 |
Download the Consolidated income statement in Excel format |
|
Download the Consolidated income statement (in USD) in Excel format |
Highlights from the Group’s income statements for year 2005 are presented below; they are based on a reclassification according to the function of expenses (the percentage changes are calculated with reference to the precise figures). The reconciliation with the income statement by nature of cost is included in the explanatory notes to the consolidated financial statements in the section “Supplementary information”.
| (millions of euro) | 2005 | % | 2004 | % | Change | % |
|---|---|---|---|---|---|---|
| Revenues | 1,765 | 100.0 | 1,704 | 100.0 | 61 | 3.6 |
| Materials and subcontracted work | 846 | 47.9 | 779 | 45.7 | 67 | 8.6 |
| Payroll and related costs | 85 | 4.8 | 87 | 5.1 | (2) | (2.5) |
| Industrial depreciation and amortization | 21 | 1.2 | 21 | 1.2 | - | 0.4 |
| Other manufacturing costs | 43 | 2.5 | 42 | 2.5 | 1 | 1.5 |
| Gross operating income | 770 | 43.6 | 775 | 45.5 | (5) | (0.6) |
| Distribution and transport | 56 | 3.2 | 48 | 2.8 | 8 | 18.0 |
| Sales commissions | 71 | 4.0 | 73 | 4.3 | (2) | (4.0) |
| Contribution margin | 643 | 36.4 | 654 | 38.4 | (11) | (1.6) |
| Payroll and related costs | 135 | 7.7 | 126 | 7.4 | 9 | 7.5 |
| Advertising and promotion | 61 | 3.5 | 54 | 3.1 | 7 | 13.5 |
| Depreciation and amortization | 64 | 3.6 | 74 | 4.4 | (10) | (13.5) |
| Other income and expenses | 178 | 10.0 | 175 | 10.3 | 3 | 1.6 |
| Ordinary operating result(*) | 205 | 11.6 | 225 | 13.2 | (20) | (8.7) |
| Non-recurring expenses/(income) | 48 | 2.7 | 67 | 3.9 | (19) | (28.3) |
| Operating profit | 157 | 8.9 | 158 | 9.3 | (1) | (0.4) |
| Share of income of associated companies | - | - | - | - | - | - |
| Financial income/(expenses) | (23) | (1.3) | (22) | (1.3) | (1) | 5.3 |
| Foreign currency hedging gains/(losses) and exchange differences | - | - | - | - | - | - |
| Income before taxes | 134 | 7.6 | 136 | 8.0 | (2) | (1.2) |
| Income taxes | 20 | 1.1 | 28 | 1.6 | (8) | (26.7) |
| Net income/(loss) for the year | 114 | 6.5 | 108 | 6.4 | 6 | 5.3 |
| attributable to: | ||||||
| - shareholders of the Parent Company | 112 | 6.3 | 109 | 6.4 | 3 | 2.8 |
| - minority shareholders | 2 | 0.2 | (1) | - | 3 | n.s. |
| (*) | Ordinary operating result is indicated for the purposes of evaluating the performance of the company’s core business and to aid financial analysts in using their models to analyze the company’s results. This information is not required by either IFRS or US GAAP. |
Revenues amounted to 1,765 million euro, compared with the 1,704 million of 2004, for an increase of 3.6%. Apparel sales to third parties amounted to 1,629 million euro, an annual increase of 3.9% from the 1,568 million of 2004, with a growth in revenues for the fourth quarter of 7.4%. Revenue performance was mainly influenced by the policy of developing the commercial network and the improvement of product mix, along with initiatives for expanding the directly operated network. This growth was also the result of the strong performance of reorders for the 2005 Fall/Winter collections, as well as the positive market response to the 2006 Spring/Summer collections and the contribution of countries in the Mediterranean, including Turkey, as well as in eastern Europe and Korea. In the apparel segment, the new Turkish partnership also played an important role, generating 30 million euro in revenues from May to December. Sales were also influenced by roughly 10 million euro for positive exchange rates trends, equal to 0.6% of revenues.
The textile segment, which suffered from a difficult market context, recorded 100 million euro in revenues from third parties, compared with 106 million euro in 2004, for a decline of 6.4%.
Revenues in the segment “Other and unallocated”, which includes only the revenues relating to sports equipment, were 36 million euro, compared with 30 million euro in 2004, for an increase of 22%.
Cost of sales increased by 66 million euro in absolute terms and represented 56.4% of revenues, compared with 54.5% in 2004.
Gross operating income came to 770 million euro, representing 43.6% of revenues, compared with 45.5% in 2004, influenced by the above-mentioned commercial development policies and offset in part by more efficient production. Margins were also somewhat influenced by the lower use of production capacity in the textile segment.
Selling costs amounted to 127 million euro, compared with the 121 million of the previous year, representing 7.2% of revenues, compared with the 7.1% of 2004. Distribution and transport costs increased as a result of the increase in volumes, and in particular in relation to the sales growth in Korea. This increase was partially offset by the decrease in commission costs, which benefited from the transfer to the Group of agencies in Italy and Germany in 2004. The contribution margin came to 643 million euro, representing 36.4% of revenues. This compares with 654 million euro in 2004, which represented 38.4% of revenues.
General and operating expenses amounted to 438 million euro, compared with 429 million euro in 2004.
Payroll and related costs, in the amount of 135 million euro, increased by 7.5%, with the ratio to sales going from 7.4% to 7.7% due to the expansion of the network of directly operated stores and a higher proportionate cost for staff incentives.
Advertising and promotion costs were 7 million euro higher, with a percentage on revenues of 3.5%, compared with the 3.1% of the previous year. This increase was due primarily to services provided to third parties.
Depreciation and amortization for 2005 came to 64 million euro, down from the 74 million euro of the previous year, with the percentage on revenues going from 4.4% to 3.6%. This decrease is the result of two factors: the adjustment in 2004 to the carrying value of certain assets related to the commercial network and the change in the estimated useful life of the commercial buildings.
Other income and expenses, in the amount of 178 million euro, rose by 3 million euro over the previous year, for an increase of 1.6% and representing 10% of revenues, from 10.3% of the previous year. This item includes overhead costs, provisions, net operating costs, and other income and expenses.
Overhead costs, in the amount of 82 million, increased by 4 million euro over 2004, with the percentage on revenues remaining unchanged at 4.6%. Provisions amounted to 25 million euro, compared with 45 million euro in 2004, 17 million euro of which for doubtful accounts, compared with the 39 million in 2004, bringing the related balancesheet provision to 11.2% of trade receivables from the 12.9% as of December 31, 2004, as a result of the improved quality of receivables outstanding as of the balance sheet date. Net operating and other costs went from the 52 million euro of the previous year to 71 million euro, with the percentage on revenues going from 3.1% to 4%. This increase is due primarily to the rental costs of the commercial network.
Net non-recurring costs for 2005 included costs for restructuring and adjustments to the current value of certain assets related to the commercial network in the amount of 25 million euro, write-downs of assets not related to the core business in the amount of 9 million euro, charges connected to the reorganization of the textile sector in the amount of 4 million euro, and other charges of 10 million euro. The decrease of 19 million euro from the previous year is due to the lower charges related to the restructuring of the commercial network.
Earnings before interest and taxes came to 157 million euro, compared with 158 million in 2004, going from a margin on revenues of 9.3% to 8.9%.
Net financial expenses and exchange differences amounted to 1.3% of revenues, in line with the prior year. This result reflects the combined effect of a decrease in average net indebtedness for the period, the slight increase in interest rates on the debt of certain foreign subsidiaries, and an increase in the time value component of currency hedging. The tax charge amounted to 20 million euro, compared with the 28 million euro of the previous year, representing a tax rate of 15.1%, down from the 20.3% of the previous year. This reduction in tax burden is due primarily to the measurement, based on forecasts of future earnings, of the fiscal benefits connected with the corporate reorganization in 2003.
Net income for the year attributable to the Group came to 112 million euro, compared with 109 million euro in 2004, representing 6.3% of revenues, compared with 6.4% in 2004.