for our second year reporting. This year, for the first time, we disclosed our water withdrawal from surface water and seawater in alliance with GRI standards. A member of the RE100 since 2021, we have reached 97% of renewable electricity across all our sites and are well on track to achieve our ambitious goal of 100% renewable electricity for 2025. We have met another key milestone with a complete phase-out of PVC, as discussed by Jerome already, from our products and packaging. In line with our commitment to monitoring resource consumption and reducing waste, waste sent to landfill decreased by 61% in 2022, amounting to a reduction of 870 tons. Finally, as part of our strategy to manage greenhouse gas emissions, we have successfully migrated 89% of our service to the cloud, reducing our energy consumption and optimizing our data storage. In terms of advancing our social priorities, we value being named one of the most attractive employers in Universum's national rankings for Switzerland, France, and China. These accolades affirm Richemont's commitment to offering a strong workplace culture based on trust and creating opportunities for our people. We're notably fully certified gender equal pay by the Equal Salary Foundation in Switzerland and France, two of our largest markets in turn of headcount, and are on track to become 100% equal pay certified worldwide by next year. Our group has a healthy gender balance, the percentage of women reaching 57% of the total workforce, 40% of our senior executive committee, and 31% of our board. Now turning to governance, where we initiated comprehensive changes across our group functions, regions, and to fully integrate ESG principles into our strategic and operational decision-making processes. Reinforcing the importance of this transversal discipline, we appointed Dr. , the group's chief sustainability officer, to the senior executive committee. Taking compliance-driven approach, our ESG reporting is now in accordance with the GRI standards. We have added content to meet new EU and Swiss regulatory requirements, including the new Swiss conflict minerals and child labor due diligence and transparency obligations. Long, long title, I know. As well as the EU's corporate sustainability reporting directive. We have further strengthened our ESG frameworks foundations, with priorities drawn from an updated double materiality matrix to best identify and assess ESG impacts. Finally, we upskilled our 250 business leaders, including all the CEOs of our maisons and regions, with dedicated ESG trainings. We also rolled out a global training on the use of our new internal speak-up platform. As a next step, we will extend the platform to external stakeholders to allow them to voice their concerns and contribute to Richemont's ongoing commitment to transparency and ethical conduct. And now I hand back over to you, Jerome.