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Article Excerpt
OPERATOR: Good afternoon ladies and gentlemen. This is the Chorus Call conference operator. Welcome, and thank you for joining Folli Follie Group full year 2008 financial results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. (Operator Instructions).
At this time I would like to turn the conference over to Mr. George Koutsolioutsos, Vice President of Folli Follie and President of Hellenic Duty Free and Elmec.
Mr. Koutsolioutsos, please go ahead.
GEORGE KOUTSOLIOUTSOS, VP & PRESIDENT HELLENIC DUTY FREE & ELMEC, FOLLI FOLLIE: Thank you. Ladies and gentlemen, I would like to welcome you on the presentation of the full year results for the year 2008 for the Folli Follie Group, including HDFS results and Elmec results.
I am happy to have you all here today. I would like to start with an introduction stating that, in this very difficult environment, I think that you all know that many markets are suffering incredibly from spending to the psychology of the customers. Nevertheless, let me tell you that, as a Group, we have been through [as a history] in these difficult times. I would say such period was even difficult for Folli Follie itself. So we have quite an experience in operating under a difficult economic environment, and I think we have the track record to prove that.
Nevertheless, as you will see from our results, we managed last year to have a very strong performance in all activities of the Group. As a Group now, for sure, we believe we are less resilient affected to whatever an economic environment which is in a bad shape. We have various activities, some are even over-performing, some are performing less but, overall, we think that we are in very good shape. A strong balance sheet and, actually, we are looking forward for a not a disastrous 2009 that many of our companies in our peer group are facing these days.
Let me start with the presentation. It's quite heavy, so maybe there is more delay on changing the slides, for those who have a view on that. Let me start with highlights of the results. Total for the Group sales reached EUR937.3 million; EBITDA reached EUR191 million; EBIT, earning before interest and taxes, EUR172 million; earning before taxes, EUR129.6 million, and earnings after tax and minorities reached EUR77 million.
As highlights, we increased our sales by 33%. You have to compare on the same base as last year; I mean in 2007 we only incorporated the last quarter of Elmec so we had to do it on a pro forma basis. We increased at 10% in sales, which we think it's an outstanding performance. Keeping in mind that we had, again, quite substantial negative currency effect starting from the euro with the US dollar. Even strong negative currency effect with the British pound, and even with the Romanian RON which is the local currency. Of course, if we have to consolidate with today's currencies, the results would be even higher.
The Group operating profit increased just a little bit more than 20%, so we think that also this is quite a strong performance which had quite a lot of expenses. We continue our heavy investment on new shops and we go onto details. The EBITDA margin slightly above 20% again, keeping our high margin business.
Here I would like to state that some of you are comparing us as a full retail Company. But, at the end of the day, let me tell you that we are a high margin retail and this is our core of operation; we want to maintain that, even to increase. And, for sure, we are not at the same level of other retail companies where there are EBITDA margins much lower.
So I think that it is completely different to the perception of a company in the retail world when it's a low margin business and there is a downturn in the economy, compared to a high margin business. We increased our overall profitability, despite that we had in 2007, as we are comparing to 2007, we had an extraordinary EUR12 million one-off income from Elmec. So we reached that -- we covered that one-off and we even increased our profitability.
The cash decreased by EUR18.4 million compared to last year. But I have to remind you that we have some significant investments during that period. First of all, we have EUR34.2 million as investment in own shares, in the various shares of the group from Folli Follie, Hellenic Duty Free and Elmec, which we didn't have last year. And we have investment, either tangible or intangible, of reaching EUR47.8 million which is opening new stores, a new department store that will open before the end of the year, which is the second Attica shop in Athens.
We had investment [renovation] in existing shops and, in addition to that which is not included in this EUR47.8 million, we had also at the beginning of the year, that we bought out the remaining stake of our joint venture in Japan, the 60%, which we paid around EUR11 million to EUR12 million. During last year we opened 72 new points of sales, bringing the total to 645 points of sales worldwide.
More into details, and comparing to last year, as I said, revenues reached EUR937.3 million compared to EUR706.2 million, which is an increase of almost 33%. Gross margin EUR474.4 million compared to EUR376.2 million, which is an increase of 26.1%. Selling expenses EUR275 million compared to EUR197 million, which is an increase of 39%. Administrative expenses stood almost at the same level at EUR52.4 million compared to EUR51.2 million. Other income expenses, EUR25.3 million compared to EUR16.5 million. Operating profit reached EUR172 million compared to EUR143 million, which is an increase of almost 20%.
Net financial income and expenses; of course this went sharply higher, EUR42.3 million compared to EUR18.3 million, which is increase of 131%. This is due to the high interest that was the environment last year. You may understand that, right now, as we started the year, this has sharply dropped. And if the euros continue at this level the EURIBOR, because we are linked to the EURIBOR, with the new spreads that we have fixed with our banks, we believe that we will economize this year around EUR20 million, which is a sharp decrease.
Income taxes EUR30.4 million, compared to EUR35.9 million. Net profit before minority interest is just a little bit less than EUR100 million, which is EUR99.3 million, compared to EUR89.7 million, which is 10.7%. Minority interests EUR22.3 million, compared to EUR16.7 million. The net profit reached EUR77 million, compared to EUR73 million, which is an increase of almost 6%. Amortization depreciation EUR19.1 million compared to EU13.9 million. EBITDA reached EUR191 million, compared to EUR157.9 million, which is an increase of 21%.
If we had to compare in pro forma revenues, so consolidating for 2007 Elmec for the full year sales, -- sorry this is -- I'm reading something -- sorry this is Folli Follie standalone. No, pro forma basis, on a pro forma basis we had to consolidate Elmec for the full year. You see the split; how pro forma every part of and activity of the Group. Sales, as I said, have reached EUR937.3 million, compared to EUR854.5 million, which is almost 10% increase.
Let's see now the revenue and EBITDA split by Company. For every activity, Folli Follie reached EUR324.6 million, which is participating EUR34.3 million of the overall revenues of the Group. Next it's HDFS with EUR264.1 million, then Elmec with EUR250.7 million which is participating EUR26.5 million out of the total. Links of London EUR78.1 million, which is 8.3% of the Group; Hellenic Distribution 2.5% reaching EUR24.1 million, and [whatever] is intra-group sales EUR4.3 million.
On the EBITDA level, Folli Follie represented almost half of the EBITDA, HDFS almost a third, Elmec 15%, Links of London 6.6% and Hellenic Distribution 1.5%.
Let's go now on the CapEx split by again Company. Elmec represented the biggest percentage, EUR30.5 million, which represented 63.8%. Out of this EUR30.5 million, EUR17 million was the new opening of Attica Golden Hall, which is the second department store now we control in Athens. We had also an acquisition of real estate in Bucharest; this development, we started now constructing in the center of Bucharest. We had one building, we bought the next building, so we're now going to have a much bigger building and much bigger selling space. HDFS was EUR4.6 million, which is 9.6%, Folli Follie standalone, EUR8.3 million, representing 17.4%, Links of London EUR4.4 million, which is almost 9%.
Let's go to the next. (inaudible) our debt structure compare 2008 to 2007. You will see in the slide the net debt, what is...
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