Geox S.p.A books slight rise in 2008 net profit on higher sales

05 Mar '09

6 min read

Operating expenses and Operating Income (EBIT)
FY 2008 selling and distribution costs, as a percentage of sales, remained the same as the previous year at 4.8%. General and administrative expenses have increased as a percentage of sales, mainly because of the costs involved in opening and running the directly operated stores (DOS), in particular the flagship stores. Advertising and promotion costs were equal to 7.5% of net sales versus 8.1% in 2007. EBIT has been adjusted for Euro 2.0 million non-cash extraordinary costs, relating to stores asset impairment, that given the current macroeconomic scenario are not certain to be recovered.

Income taxes and tax rate
The adjusted tax charges were Euro 44.7 million, compared with Euro 55.4 million in the previous year, with an adjusted tax rate of 27% compared with 31% in 2007. 2008 adjusted tax rate is mainly affected by the reduction in the Italian corporate income tax rate (IRES) from 33% in 2007 to 27.5% in 2008 and by an operation carried out in the second quarter in accordance with Law 244/2007 (Budget Law 2008), which again made deductible the higher net value of certain asset items for statutory purposes compared with their residual value for tax purposes. The adjusted tax rate for 2008 does not include Euro 3.9 million write-down of deferred tax assets, the recoverability of which is not certain given the current macroeconomic scenario.

THE GROUP'S FINANCIAL PERFORMANCE
The Group shareholders' equity rose from Euro 357.0 million as of December 2007 to Euro 427.5 million mainly thanks to the net result of the period, while Geox net cash position was equal to Euro 58.2 million (Euro 106.8 million at the end of 2007).

The net working capital ratio on sales shows an increase over the equivalent period in 2007. This is mainly due to the increase of inventories caused by early receiving of Spring/Summer products compared to the previous year.

The free cash flow of 2008 is negative for Euro 10.7 million (positive for Euro 74.1 million in 2007), mainly due to the increase in capital expenditure (Euro 94.3 million in 2008 vs. Euro 42.7 million in 2007). During 2008 Euro 62.2 million of dividends were distributed (Euro 38.8 million in 2007).

FINANCIAL STATEMENT OF THE PARENT COMPANY, GEOX S.P.A.
The Board of Directors also approved the financial results of Geox S.p.A., the group's parent company, for the year ending December 31, 2008 and the annual corporate governance report.

Sales reached Euro 781.7 million from Euro 697.2 million in 2007. Net Income was Euro 82.4 million (Euro 87.9 million in 2007) with a 11% margin.

Shareholders' equity at the end of December 2008 amounted to Euro 452.7 million from Euro 418.0 million at the end of 2007. Net financial position was positive for Euro 88.6 million, from Euro 93.9 million at the end of 2007. Geox 2008 financial statements are subject to the approval of the shareholders' meeting, scheduled for 21 April 2009 at first calling and 22 April 2009 at second calling.

DIVIDEND
The Board of Directors has decided to propose to the Shareholders' Meeting the distribution of a dividend of Euro 0.24 per share (pay-out of around 53%). The shares will go ex-coupon on 18 May 2009 and dividends will be paid on 21 May 2009.

OTHER RESOLUTIONS
The Board of Directors has decided that the second tranche of options deriving from the stock option plan approved in November 2004 and the first tranche of options deriving from the stock option plan approved in December 2005 can be exercised.

The Board has also decided to submit for the approval of the next Shareholders' Meeting a new stock option plan in favour of managers and collaborators of the Company. The plan involves a block of shares forming part of the increase in capital authorized by the General Meeting held December 2008.

Geox S.p.A.

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