SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 2005
Benetton Group S.p.A.
(Exact name of Registrant)
Via Villa Minelli, 1 - 31050 Ponzano Veneto, Treviso - ITALY
(Address of principal executive offices)
(Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F)
Form 20-FX Form 40-F ______
(Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934).
Yes ______ NoX
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Benetton Group S.p.A.
By: /s/ Luciano Benetton
______________________
Name: Luciano Benetton
Title: Chairman
Dated: May 30, 2005
Benetton Group
2005 first quarter report
Benetton Group S.p.A.
Villa Minelli
Ponzano Veneto (Treviso) - Italy
Share Capital: Euro 236,026,454.30 fully paid
Tax ID/Treviso Company register: 00193320264
Index | The Benetton Group | ||
3 | Directors and other officers | ||
4 | Financial highlights | ||
5 | Directors' Report | ||
Results for first quarter 2005 | |||
Significant events in the quarter | |||
Outlook for the year | |||
6 | Financial statements and related explanatory notes | ||
Explanatory notes | |||
7 | Consolidated Group results | ||
-Consolidated statement of income with revenues and cost of sales reclassified | |||
8 | -First quarter 2005 | ||
11 | -Consolidated balance sheet reclassified according to financial criteria | ||
13 | -Financial situation - highlights | ||
15 | -Statement of cash flow |
The Benetton Group | Directors and other officers | |
Board of Directors | ||
Luciano Benetton(1) | Chairman | |
Carlo Benetton | Deputy Chairman | |
Silvano Cassano(2) | Managing Director | |
Giuliana Benetton | Directors | |
Gilberto Benetton | ||
Alessandro Benetton | ||
Reginald Bartholomew | ||
Luigi Arturo Bianchi | ||
Giorgio Brunetti | ||
Gianni Mion | ||
Ulrich Weiss | ||
Pierluigi Bortolussi | Secretary to the Board | |
Board of Statutory Auditors | ||
Angelo Casò | Chairman | |
Filippo Duodo | Auditors | |
Dino Sesani | ||
Antonio Cortellazzo | Alternate Auditors | |
Marco Leotta | ||
Independent Auditors | ||
PricewaterhouseCoopers S.p.A. |
Powers granted
(1) Company representation and power to carry out any action that is consistent with the Company's purposes, except for those expressly reserved by law to the Board of Directors and to the Shareholders' Meeting, with limitation on some categories of action.
(2) Power to carry out any action relating to the ordinary administration of the Company as well as certain acts of extraordinary administration subject to limits on values.
Financial highlights
1st quarter | 1st quarter | Year | |||||||
Key operating data(millions of euro) | 2005 | % | 2004 | % | Change | % | 2004 | % | |
Net revenues | 378 | 100.0 | 381 | 100.0 | (3) | (0.8) | 1,686 | 100.0 | |
Cost of sales | 214 | 56.5 | 210 | 55.1 | 4 | 1.7 | 929 | 55.1 | |
Gross operating income | 164 | 43.5 | 171 | 44.9 | (7) | (3.8) | 757 | 44.9 | |
Income from operations | 36 | 9.4 | 45 | 11.9 | (9) | (21.5) | 217 | 12.9 | |
Ordinary income | 30 | 8.0 | 40 | 10.4 | (10) | (23.8) | 194 | 11.5 | |
Net income | 23 | 6.1 | 28 | 7.3 | (5) | (16.9) | 123 | 7.3 |
Key financial data(millions of euro) | 03.31.2005 | 12.31.2004 | 03.31.2004 | ||
Working capital | 759 | 688 | 820 | ||
Assets due to be sold | 6 | 8 | 8 | ||
Net capital employed | 1,731 | 1,668 | 1,707 | ||
Net financial position | 470 | 431 | 497 | ||
Shareholders' equity | 1,255 | 1,230 | 1,204 | ||
Self-financing | 59 | 312 | 68 | ||
Capital expenditures in tangible | |||||
and intangible fixed assets | 23 | 152 | 21 | ||
Purchase of equity investments | - | 22 | 15 | ||
Share and market data | 03.31.2005 | 12.31.2004 | 03.31.2004 | ||
Shareholders' equity per share (euro) | 6.91 | 6.77 | 6.63 | ||
Price at period end (euro) | 7.46 | 9.74 | 8.65 | ||
Screen-based market: high (euro) | 10.15 | 10.18 | 9.37 | ||
Screen-based market: low (euro) | 7.46 | 8.33 | 8.33 | ||
Market capitalization (thousands of euro) | 1,354,429 | 1,768,383 | 1,570,484 | ||
Average no. of shares outstanding(1) | 181,558,811 | 181,558,811 | 181,558,811 | ||
Number of shares outstanding | 181,558,811 | 181,558,811 | 181,558,811 | ||
(1) Net of treasury shares held during the period. | |||||
Number of personnel | 03.31.2005 | 12.31.2004 | 03.31.2004 | ||
Total employees | 7,276 | 7,424 | 6,922 |
Directors' Report Results for first quarter 2005
- Groupnet revenues for the first quarter of 2005 were 378 million euro compared with 381 million in the corresponding period of 2004. Casual sector sales amounted to 339 million euro, in line with the first quarter of 2004. Sports sector revenues were 16 million euro.
- Gross operating income was 43.5 per cent of sales, compared with 44.9 per cent in the same period of 2004.
- Income from operations was 36 million euro, 9.4% of revenues, compared with 11.9% in the corresponding period of 2004.
- Net incomefor the period was 23 million euro, compared with 28 million in the first quarter of 2004.
- Free cash flowin the first three months was 42 million euro negative (51 million euro in the same period of 2004).
- Groupcapital expenditure on tangible and intangible assetsin the first quarter of 2005 amounted to 23 million euro compared with 21 million euro in the first quarter of 2004. The greater part of this expenditure, of around 15 million euro, was dedicated to the purchase, modernization and upgrading of properties for commercial use. Productive capital expenditure for the period amounted to 6 million euro and mainly related to plant and machinery in some Italian factories.
- Thenet financial position was 470 million euro, compared with 497 million as of March 31, 2004 and 431 million euro as of December 31, 2004. The change compared with year-end was mainly due to normal cyclical movements of working capital.
Significant events in the quarter
There were no significant events during the quarter, except for the co-option of the new independent director Giorgio Brunetti to replace Sergio De Simoi.
Outlook for the year
The Group has established an important policy of incentives for the network of partners, in line with the business model, with the objective of placing them in a condition to increase their investment capacity, to open new stores and to renew existing ones as well as to increase their competitive capacity in terms of price to the final customer.
On the commercial front, emphasis has been placed on development of some emerging markets, such as China and India, also through agreements with local large-scale retailers, for the opening of "store in store" facilities within large stores in the main cities. New initiatives also include the setting up of a new joint venture to manage and develop commercial activities in the Turkish market, which will be operational by the end of the first half of 2005.
At the same time, the Group is maintaining its strategic focus on policies of production and organizational efficiency, relative to the process of decentralization of production, completion of production cycles in overseas units and organizational cost reduction actions.
In this environment, consolidated revenues for 2005 are expected to be between 1,620 and 1,650 million euro, with EBIT between 9.5% and 10% of revenues. Net income of the order of 6% of revenues is forecast. The net financial position should improve further, to around 400 million euro, as a result of a positive free cash flow and net annual operative capital expenditure of 130 to 150 million euro, mostly targeted on development of the sales network.
Financial statements and related
explanatory notes
The first quarter directors' report has been prepared in accordance with the provisions of art. 82 of the Regulation approved by Consob resolution no. 11971 of May 14, 1999 to implement Legislative Decree no. 58 of February 24, 1998 relating to issuers.
Accounting policies and consolidation criteria used are in line with those adopted for the preparation of the 2004 annual financial statements. As already done by foreign subsidiaries, the Italian companies, with effect from January 1, 2005, are calculating depreciation on commercial buildings based on a useful life of 50 years instead of 33.
On the basis of changes to Regulation no. 11971/1999, following the coming into effect of E.U. regulation no. 1606/2002 (the so-called "IAS/IFRS Regulation") relating to the application of international accounting policies (IAS/IFRS), the Group has opted for the application of art. 82 bis, according to which "share issuers may prepare quarterly reports relative to the period commencing January 1, 2005, or a subsequent date, and which are approved by September 30, 2005, in accordance with the policies used in the previous year annual and consolidated financial statements".
Therefore the quarterly consolidated statement of income and balance sheet as of March 31, 2005 are shown in the same format as that used in the preparation of the Directors' report for 2004, in observance of other provisions of the same art. 82 bis.
The Group intends to adopt IAS/IFRS accounting principles as from the consolidated half-year report as of June 30, 2005.
The transition date, namely the opening date of the financial year prior to that of first-time adoption of IAS/IFRS, is January 1, 2004. The consolidated balance sheet as of that date is required to be adjusted on the basis of international accounting standards as if they had always been applied, with the exception of obligatory and optional concessions set out in IFRS 1.
For the purposes of adjusting the opening balance sheet at the transition date and of the consolidated financial statements to December 31, 2004, the Benetton Group will adopt the following options stated in IAS/IFRS for preparing the financial statements:
- in the balance sheet, assets and liabilities will be classified according the criterion which divides categories between "current" and "non-current";
- the statement of income will be classified based on the nature of costs.
As recommended by Consob resolution no. 14490 of April 14, 2005, the independent auditors will be given the task of performing a full audit of the balances in the reconciliation required by IFRS 1 (first adoption of International Financial Reporting Standards) and, therefore, of the values in consolidated shareholders' equity at the start and end of the previous year, as well as of the income statement for the same year, on the basis of the above-mentioned IAS/IFRS accounting policies.
In addition, instructions given for the accounting audit of the half-year report provide for further significant checks in the limited audit of IAS/IFRS income statement data relating to both the current half-year and the preceding one (to June 30, 2004 and June 30, 2005), as well as of IAS/IFRS balance sheet values at the end of the previous year and of the current half year (to December 31, 2004 and June 30, 2005).
The first annual financial statements of the Benetton Group that will be prepared in accordance with international accounting standards will be those for the year ending December 31, 2005.
Consolidated Group results | ||||||||
Consolidated statement of income with revenues and cost of sales reclassified as used in internal reporting | ||||||||
1st quarter | 1st quarter | |||||||
(thousands of euro) | 2005 | % | 2004 | % | Change | % | ||
Revenues | 378,209 | 100.0 | 381,199 | 100.0 | (2,990) | (0.8) | ||
Cost of sales | ||||||||
Materials consumed | 106,369 | 28.1 | 91,106 | 23.9 | 15,263 | 16.8 | ||
Payroll and related costs | 20,621 | 5.5 | 23,966 | 6.3 | (3,345) | (14.0) | ||
Subcontract work | 71,273 | 18.8 | 78,859 | 20.7 | (7,586) | (9.6) | ||
Industrial depreciation and amortization | 5,211 | 1.4 | 5,687 | 1.5 | (476) | (8.4) | ||
Other manufacturing costs | 10,285 | 2.7 | 10,567 | 2.7 | (282) | (2.7) | ||
213,759 | 56.5 | 210,185 | 55.1 | 3,574 | 1.7 | |||
Gross operating income | 164,450 | 43.5 | 171,014 | 44.9 | (6,564) | (3.8) | ||
Selling, general and administrative expenses | ||||||||
Distribution and transport | 6,717 | 1.8 | 6,725 | 1.8 | (8) | (0.1) | ||
Sales commissions | 15,663 | 4.1 | 18,222 | 4.8 | (2,559) | (14.0) | ||
Advertising and sponsorships | 13,779 | 3.6 | 13,842 | 3.6 | (63) | (0.5) | ||
Payroll and related costs | 30,837 | 8.2 | 28,700 | 7.5 | 2,137 | 7.4 | ||
Depreciation and amortization | 20,129 | 5.3 | 18,842 | 5.0 | 1,287 | 6.8 | ||
Other expenses | 41,756 | 11.1 | 39,370 | 10.3 | 2,386 | 6.1 | ||
128,881 | 34.1 | 125,701 | 33.0 | 3,180 | 2.5 | |||
Income from operations | 35,569 | 9.4 | 45,313 | 11.9 | (9,744) | (21.5) | ||
Other income/(expenses) | ||||||||
Net foreign currency hedging gains/(losses) and exchange rate differences | ||||||||
314 | 0.1 | 133 | 0.0 | 181 | n.s. | |||
Financial income | 5,263 | 1.4 | 5,869 | 1.5 | (606) | (10.3) | ||
Financial expenses | (10,893) | (2.9) | (11,599) | (3.0) | 706 | (6.1) | ||
Other income/(expenses), net | (939) | (0.2) | (753) | (0.2) | (186) | 24.7 | ||
(6,255) | (1.6) | (6,350) | (1.7) | 95 | (1.5) | |||
Income before taxes and minority interests | ||||||||
29,314 | 7.8 | 38,963 | 10.2 | (9,649) | (24.8) | |||
Income taxes | 6,692 | 1.8 | 11,397 | 3.0 | (4,705) | (41.3) | ||
Income before minority interests | ||||||||
22,622 | 6.0 | 27,566 | 7.2 | (4,944) | (17.9) | |||
Loss attributable to minority interests | 461 | 0.1 | 198 | 0.1 | 263 | n.s. | ||
Net income for the period | 23,083 | 6.1 | 27,764 | 7.3 | (4,681) | (16.9) | ||
First quarter 2005
Revenues for the first quarter of 2005 were 378 million euro, compared with 381 million in the corresponding period of 2004. Casual sector sales amounted to 339 million euro, in line with the first quarter of 2004, thanks also to an increase in retail sales, resulting from the acquisition of new directly managed stores in the second half of 2004, and a different product mix.
In the sports sector, the net negative variation in revenues amounted to 4 million euro and resulted mainly from a 6 million euro reduction in sales of sportswear and a small increase in sports equipment revenues. Manufacturing revenues were maintained substantially in line with the first quarter of 2004.
Consolidated cost of sales was 214 million euro compared with 210 million in the corresponding period of 2004, rising from 55.1% of revenues to 56.5%, mainly influenced by the enriched product mix.
Group gross operating income was 164 million euro, 43.5% of revenues compared with 44.9% in the first quarter of 2004, with a reduction of around 7 million euro due to both the casual and sportswear businesses.
Selling, general and administrative costs, of 129 million euro, 34.1% of revenues, increased by around 3 million, equivalent to 2.5%, mainly due to expansion of the directly managed sales network. Variable distribution and transport costs were largely in line with the comparative period, in terms of both absolute value and as a percentage of revenues. Sales commissions reduced by 2.5 million euro, due mainly to transfer to the Group of agencies in Italy and Germany which were managed by third parties in the first quarter of 2004. Advertising and sponsorship expenses remained constant in terms of both absolute value and as a percentage of revenues.
Payroll costs increased by 7.4% as a result of the above-mentioned strengthening of the directly managed sales network in the second half of 2004, in particular in the German market.
Depreciation and amortization increased as a result of commercial investments made after the first quarter of 2004 and of costs arising from the early termination of a business lease contract which resulted in full depreciation and amortization of all costs associated with the activity.
Other expenses included general organizational expenses, net operating expenses and accruals.
General organizational costs reduced by 3.5% as a result of rationalization and cost reduction actions. Other operating income and expense were impacted by the increase in rental costs related to the sales network, increasing from 4% to 4.2% of revenues.
Although receipts from customers were satisfactory, increased provisions to the reserve for doubtful accounts were made in the period relative to a few specific accounts.
Income from operations was 36 million euro compared with 45 million in the first quarter of 2004, moving from 11.9% to 9.4% of revenues. This change was mainly caused by the reduction in gross operating income, as described above, and the increase in expenses due to expansion of the directly managed sales network.
There was no significant change in net exchange rate differences, nor in the percentage of net financial expense.
Net income was 23 million euro, 6.1% of revenues, compared with 28 million euro in the first quarter of 2004.
- Revenues by geographical area and business sector
(millions of euro) | Europe | % | The Americas | % | Asia | % | Rest of the world | % | 1st quarter 2005 | 1st quarter 2004 | Change% | |
Casual | 271 | 88.1 | 24 | 99.4 | 43 | 97.3 | 1 | 55.1 | 339 | 339 | 0.1 | |
Sportswear and equipment | ||||||||||||
15 | 4.9 | - | 0.3 | 1 | 1.7 | - | - | 16 | 20 | (20.3) | ||
Manufacturing and other | 22 | 7.0 | - | 0.3 | - | 1.0 | 1 | 44.9 | 23 | 22 | 2.8 | |
Total 1st quarter 2005 | 308 | 100.0 | 24 | 100.0 | 44 | 100.0 | 2 | 100.0 | 378 | 381 | (0.8) | |
Total 1st quarter 2004 | 319 | 21 | 40 | 1 | 381 |
As from 2005, sales in Turkey have been reclassified from Asia to Europe; as a result, 2004 values have also been adjusted in line with the new geographic grouping.
- Business sectors. The Group's activities are traditionally divided into three sectors to provide the basis for effective administration and decision-making by company management, and to supply accurate and relevant information about company performance to financial investors.
The business sectors are as follows:
- casual, representing the Benetton brands (United Colors of Benetton, Undercolors and Sisley), including figures for the retail business as well as complementary products, such as accessories and footwear;
-sportswear and equipment, under the Playlife and Killer Loop brands; it also includes sales of equipment relating to production for third parties by a Group manufacturing company;
- manufacturing and other, composed mainly of sales of raw materials, semi-finished products and industrial services as well as of revenues and expenses from real estate activities.
- Casual sector results
1st quarter | 1st quarter | ||||||
(millions of euro) | 2005 | % | 2004 | % | Change | % | |
Total sector revenues | 339 | 100.0 | 339 | 100.0 | - | 0.1 | |
Cost of sales | (183) | (53.9) | (179) | (52.7) | (4) | (2.4) | |
Gross operating income | 156 | 46.1 | 160 | 47.3 | (4) | (2.3) | |
Selling, general and administrative expenses | (122) | (36.1) | (117) | (34.6) | (5) | (4.5) | |
Income from operations | 34 | 10.0 | 43 | 12.7 | (9) | (21.0) |
Casual sector revenues were in line with the corresponding period of 2004. Cost of sales increased in terms of both absolute value, from 179 to 183 million euro, and as a percentage of revenues, 53.9% compared with 52.7% in the first quarter of 2004; this was mainly due to an enrichment of product mix.
Gross operating income was 156 million euro compared with 160 million in the comparative period, moving from 47.3% to 46.1% of revenues.
Selling, general and administrative expenses increased by 4.5% compared with the first quarter of 2004; in particular, there were increases in payroll costs, depreciation and amortization and rental costs associated with the initiatives undertaken for the sales network. General organizational expenses reduced as a result of rationalization and cost reduction actions.
Income from operations moved from 12.7% to 10% of revenues as a result of the above changes.
- Sportswear and equipment sector results
1st quarter | 1st quarter | ||||||
(millions of euro) | 2005 | % | 2004 | % | Change | % | |
Total sector revenues | 16 | 100.0 | 20 | 100.0 | (4) | (20.3) | |
Cost of sales | (11) | (68.5) | (13) | (64.9) | 2 | 15.9 | |
Gross operating income | 5 | 31.5 | 7 | 35.1 | (2) | (28.5) | |
Selling, general and administrative expenses | (3) | (21.6) | (5) | (23.7) | 2 | 27.6 | |
Income from operations | 2 | 9.9 | 2 | 11.4 | (0) | (30.5) |
The change in revenues for this sector was entirely due to the reduction in sportswear sales; in fact, sales for this area were 10 million euro compared with 16 million in the first quarter of 2004, with a reduction of 6 million euro.
Income from operations was 9.9% of revenues compared with 11.4% in the relative comparative period; the reduction was exclusively due to the contraction in gross operating income as explained above, while selling, general and administrative expenses reduced in both absolute and percentage terms.
- Manufacturing and other sector results
1st quarter | , | 1st quarter | , | ||||
(millions of euro) | 2005 | % | 2004 | % | Change | % | |
Total sector revenues | 23 | 100.0 | 22 | 100.0 | 1 | 2.8 | |
Cost of sales | (20) | (87.8) | (18) | (83.9) | (2) | (7.6) | |
Gross operating income | 3 | 12.2 | 4 | 16.1 | (1) | (22.3) | |
Selling, general and administrative expenses | (3) | (12.1) | (4) | (15.9) | 1 | 22.2 | |
Income from operations | 0 | 0.1 | 0 | 0.2 | (0) | n.s. |
Manufacturing sector sales to third parties were in line with the first quarter of 2004. Due to the increase in the cost of sales in both absolute and percentage terms, gross operating income moved from 4 million to 3 million euro, causing the percentage of revenues to move from 16.1% to 12.2%. Also in this sector, there was a reduction in selling, general and administrative expenses. Income from operations, substantially breakeven, was in line with the first quarter of 2004.
Consolidated balance sheet reclassified according to financial criteria | |||||
(thousands of euro) | |||||
Assets | 03.31.2005 | 12.31.2004 | 03.31.2004 | ||
Current assets | |||||
Cash and banks | 173,137 | 260,196 | 283,386 | ||
Marketable securities | 158,442 | 117,879 | 27,539 | ||
Differentials on forward transactions | 10,818 | 6,857 | 9,834 | ||
Short-term financial receivables | 7,986 | 9,167 | 16,302 | ||
350,383 | 394,099 | 337,061 | |||
Accounts receivable | |||||
Trade receivables | 792,998 | 755,082 | 859,351 | ||
Other receivables | 233,656 | 249,328 | 276,136 | ||
less - Reserve for doubtful accounts | (99,312) | (97,642) | (99,412) | ||
927,342 | 906,768 | 1,036,075 | |||
Assets due to be sold | 5,640 | 7,840 | 8,356 | ||
Inventories | 285,089 | 255,436 | 263,682 | ||
Accrued income and prepaid expenses | 12,827 | 13,367 | 14,875 | ||
303,556 | 276,643 | 286,913 | |||
Total current assets | 1,581,281 | 1,577,510 | 1,660,049 | ||
Financial fixed assets | |||||
Equity investments | 5,201 | 5,116 | 17,880 | ||
Securities held as fixed assets | 223 | 223 | 9 | ||
Guarantee deposits | 16,770 | 16,715 | 16,337 | ||
Medium/long-term financial receivables | 24,694 | 28,273 | 30,292 | ||
Other non-current receivables | 48,378 | 44,436 | 8,069 | ||
Total financial fixed assets | 95,266 | 94,763 | 72,587 | ||
Tangible fixed assets | |||||
Real estate | 708,432 | 703,449 | 646,310 | ||
Plant, machinery and equipment | 313,356 | 305,636 | 339,964 | ||
Office furniture, furnishings and electronic equipment | 113,993 | 112,655 | 101,300 | ||
Vehicles and aircraft | 22,346 | 22,366 | 22,838 | ||
Assets under construction and advances for tangible fixed assets | 3,427 | 3,724 | 15,772 | ||
Assets acquired through finance leases | 13,275 | 13,259 | 17,627 | ||
less - Accumulated depreciation | (431,746) | (419,293) | (421,898) | ||
Total tangible fixed assets | 743,083 | 741,796 | 721,913 | ||
Intangible fixed assets | |||||
Licenses, trademarks and industrial patents | 24,090 | 25,041 | 26,960 | ||
Deferred charges | 181,984 | 184,392 | 192,759 | ||
Total intangible fixed assets | 206,074 | 209,433 | 219,719 | ||
TOTAL ASSETS | 2,625,704 | 2,623,502 | 2,674,268 | ||
(thousands of euro) | |||||
Liabilities and Shareholders' equity | 03.31.2005 | 12.31.2004 | 03.31.2004 | ||
Current liabilities | |||||
Due to banks | 11,105 | 19,924 | 24,429 | ||
Bonds | 300,000 | 300,000 | - | ||
Short-term loans | 6,993 | 4,985 | 7,902 | ||
Current portion of medium/long-term loans | 841 | 1,101 | 1,320 | ||
Current portion of lease financing | 6,071 | 6,007 | 6,243 | ||
Trade payables | 284,342 | 284,011 | 291,474 | ||
Other payables, accrued expenses and deferred income | 77,948 | 93,422 | 77,946 | ||
Reserve for income taxes | 15,524 | 14,113 | 130,517 | ||
Total current liabilities | 702,824 | 723,563 | 539,831 | ||
Medium/long-term liabilities | |||||
Bonds | - | - | 300,000 | ||
Medium/long-term loans, | |||||
net of current portion | 500,946 | 501,180 | 501,765 | ||
Other medium/long-term liabilities | 42,267 | 41,343 | 8,135 | ||
Lease financing | 16,206 | 17,748 | 22,753 | ||
Reserve for employee termination indemnities | 50,054 | 51,518 | 49,296 | ||
Other reserves | 51,680 | 50,990 | 42,267 | ||
Total medium/long-term liabilities | 661,153 | 662,779 | 924,216 | ||
Minority interests in consolidated subsidiaries | 6,292 | 6,840 | 5,677 | ||
Shareholders' equity | |||||
Share Capital | 236,026 | 236,026 | 236,026 | ||
Additional paid-in capital | 56,574 | 56,574 | 56,574 | ||
Surplus from monetary revaluation of assets | 21,452 | 22,058 | 22,058 | ||
Other reserves and retained earnings | 916,267 | 790,211 | 859,205 | ||
Translation differences | 2,033 | 2,377 | 2,917 | ||
Net income for the period | 23,083 | 123,074 | 27,764 | ||
Total Shareholders' equity | 1,255,435 | 1,230,320 | 1,204,544 | ||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 2,625,704 | 2,623,502 | 2,674,268 | ||
Financial situation - highlightstaken from internal reports
(millions of euro) | 03.31.2005 | 12.31.2004 | Change | 03.31.2004 | |
Working capital | 759 | 688 | 71 | 820 | |
Assets due to be sold | 6 | 8 | (2) | 8 | |
Total capital employed | 1,731 | 1,668 | 63 | 1,707 | |
Net financial position | 470 | 431 | 39 | 497 | |
Shareholders' equity | 1,255 | 1,230 | 25 | 1,204 | |
Minority interests | 6 | 7 | (1) | 6 |
Compared with December 31, 2004, working capital increased by 71 million euro, mainly due to normal cyclical movements, with an increase in trade receivables and inventories partially offset by the reduction in trade payables. Assets due to be sold relate to a factory in the manufacturing sector, while those in the first quarter of 2004 related to the sports equipment sector.
The change in net capital employed, in addition to comments already made, was also due to the combined effect of the following factors:
- additions to tangible and intangible fixed assets as a result of capital expenditure totaling 23 million euro;
- depreciation, amortization and sales of fixed assets of 25 million and 1 million euro respectively;
- decrease in deferred tax assets of 5 million euro.
Compared with the first quarter of 2004, working capital improved, mainly due the reduction in receivables, while inventories increased, also as a result of the expansion of the directly managed sales network.
The net financial position was 470 million euro, increasing by 39 million euro compared with December 31, 2004, and was made up as follows:
(millions of euro) | 03.31.2005 | 12.31.2004 | 03.31.2004 | ||
Current financial assets: | |||||
- Italian government securities and monetary funds and bonds | 158 | 118 | 28 | ||
- bank deposits | 95 | 141 | 181 | ||
- cash and ordinary current accounts | 78 | 119 | 102 | ||
- other short-term financial receivables | 19 | 16 | 26 | ||
Total current financial assets | 350 | 394 | 337 | ||
Medium-term financial receivables | 25 | 29 | 30 | ||
Total financial assets | 375 | 423 | 367 | ||
Current financial liabilities: | |||||
- bond loan | (300) | (300) | - | ||
- short-term financial payables | (18) | (25) | (33) | ||
- current portion of medium-term debt | (1) | (1) | (1) | ||
- current portion of amounts due to leasing companies | (6) | (6) | (6) | ||
Total current financial liabilities | (325) | (332) | (40) | ||
Medium-term financial payables: | |||||
- bond loan | - | - | (300) | ||
- syndicated loan | (500) | (500) | (500) | ||
- other medium-term loans | (4) | (4) | (2) | ||
- due to leasing companies | (16) | (18) | (22) | ||
Total medium-term financial payables | (520) | (522) | (824) | ||
Total financial liabilities | (845) | (854) | (864) | ||
Net financial position | (470) | (431) | (497) | ||
Net short-term financial position | 25 | 62 | 297 | ||
Net medium-term financial position | (495) | (493) | (794) | ||
Net financial position | (470) | (431) | (497) | ||
To provide better support for Group business cycles and to meet future commitments, on March 4, 2005, the Board of Directors authorized the management to negotiate a revolving line of credit for a maximum amount of 500 million euro and with a maximum duration of 5 years.
These financial resources, of 350 million euro as of March 31, 2005, will enable us to meet the maturity date in July 2005 of the 300 million euro bond loan, which places limitations on giving collateral security for new loans but does not require observance of any financial ratio ("financial covenants").
The syndicated loan of 500 million euro, maturing in July 2007, provides for compliance with two financial ratios that have to be calculated every six months based on the consolidated financial statements, namely:
- minimum ratio between EBITD (earnings before interest, tax and depreciation) and net financial charges of 2.5 times;
- maximum ratio between the net financial position and shareholders' equity of 1.
There are also limitations on significant business disposals and on the granting of collateral security for new loans.
Statement of cash flow
1st quarter | 1st quarter | Year | ||||
(millions of euro) | 2005 | 2004 | 2004 | |||
Cash flow from operating activities | (20) | (21) | 269 | |||
Net operating capital expenditure | (22) | (15) | (69) | |||
Change in financial fixed assets | - | (15) | (23) | |||
Free cash flow | (42) | (51) | 177 | |||
Payment of dividends | (0) | - | (69) | |||
Payment of substitute tax | - | - | (125) | |||
Disposal of the sports equipment sector | - | 27 | 50 | |||
Net financial (requirements)/surplus | (42) | (24) | 33 | |||
The negative cash flow from operating activities was substantially in line with the first quarter of 2004, while free cash flow was 42 million euro compared with 51 million in the first quarter of 2004, although net operating investments were higher.
Corporate information | Headquarters |
Benetton Group S.p.A. | |
Villa Minelli | |
31050 Ponzano Veneto (Treviso) - Italy | |
tel +39 0422 519111 | |
Legal data | |
Share Capital: Euro 236,026,454.30 fully paid | |
R.E.A. (register of Commerce) no. 84146 | |
Tax ID/Treviso Company register no. 00193320264 | |
Media & communications department | |
e-mail: press@benetton.it | |
tel +39 0422 519036 | |
fax +39 0422 519930 | |
Investor relations | |
e-mail: invrel@benetton.it investor@benetton.it | |
tel +39 0422 519412 | |
fax +39 0422 519740 | |
TV Conference +39 0422 510623/24/25 | |
www.benettongroup.com |