- XL~'L-
ROTHMANS INTERNATIONAL PLC
COMPETITOR ANALYSIS FROM RFPORTS AT 31 MARCH 1991
it 1-1
Source Data Available
Richemont A.G. Accounts
Rothmans International Pic Accounts
Barclays de Zoete Wedd Analysis
County Narwest Woodmac Analysis
Barclays de Zoete Wedd Analysis
Rothmans Holdings Ltd. Accounts
Rothmans Industries Ltd. Accounts
Rothmans of Pall Mall Malaysia
Rothmans Inc. Accounts
Smith New Court Research Analysis
James Cape] & Co. Analysis
James Capel & Co. Analysis
Fergusson Bros, Hall Stewart & Colne
Reuters, Times, Financial Times,
Investors Chronicle, etc. extracts
Date Coverag
March 1991 Whole Group results.
March 1991 Tobacco Subsidiaries/Assocs and
luxury goods
March 1990 Rothmans Int. Plc - next issue
August 1991
April 1991 Rothmans Mt. Plc
Dec 1990 Rothmans Holdings Ltd : Australia,
New Zealand, Philippines,
Indonesia, Fiji, Papua New Guinea,
W. Samoa
March 1991 Australasia, Asia and Pacific
June 1990 Singapore
March 1991 Malaysia
March 1991 Rothmans, Benson & Hedges Inc.,
Rothmans Inc., Canada
March 1991 Rothmans International Pic
July 1991 Rothmans International Pic
July 1991 Richemont Unbundled value
July 1991 Pichemont group analysis
Rothmans & Subs., Ricbemont SA,
Tabacalera, Nijkerk plant closure,
Malaysia manufacture change etc.
OWNERSHIP OF ROTHMANS IN"T'17RNATIONAL PLC
Rothmans is a Netherlands subsidiary of Richemont
S.A., Luxemburg, a. 100% owned subsidiary of
Richemont A.G., Switzerland. The holding in
Rothmans Intemational Pic by Richemont S.A. is
through
Rothmans Tobacco (Holdings) Ltd: 99.9% of the
Ordinary Shares, 60.5% of the 'B' Ordinary Shares,
and 100% of the Preference Share Capital.
Richemont has control of68.2% of the voting
rights, and
62.8% of the Ordinary and 'B' Ordinary share
capital. The group structure is per Elie attached
chart.
(Appendix I of the Analysis). The above date
appears on page 109 of Richemont accounts.
A contingent liability is reported by Richemont
S.A. in respect of the purchase by Rothmans
Tobacco
(Holdings) Ltd., Jersey, a 100% Richemont S.A.
subsidiary, of the 29. 1 % holding of'B' Ordinary
Shares of Rothmans International Pic acquired from
Philip Morris in December 1989 for E612.7 mn, by
issue of 10.25% Transferable Loan Notes, to mature
on 15 October 1994.
References to pages below refer to Rothmans
International Pic accounts unless otherwise
stated.
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BATCo document for Province of BritiSh Columbia 25
October 1999


STRATEGY
1. Organisation Intepration
a. Richemont and Rothmans are uniting 'at the
Senior management level, echoing the close
working relationship that is being developed
between the two orglaisations'. See Board of
Director changes in this Analysis and Richemont
Chairman's Report.
b. Rothmans International Business Review states
'it is organising to med the challenges and
opportunities of world markets by reshaping its
management structure. The changing needs of
the market place call for a more integrated form
of organisation, to reaRse the full potential of
the Group's international tradennarks as wil as
its strong national brands'.
c. Marketing and brand strategies are being
closely coordinated by the Chief Executive -
Tobacco
with his senior management tearri.
d. Rothmans International Plc Chid Executive
Tobacco, Mr. V.P. Ryan, joined the Overseas
Boards of Malaysia and Singapore during the year,
and is on the Australia Board with the
Chairman, Lord Swaythling.
2. Sirateizic Inte2r2tion
a. The 'evolution of the EEC towLrds a single
market" calls for strategic integration. The two
investments of Theodorus Niemeyer B.V. and P.J.
Carroll form part of the strategy to
strengthen Rothmans position in Europe. On June 8
1991 Rothmans has announced the
closure of Nijkerk factory for pipe and rolling
tobacco production. Further rationalisation
could follow.
b. 'The 1989 purchase of the minority shareholding
in Tobacofina demonstrates the Group's
cornmirtment to the developmer-, of its EEC
tobacco business on a fully integrated basis".
c. The geographical growth of the European
operating profits of Tobacco and Dunbill from
(Z80.6 ran 1990 to f 122.5 mn 199 1) by 52 % does
not appear in the estimates of the individual
companies' resulLs, and it is surprising since
these are stated as static or declining market
volumes. It appears that the accounting treatment
of European profit, or of new investments in
Europe is responsible.
3. OualilX
The strategy for growth encompasses total quality
commirtzrient, and top quality brand name
images, to secure high margins and high quality
European earnings. The spin offbenefit of the
top quality brand name Dunhill is e,;ident in the
high margin 22% (26% - 1990) in spite of the
Gulf War's adverse effect on international travel,
and the economic recession. The luxury names
Cartier and Piaget have also perfbrrn-~d well,
operating profit + 9.3%, in the circumstances.
4. Imoroved Operatine Cost EMcienc,
The theme of Cost Efficiency is repeated
throughout the accounts, and continues the Policy
of
earlier years.
The low increase in Variable Costs - 2% in
Sterling, and in Administration Costs + 5%, arise
on similar Net Turnovers, up 3% aW volume up 8%
worldwide. However, Excise Cost is un
increasing as a % ofTurnover from 57.49o' in 1990,
to 59.8% in 1991. Although reference is CD
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October 1999


3
made to high taxation in Canada, the inc-ease in
Excise is more likely to reflect the increase of
European earnings including the new intstments in
Europe.
Productivity improvement is evident from worldwide
volumes up 8% and 4% increase in tobacco
employee numbers.
S. New Markets in F-tem Europe. Asia 3nd China
Poland and USSR (Page 12) are medium and long term
sources ofgrowth and profitabi.lity.
(Volumes up 250% in 1991). Asia/Paci-Ific -
Malaysia, Indonesia, Philippines, provided
profitability and market share gains, and :be
whole region provides scope for growth (Page 12).
China - The joint venture with Shandong Tobacco
Corporation follows 5 years of close technical
support and tobacco growing, and providts an entry
point to "the world's largest tobacco market'
(see Page 14).
IROT14MANS INTERNATIONAL PT C
Board or Directors Chanepq
Executiv
Appointed: Johann P. Rupert Execzive Deputy
Chairman, 3rd September 1990
William P. Ryan Chief'-2xecutive Tobacco, Ist
January 1991
Jan. P. du Plessis Groun Finance Director - on
death of predecessor,
Mr. kfalcomThompson, December 1989.
Note:
1. Johann P. Rupert is Managing Director of
Richemont A.G., and was Non-Executive Director of
Rothmans Int. Pic.
2. William Ryan was Chief Executive C>Fz--r of
Rothmans Holdings Ltd., and joined Rothmans
Int. Plc Board 3rd July 1990.
3. Jan P. du Plessis is Finance Director
ofRichemont.
4. Lord Swaythling, Executive Chairman Rothmans
International Pic, has also become Non-
Executive Director, Richemont A.G.
Non-Executive
Appointed 1990:
Mr. Joseph Kanoui, is Execut-ve Director of
Richemont A.G. and Chairman of Cartier
Monde S.A.
Lord Douro, EEC Parliamenr-v member 1979/89, other
directorships and Deputy
Chairman Dunhill Holdings lyc.
Emst J. Verloop, Former Director Unilever NV &
Pic, Chairman of Board of
Supervisors, Tur7nac.
ne full list of current Directors is pubi ishe~ in
the Accounts.
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BATCo document for Province of BritiSh Columbia 25
October 1999


4
Accuisitions durine the vear
Consideration Net Assets Goodwill
E mn f ran f ma
TheDclorus Niemeyer B.V., Netherlands July 1990
73.3 37.8 35.5
P.J. Carroll & Co. Pic, Rep. of Ireland April 1991
70.9 5.6 65.3
Dunhill Holdings Pic 13.6 2.7 10.9
Others -I& _U ~U
161.4 46.4 115.0
Share of Goodwill of Associates -12
Total Goodwill Arising written off against
reserves U7_2
Notes: Theodorus Niemeyer BV is engaged in Pipe
and Cut Tobacco manufacture and becomes a
100% Subsidiary of Rothmans International Pic.
P.J. Carrol I & Co. P1 c shareholding was
inc.-ea.sed from 38.7 % to 100 % by acquisition of
the
outstanding 61.3%, in the offer which becarne
unconditional in December 1990.
Dunhill Holdings Pic shareholding was incre-,sed
from 55% to 56.9%, thereby increasing the
ownerships of its subsidiaries, Alfred Dunhill
Ltd. and Chlod S.A., luxury consumer products,
and Montblanc-Simplo GmbH (writing instruments)
from 55% to 56.9% each.
Others: These appear to be -
Tobacofina-Vander Elst N.V.; holdirg increase from
98% to 99% Ord. Shares
Rothmans Inc. Canada First Preferred Shares-
holding increase from 27% to 28%
After year end the Company announced the
acquisition of 3.93 % of Tabacalera. S.A. by
purchase of 1.45
million shares from Caja Madrid savings bank.
Rothmans International Plc Results
I . See Appendix U analysis of Results by
CompanytRegion.
2. 0,,er-all Prorit & bass Summarv:
I"I I"o
EM Emn
Net Sales Revenue (All) B 2293 2220
Group Operating Profit A 400.1 369.9 + 8.2%
Share of Associates 77.0 -~U + 17.9%
Consolidated Operating Profit 477.1 435.1
Net Interest Receivable 65.4 49.4 + 32.3%
Profit Before Tax D 542.5 484.5
Taxation C M i0A
Profit after Tax 342,7 297.7
Taxation Rate CID 36.8% 38.6%
Margin on Net Sales A/B 17.5% 16.7%
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October 1999


5
3. The company has achieved improved margins on
Net Sales, and improved Tax efficiency.
4. Net Interest receivable is substantially higher
on the Cash less Borrowings of E713.6 mn shown on
Page 36. The Funds generated from operations
E268.8 mri were mainly used to acquire businesses
E161.4 mn, or pay dividends E105.9 mn.
5. Adverse exchange movement principally fl/USS
has reduced consolidated operating profits by
E25 mn.
6. Turnover growth has been marked (+23%) in
Continental Europe as shown below, and profit
growth in Europe + 52% (1991 E122.5 mn, 1990 E80.6
mn) see Page 26. The accounting
treatment of new investments Tobacofina, and
Theodorus-Niemeyer may well be exaggerating the
apparent margin improvement.
Turnover: Geoeranhical Analysis
min
U.K. 441.6 411.0 + 7%
Continental. Europe 1) 1027.7 836.6 + 23%
Asia Pacific 625.4 749.9 17%
Middle East/Africa/India 11.5 22.7 49%
Americas 255.5 260.4 2%
Less: Inter segment sales (69-1) (60.6 -
2292.6 2220 + 3%
Cost of Sales + 2%
Gross Profit 655.6 622.6 + 5%
Distribution Costs (64.1) (57.6) + 11%
Administration Costs (196.2) (187.3)+ 5%
395.3 377.7 + 5%
Income from fixed asset investments 1.6 1.8
Other operating income (expense) -2-2 J9 _71
Operating profit of Company and subsidiaries 4001
JLM
The economy drive on costs has been apparent on
Cost of Sales and Administration Costs.
Emolovee Numbers 1991 im Im
Total. 22190 2L4U IM&
Analysis
Tobacco 20226 *19463 12017
Dunhill 1964 1 U4 Im
Per 1990 Accounts
Tobacco 11961
Dunhill J245
12 M
Represents New Subsidiaries added to group
Luxurv Busin--gs 1991 1990
The margin on trade in Dunhill remains high: L=
Fran
Operating Profit 49.4 55.1
Net Sales 227 208
Margin % 22% 26%
Profit improved from share of Cartier Associate Ln
by 9.3% 71.4, 65.3.- CD
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The company will be claiming tax incentives for
restructuring share capital, and also Reinvestment
Allowance from 1991 onwards, and discuss reopening
the 1996 assessment.
N12121sia
The Company has reached agreement with RJR, for
RJR to manufacture Philip Morris Marlboro from
Ist January 1992.
Total dividends of 421h sen gross (1990 30 sen
gross) are payable from earnings per share of 0.65
sen
and 0.37 sen 1990 (9 months) respectively.
Director: W.P. Ryan Chief Executive Rothmans
International Pic was appointed
Ist September 1990, replacing Mr. M.A. Thompson
(deceased).
Sinraoore
In difficult trading conditions from falling
domestic volumes and government restrictions,
operating
profit increased 20% (page 20 Business Review) for
6 months to 31st December 1990. 71e accounts
disclosed as an extraordinary item the sale of
Vend6me Holdings SA to Partnership in Industry
Ltd. for
USS 8,250,000. The company also acquired the
balance of shares for control of Rotraco Exports
Pic
Ltd., for US$ 500,000.
Rothmans Inc. Canada
The total maket declined by 4%, in a restrictive
regulatory environment and under heavy tobacco
taxation. A specW dividend of $88 million was paid
during the year diminishing cash.
I.C.L. Milne
9 th August 1991
ICLM/jmb
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BATCo document for Province of l3ritiSh Columbia
25 October 1999


APPENDIX I
...... nt AG
Compagnic Financiire Richemo
52!::: 1 $22' C
Units
Richemont SA
6
Rothmans International p.l.c.'
Europe
~6
1-.: Sla,- 13-kinan. AG
ICO Fj Cirroll and Company plc
100 Rothmans In-in-al E,p-,
(E.r.p,) L.m-d
I Rothmans International
Tob- (UK) Um-d
I R.,hman, .1 Pall Mail L,,.td
- 1C.' % Shimmelp-ninck Si;aren-abricken BV
- 10C % Sigire-fabrick Ed. Laurens BV
- I ~^: '. Sullart, AG
-S-9"~, T~b-fin.-V.d,r El,, Nk
- I CC Theodor- Nime% er BV
- 1:: Tu,- Tba-~ C.,npan, BV
NUddle East & Africa
-I C: Rothmans Exports Limited
Asia P2CifIC
1 ::'. R.,hntan, ,i Pall.\bll
(A.-A., I L--J
1 ::'n R.,htnan, of Pall Mall
,N- Z,ala.d~ L--~
w l"IdlMall
B~rh,
Americas
- 17 C,-- G-p Urn-d
- 1:0 % L- Lim-d
- 71.2 % Rothmans Inc
L 6:.:". R,,,h.,n,.
B-on & Hdg,, 1-
- 1:: ".. Toba-, Exporter, Inicritat-all
(USA, L,mi.,J
TOBACCO
Luxco SA
1
1 ;**.. 31. 1*.
L
Cartier Monde A
p--g .mp~ni.
IPB.',l HoIjing SA
6 :.
I
PBM International
Holding SA
Baurne & Xlerc- operating companin
pu~': P--; comp--
Dunhill H ings
A' PLC
- 1-:% Alf,~d D-hdl L,m,,,d
- I::".. Chl- SA
- 1::". Slon,blan,-S~ p,o GmbH
A. Sulk, & Conip,..,
LUXURY GOODS
N..h Arn-c. R-u-, L,.i,,d 5 C
B.,m- C-trol SA
R~~hemont Internitionil U.-ted 1::".
R,~h-n, S-r,-, AG
OTHER GROUP COMPANIES
101
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BATCo document for Province of BritiSh Columbia 26
October 1999


APPENDIX II
:""MAN' IM1111AIIINA1. 111.11MI1111011 A111YS11
1991
EVISI S
STIKATE TOBACCD OPERATING PROFIT
GROUP SUBSIDIARIES TRADE AREA
MARTIN B INKKAwM
: GERKANY,EXPORTS
TA BACOFI
A VANDER-ELST IIELGIUM,AFRICA
AOTHM.SELGIUM HOLDINGS ROLLAND, SWI TZE R LAND,
EXPOR TS
TURMA EXPORTS
ROLLAND FRAMCE
THECDORUS NIEMEYER ,
BDLLAND:GERMAM
P-j-CARIOLL IRELAND
HS r
IOT HKA U._
ENGLAKD,EXPORT
1 OT`MANS INC. CA A SEE WORKING
ROTHMANS HOLDINGS LTD MJSTRALIA,ASIA
40 TMKANS INDUSTRIES SINGAPORE
ROTH14ANS PAL L MALL MALAYSIA
ADJUSTRENTS/COMPARATIVE CHANGE
ROUNDING
SUBTOTAL
LAKSON/CARRERAS/PJ CARROLL
ASSOC IATES
70 TAL TOBACCO BUSINESS
SUMMARY:
CANADA
OTHER SUBSIDIARIES
AUSTtALIA,ASIA
SI NGAPORE
MALAYSIA
$U11 TOTAL
SUR TOT L
LAKSO./CARRERAS/PJ CARROLL
ASSOCI ATE5
TOTAL TOBACCO BUSINESS
11 UNHILL
W TI "
SIX TOTAL
I)THER BUSINESS (CO4PARATIVE ALTERED)
OPERATiNG PROFIT
NET INTEREST
PROFIT BEFORE TAX
WCRKIWGS
PUBLISHED ACCOUNTS DATA
IM XKANS INC.
10 MMANS HOLDINGS LTD
ROTHMANS INDUS TRIES LT~,
ROT HAU S PALL KA LL BER
SINGAPORE WORKINGS
CWSOLIDAtED
OCHS OP.PROFIT
EXTRAOR' IMARY ITEM
MET INTIRE 17
CONS OP I:AOFI T
EXTR.CR6 ITEM
AVERAGE EXC:AYNGE RATE
SMITH IEWCOUR '
.CKAXGE RATE TABLE 10 EI
D-M '
IELG. FR.
GUI LOER
IRIS" PUNT
U.S. $
CANADIAN S
MALAYSIAN S
SIJIGAPORE
"TZALIAM$ 2
JAMAICAN S
RATWEST NATWEST MATWEST
WOWKAC WOMMAC WDOOKAC
ESTIMATE ESTIMATE REVISED
1990 1991 1991
E Mw
N
M
I
9
0 Ia ; I
O
'
i
1
9 :
0 18:5 is
s
a.0 7.5 7:5
.5 11.0 45.0
9.0 9.0
3.5 3.5
45.6 47
* /.11-
*
48.6 :
2 0 6.
2
so 0 74 0 79 5
16 :0 14:0 19:2
46.4 54 .0 58.6
5.4 3.2
0.1
324.5 335.0 351.5
4.D 3.5
5.2
320.5 339.5 356.7
48.6 52.0 S6.2
133.5 141.0 137.9
so 0 74 0 79 5
16 :0 14:0 19:2
46.4 51..a 5a.6
142.4 142.0 157.4
324.5 335.0 351.5
.4.0 3.5
5.2
320.5 338.5 356.7
49.4 57.D 55.1
65 3 73.5 71 /.
114:7 130.5 126:5
-0.1 -11.0 .6.I
435.1 1.61.0 477.1
49.4 51.0 65.4
484.5 512.0 542.5
GROWTH
%
16.7
-2.6
-6.3
-3.2
3.1
15.7 SEE WORKINGS
-0.6 SEE WORK,1:GS
20.2 SEE WORK GS
26.4 SEE WORKINGS
PER ACC HIS
PE ACCOUNTS
FROM PRO RATA FROM
ACCOUNTS TEAR ACCOUNTS
1990 1990 1"1
CMM. ENw. EHN.
YEAR 48.6 56.2
9 MONTHS 56.7 75.6 79.5
YR 31/12/90 11:2
9 MONTHS 35.7 47.6 5a 6
YR 1/2YR YR 1/2YR YR
30/6189 31112/89 30/6190 31/12/90 31/12/90
S MN
38. MM:2
5 26.1 531 32.5 59
130 13.0
6.9 4.9 8.8 6.7 10.6
15 a.4 96.0 195.3 105.6 204.9
31.7 21.5 4 .3 Z5.8 48.6
1'3.0 13.0
3.2
19811/9 1989/90 1990/91 1991/92
MARCH K&RCN MARCH MARCH
3.2 3.0 2.9 3.o
66.6 62.2 59.8 60.9
3.6 3.4 3.3 3.3
'.9
I'IS I'6 1,9 2,0
2 1 1 9 20 2.1
4*7 4's 4'a 5.0
3 5 3-1 3:12 3:3
2'2 2.2 2 2 3
9.5 9.5 13.2 13.2
A:.,~:SIED 1990 1991 TO S-IT CO-S RATES
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BATCo document for Province of British Columbia 25
October 1999