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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
UNIDENTIFIED COMPANY REPRESENTATIVE: Hello, everybody. Welcome to our presentation of the final results of the business year '07/08. This presentation is also webcasted globally. My regards also to everybody internationally.
Before we start the presentation, I would like to introduce you to two new faces. First, there's Paul Chan, one of our independent and non-executive directors. He has accepted the call to be the deputy chairman of our company. I believe Paul, with his big experience in business, and as a human being, can be a good adviser to all of us young guys.
And second person I want to introduce you to is Ernst Vogel. He's our global deputy CFO. He's with the company for more than five years, and he was running our European Financial Department as the financial director. And, as you know, Europe still accounts for more than 80%, so he knows quite a lot about this company, but he always was also involved in our Global Finance Department and was also doing global issues. So he knows a lot about all the little details.
Ernst will start giving you an overview about the figures, and afterwards will be followed by Thomas, who is going to give you an outlook of this present business year. And afterwards, we are prepared for Q&A.
Thank you. Ernst, would you please start?
ERNST VOGEL, GLOBAL DEPUTY CFO, ESPRIT: Of course.
UNIDENTIFIED COMPANY REPRESENTATIVE: Thanks.
ERNST VOGEL: Hello, welcome also from my side. Yes, let's directly start. Okay, yes, let's get into it directly. Again, our Group achieved an excellent, excellent result, despite the difficult macroeconomic environment we're operating in. Our net sales went up by 25.6% to HKD37.2 billion. Operating profit rose at 23.4% to HKD7.7 billion, while our net income increased to HKD6.5 billion, which is 24.5% higher than last year's earnings, which gives us an increase of our basic EPS by 23.5%, amounting to HKD5.21 per share.
Now coming to some additional good news for our shareholders; we will increase our payout ratio for our special dividend by 12% to 40 percentage points, or HKD2.1. This means, together with our 40% payout ratio for our regular dividend, the total payout ratio for fiscal '08 will be 80%, or HKD4.2 per share. The final and special dividend, an amount of HKD3.25, will be paid on December 16, 2008.
Coming now -- our international expansion continues to grow with double-digits in the mid 20's for all of our three regions; leaves our turnover ratio unchanged. Europe, representing 87% of our business, grew 26%, whereof Germany, accounts for 47 percentage points, grew at 25%. All European countries other than Germany achieved a combined growth rate of 28%.
Asia Pacific, as our second largest region, grew at 21%, mainly driven by rapid expansion of our wholesale business in China, India and Thailand, as well as a continuous high growth momentum for our Malaysian and Singapore operations.
Across all our product worlds, we achieved double-digit growth. Casual world, accounting for 46% of our business, achieved a growth rate of 24%; edc our fastest growing business world -- product world, grew at 33% year-on-year; accounts now for 24% of our business. Our collection lines and others grew at 24%, or 22% respectively. For those who have difficulties to read at the bottom, others includes our non-apparel divisions, as well as kids' shoes, salons, licensed products business.
This year for the first time, that's really important I think. It's quite an achievement. Our directly and indirectly controlled selling space for wholesale and retail combined exceeded 1 million square meter. Our retail turnover went up by 25% to a total turnover of HKD16.1 billion with a healthy Comp Store growth of 7%, which I believe is top in our industry. Our biggest markets, such as Germany and Benelux, grew at 26% and 27%, and France has to be mentioned with an extraordinary increase of 44%.
With HKD1.1 billion, we more than doubled our investment, our retail distribution network, adding 93 stores and increasing our selling space by 14%. As of June 30, 2008, our retail organization operated 697 directly managed stores worldwide, with a selling space over 271,000 square meters. Wholesale, accounting for 56% of our business, grew even to 26%. During fiscal '08, our expansion of controlled selling space in this segment continued on a higher level at 18%, increasing our total amount of selling space for the whole area to 746,000 square meters.
Margin profitability; our Group continued to grow at stable margins, though the EBIT margin still around 21%. The wholesale channel contributed to this with an improved EBIT margin of 26.5%. As we are now back on our regular level of retail selling space expansion, the EBIT margin for our retail business in fiscal '08 was 13.3%. But this is on a much higher -- on a higher level than in the previous years, as you can see from the slides. Then we have followed our regular growth path. Net profit margin, I forgot, is still 17.3%.
Financially, we are strong as before. Also, we have increased our CapEx spending by 120% to HKD1.4 billion. And the payout of dividends of HKD4.3 billion to our shareholders, we further strengthened our net cash position by increasing it by 25% to HKD6.5 billion. As you are all well aware, we have for the first time initiated a share buyback program after the end of the fiscal year. So far, we have repurchased 2.6 million shares which have been cancelled afterwards in the price range between HKD76.55 and HKD86. Overall, we have the approval from our shareholders to buy back up to...
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