Broadway - Theater - The New York Times

Broadway - Theater - The New York Times

THE ANNUAL REPORT ON THE YEAR 2006 APPROVED BY THE BOARD OF DIRECTORS

CONSOLIDATED SALES: +13.6% - NET INCOME: +9.8% - DIVIDEND: +30%

- Consolidated sales: E1,963.3 million (+13.6% vs 2005: E1,728.0 million)

- Operating result: E230.4 million (+18% vs 2005: E195.2 million)

- Net income: E157.2 million (+9.8% vs 2005: E143.2 million, +24.2% vs 2005 adjusted E126.6 million)

- Net financial debt: E340.9 million (vs E333.5 milion as at 31/12/2005)

- Proposed dividend: E0.65 for each share (+30% vs E0.50 in the year 2005)

Milan, 22nd March 2007 - The Board of Directors of Valentino Fashion Group S.p.A., held today in Milan, approved the Company´s and the Group´s accounts for the year ended at 31st December 2006, along with the Directors´ Report. The said documents will be published pursuant to the law.

the group [1]

Sales

Consolidated net sales amounted to E1,963.3 million in the year 2006, up by 13.6% from E1,728.0 million in the previous year.

The growth was the result of the positive trend of sales achieved by all the business units, which showed double-digit growth rates.

(EUR millions) 

2006 

2005 

Var. % 

Hugo Boss  1,495.5  1,309.4  14.2  Valentino  239.5  209.1  14.5  Marlboro Classics /Other brands  293.3  266.3  10.1 ()  Other and elisions  -65  (56.8)    Total  1,963.3  1,728.0  13.6 

() +12.5% on like-for-like brands marketed

Main contributors to the 2006 performance of all brands were the brand extension and the increase in the directly operated stores (DOS).

In particular:

- sales of the women´s collections reached E420 million, rising by 36% (Boss +69%, Valentino +15%, Marlboro Classics +52%, M Missoni +39%);

- sales of footwear and leather accessories increased by 27% to E211 million (Boss +28%, Valentino Garavani +34%);

- the expansion of the directly operated stores network, 76 new openings during the year, supported a 28% rise of sales. With E302 million, the ratio of direct sales to consolidated sales thus rose from 14% in 2005 to 15% in 2006. Directly operated stores were 284 at year´s end.

In 2006 sales showed a positive development trend on all markets.

(EUR millions) 

2006 

2005 

Var % 

Italy  209.0  188.1  11.1  Germany  355.8  324.2  9.7  Other European Countries  780.0  670.0  16.4  Americas  343.6  295.1  16.4  Asia  180.2  164.5  9.5  Other countries  31.7  27.4  15.7  Total products and services  1,900.3  1,669.3  13.8  Royalties  63.0  58.7  7.3  Total  1,963.3  1,728.0  13.6 

EBIT

Year´s EBIT was E230.4 million (11.7% on sales), up by 18.0% on E195.2 million in 2005 (11.3% on sales), thanks to progress reported by all brands. In detail:

(EUR millions) 

2006 

2005 

Var. % 

Hugo Boss  184.4  162.9  13.2  Valentino  31.3  27.4  14.2  Marlboro Classics/other brands  19.7  15.0  31.3  Other and elisions  (5.0)  (10.1)    Total  230.4  195.2  18.0 

Pre-tax result

Pre-tax result was E216.9 million, increased by 19.4% on E181.6 million in 2005.

Taxes

Taxes amounted to E59.7 million in the year 2006, with a 27.5% impact on pre-tax profit (21.2% in 2005). 2005 tax rate benefited from the extraordinary effect of the revaluation of some assets made pursuant to Italian Budget Law. The adjusted tax rate would have been 30.3% of pre-tax profit.

Net income

Consolidated net income, including income attributable to minority

shareholders, was E157.2 million (2005: E143.2 million), a 9.8% increase. After considering last year´s fiscal extraordinary effects, net income would have risen by 24.2% on 2005[2] adjusted income (E126.6 million).

Group net income

Net income attributable to the Parent Company´s shareholders was E95.2 million, 5.2% higher than in the previous year (E90.5 million), while the positive change would be equal to 28.8% if compared with 2005 Group´s adjusted[3] net income (E73.9 million).

Staff

Group´s employees were 10,988 at 31st December 2006, against 9,844 at 2005 year´s end. The staff increase was mainly attributable to Hugo Boss expansion of in-house production capacity and logistics, as well as the to direct retail development.

Investments

Year´s investments amounted to E118.9 million (2005: E95.1 million). The most significant were projects relating to the direct retail business and distribution network, Hugo Boss extension of production capacity and expansion of some operating sites, as well as the upgrade of the Group´s information technology.

Net financial debt

Group´s net financial debt was E340.9 million as at 31st December 2006, against E333.5 million at last year´s end and E392.9 million as at 30th September 2006.

VALENTINO FASHION GROUP S.P.A. [4]

Sales

The Parent Company´s sales amounted to E251.4 million.

Net income

Net income was E41.0 million.

Net financial debt

Valentino Fashion Group S.p.A. net financial debt was E233.4 million as at 31st December 2006.

Shareholders´ equity

The Parent Company´s shareholders´ equity amounted to E240.4 million at 2006 year´s end.

PROJECTIONS FOR 2007

In 2007, Valentino Fashion Group will continue to register organic growth at a sustained pace along the lines set in 2006: development of the women´s lines, the footwear and accessories collections, and direct retail.

The sizable wholesale backlog and the direct retail performance in the first two months support expectations and our projection for significant revenue growth - at comparable exchange rates - in 2007. Management also expects to improve profitability in 2007, with operating and before-tax income rising more than proportionally to the increase in turnover. Chairman Antonio Favrin of Valentino Fashion Group S.p.A. says, "We are encouraged by these results: the combination of the prestigious fashion & luxury brand portfolio ensures the Group huge opportunities for growth through brand extension. The hallmarks of our brands are volume and innovative forms of communication, expressing modernity, the joy of living, style, and also art and culture: this will be the engine of growth for us in the major markets, to increasingly capture the attention and favour of new consumers. We are present throughout the world with a highly advanced integrated distribution and logistics platform.. With major investment and deep passion, we have built systems, organisational structure, and innovation to compete in distribution and to respond to consumers´ new desires. These will be the key points in our development strategy."

DIVIDEND DISTRIBUTION

The Board of Directors will propose that the Shareholders´ Meeting approve a dividend distribution totalling E48.2 million (E37.1 million in 2006), to be paid on 24th May 2007 (coupon detachment date: 21st May 2007) equal to E0.65 for each of 74,106,302 ordinary shares.

CALL FOR ORDINARY SHAREHOLDERS´ MEETING

The Board of Directors has resolved to call an Ordinary Shareholders´ Meeting for 10 May 2007 on first call and 11 May 2007 on second call, to adopt resolutions on the following agenda: 1) resolutions pursuant to art. 2364, points 1 and 2, of the Italian Civil Code; 2) extension of the Independent Auditors´ mandate to adjust duration of the term to that prescribed by art. 159, paragraph 4, of Italian Legislative Decree 24 February 1998, no. 58, as amended by Italian Legislative Decree 29 December 2006, no. 303.

This press release is available on the Company´s website: www.valentinofashiongroup.com

For further information: Investor Relations Tel. 02/62491442 e-mail:

Consolidated income statement

Income statement

Income statement  

 

 

 

 

 

 

  2006     2005     Change   Ch. in %   (millions of euro)               Net sales   1.963,3   100,00%   1.728,0   100,00%   235,3   13,60%   Cost of goods sold   (1.006,9)   -51,30%   -910   -52,70%   -96,9   -10,60%   Gross profit   956,4   48,70%   818   47,30%   138,4   16,90%   Product research and development costs   -56   -2,80%   -47   -2,70%   -9   -19,10%   Advertising, marketing and promotion costs   -142,7   -7,30%   -128,1   -7,40%   -14,6   -11,40%   Selling and distribution costs   -370   -18,80%   -307,7   -17,80%   -62,3   -20,20%   General and administrative costs   -144,4   -7,40%   -133,6   -7,70%   -10,8   -8,10%   Operating income   243,3   12,40%   201,6   11,70%   41,7   20,70%   Other non-recurring (costs)/revenues   -12,9   -0,70%   -6,4   -0,40%   -6,5   n.s   EBIT   230,4   11,70%   195,2   11,30%   35,2   18,00%   Net financial income/(charges)   -13,5   -0,70%   -13,6   -0,80%   0,1   0,70%   Income before taxes   216,9   11,00%   181,6   10,50%   35,3   19,40%   Taxes   -59,7   -3,00%   -38,4   -2,20%   -21,3   -55,50%   Net income before minorities   157,2   8,00%   143,2   8,30%   14   9,80%   Minority interest   -62   -3,20%   -52,7   -3,10%   -9,3   -17,60%   Group net income   95,2   4,80%   90,5   5,20%   4,7   5,20%  

Note: Valentino Fashion Group S.p.A. is the beneficiary company of the partial proportional demerger, effective from 1st July 2005, of the apparel business of Marzotto S.p.A. As a consequence, in order to allow a homogenous comparison of the year 2006 financial and economic results with those of the previous year, pro-forma accounts for the year 2005 have also been prepared.

Consolidated balance sheet

Balance sheet 

 

 

 

(millions euro)  31.12.06  31.12.05  Change  Trade receivables  264,1  242,9  21,2  Other receivables  84,9  73  11,9  Inventories  391  349,1  41,9  Trade payables and other liabilities  -372,5  -337,8  -34,7  Net working capital  367,5  327,2  40,3  Other non-recurring assets1  120,3  109,8  10,5  Investments  0,4  0,4  -  Net tangible fixed assets  285,9  253,3  32,6  Intangible fixed assets  96  87  9  Goodwill and trademarks  304,2  303,7  0,5  Medium/long-term assets  806,8  754,2  52,6  Non-current liabilities and provision  -114,8  -85,3  -29,5  Deferred taxes provision  -51,2  -47,6  -3,6  Net invested capital  1.008,3  948,5  59,8                  Short-term financial liabilities  174,2  191,1  -16,9          Cash & cash equivalents and short-term financial assets  -66,6  -75,6  9          Medium/long-term financial liabilities  233,3  218,4  14,9  Medium/long-term financial assets  -  -0,4  0,4  Net financial debt  340,9  333,5  7,4  Minority interest  246,2  234,8  11,4  Group net equity  421,2  380,2  41  Financing of net invested capital  1.008,3  948,5  59,8 

Income statement of Valentino Fashion Group S.p.A.

Income statement  

 

 

 

 

  2006     2005     (millions of euro)           Net sales   251,4   100,00%   124,3   100,00%   Cost of goods sold   -169,8   -67,50%   -81,9   -65,90%   Gross profit   81,6   32,50%   42,4   34,10%   Product research and development costs   -7   -2,80%   -3,3   -2,60%   Advertising, marketing and promotion costs   -7,7   -3,10%   -4,2   -3,40%   Selling and distribution costs   -35,2   -14,00%   -16,6   -13,40%   General and administrative costs   -21   -8,40%   -9,6   -7,70%   Operating income   10,7   4,20%   8,7   7,00%   Other non-recurring (costs)/revenues   -1   -0,40%   -2,5   -2,00%   EBIT   9,7   3,80%   6,2   5,00%   Net financial income/(charges)   -7,2   -0,40%   -1,9   -1,50%   Dividends from consolidated participations   40,9   16,40%   30,2   24,30%   Income before taxes   43,4   17,30%   34,5   27,80%   Taxes   -2,4   -1,00%   3,6   2,90%   Net income   41   16,30%   38,1   30,70%  

Note: Valentino Fashion Group S.p.A. is the beneficiary company of the partial proportional demerger, effective from 1st July 2005, of the apparel business of Marzotto S.p.A. As a consequence, any comparison with the previous year are not significant as the figures for the year 2005 mainly referred to the second year half.

Balance sheet of Valentino Fashion Group S.p.A.

Balance sheet 

 

 

(millions euro)  31.12.06  31.12.05  Trade receivables  100,5  91,7  Other receivables  7,3  5,3  Inventories  52,3  40,3  Trade payables and other liabilities  -102,1  -93,7  Net working capital  58  43,6  Other non-recurring assets1  13,8  14,1  Investments  395,5  395,5  Net tangible fixed assets  13,6  11,5  Intangible fixed assets  9,2  9,3  Medium/long-term assets  432,1  430,4  Non-current liabilities and provision  -15,6  -16,2  Deferred taxes provision  -0,7  -0,8  Net invested capital  473,8  457              Short-term financial liabilities  -202,9  -214        Cash & cash equivalents and short-term financial assets  10  10        Medium/long-term financial liabilities  -159,5  -136,1  Medium/long-term financial assets  119  119  Net financial debt  233,4  221,1  Net equity  240,4  235,9  Financing of net invested capital  473,8  457 

[1] 2006 consolidated figures are compared with 2005 pro-forma ones, as the Group has been operational since 1st July 2005.

[2] Net income (2005 annual accounts: E143.2 million) - 2005 extraordinary positive effect (E16.6 million)

[3] Group net income (2005 annual accounts: E90.5 million) - 2005 extraordinary positive effect (E16.6 million)

[4] As per the reasons stated above, a comparison with previous year´s results is not available

Copyright Companynews

The appendixes relating to the press release are available on:

http://www.companynewsgroup.com/documents/PJ/CO/2007/117157_88_A18H_VFG2007ing.pdf

[CN#117157]

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