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INTERIM REPORT
FIRST QUARTER OF 2007
Geox S.p.A.
Registered Offices in Italy - Via Feltrina Centro 16, Biadene di Montebelluna (Treviso)
Share Capital - Euro 25,884,400 fully paid
Tax Code and Treviso Companies Register No. 03348440268
2
Contents
Company officers ............................................................................................................................................ 4
Directors’ report............................................................................................................................................... 5
Introduction ..................................................................................................................................................................... 5
The Group’s Economic Performance .............................................................................................................................. 6
The Group’s Financial Performance................................................................................................................................ 9
Significant events during the quarter............................................................................................................................. 11
Forecast for operations and significant subsequent events........................................................................................... 11
Consolidated Financial Statements............................................................................................................. 12
Income Statement ......................................................................................................................................................... 12
Balance Sheet............................................................................................................................................................... 13
Cash flow statement...................................................................................................................................................... 14
Statement of Changes in Shareholders’ Equity............................................................................................................. 15
Explanatory Notes ......................................................................................................................................................... 16
3
Company officers
Board of Directors
Name and Surname Position and indication of independence (where
applicable)
Mario Moretti Polegato Chairman
Diego Bolzonello (*) Director and Chief Executive Officer
Enrico Moretti Polegato Director
Umberto Paolucci Independent Director
Francesco Gianni Independent Director
Alessandro Antonio Giusti Independent Director
Bruno Barel Independent Director
Giuseppe Gravina Independent Director
Renato Alberini Independent Director
(*) Powers and responsibilities for ordinary and extraordinary administration, within the limits indicated by the law and by the Articles of
Association, in compliance with the powers of the Shareholders' Meeting, of the Board of Directors and of the Executive Committee, in
accordance with the resolution approved by the Board of Directors on April 12, 2007.
Board of Statutory Auditors
Name and Surname Position
Fabrizio Colombo Chairman
Achille Frattini Statutory Auditor
Francesco Mariotto Statutory Auditor
Francesca Meneghel Alternate Auditor
Laura Gualtieri Alternate Auditor
Independent Auditors
Reconta Ernst & Young S.p.A.
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Directors’ report
Introduction
The market in which the Geox Group operates is characterized by seasonal phenomena, typical of the sector, leading to
differences in the flow of costs and revenues in the various months of the year. In particular, the invoicing of products in
the first six months, corresponding to the Spring/Summer sales period, is characterized by a concentration in the months
of January, February and March, while the operating costs showed a more linear trend throughout the first six months.
It is important to remember, therefore, that the Income Statement relating to the First Quarter cannot be considered as a
proportionate part of the whole financial period and the quarterly results of the period ending on March 31 are not
comparable with those as of June 30 and December 31.
From a financial point of view, the quarterly figures are also affected by the same seasonal phenomena. The figures as
of March 31, in fact, compared to the figures as of June 30 and December 31 highlight a significantly higher net working
capital.
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The Group’s Economic Performance
The Group’s results for first quarter 2007 are summarized below:
• Net sales of Euro 315.2 million, up 29% from Euro 245.3 million in the same period of 2006;
• EBITDA of Euro 118.2 million, compared to Euro 85.4 million in the same period of 2006 (+38%), with a 37.5%
margin;
• EBIT of Euro 113.1 million, compared to Euro 81.3 million in the same period of 2006 (+39%), with a 35.9%
margin;
• Net income of Euro 72.5 million, compared to Euro 52.6 million in the same period of 2006 (+38%), with a
23.0% margin.
In the following table a comparison is made between the consolidated income statement for first quarter of 2007, first
quarter of 2006 and the full year 2006.
(Thousands of Euro) I quarter % I quarter % FY %
2007 2006 2006
NET SALES 315,233 100.0% 245,305 100.0% 612,258 100.0%
% growth 29% 32% 35%
DIRECT COST OF GOODS SOLD (1) (140,528) (44.6%) (113,882) (46.4%) (283,079) (46.2%)
GROSS MARGIN 174,705 55.4% 131,423 53.6% 329,179 53.8%
SELLING AND DISTRIBUTION COSTS (15,095) (4.8%) (12,173) (5.0%) (30,882) (5.0%)
OVERHEADS (2) (29,283) (9.3%) (23,679) (9.7%) (94,570) (15.4%)
ADVERTISING AND PROMOTION (12,098) (3.8%) (10,123) (4.1%) (50,257) (8.2%)
EBITDA 118,229 37.5% 85,448 34.8% 153,470 25.1%
DEPRECIATION AND AMORTIZATION (3) (5,086) (1.6%) (4,112) (1.7%) (18,564) (3.0%)
EBIT 113,143 35.9% 81,336 33.2% 134,906 22.0%
NET INTEREST (2,391) (0.8%) (1,635) (0.7%) (992) (0.2%)
EBT 110,752 35.1% 79,701 32.5% 133,914 21.9%
INCOME TAXES (38,245) (12.1%) (27,113) (11.1%) (36,652) (6.0%)
Tax rate 34.5% 34.0% 27.4%
NET INCOME 72,507 23.0% 52,588 21.4% 97,262 15.9%
EPS (earnings per share, Euro) 0.28 0.20 0.38
(1) Direct cost of goods sold: it represents the direct manufacturing and/or sourcing cost of goods sold.
(2) It includes:
- industrial costs (3,541) (3,247) (13,071)
- general & administrative costs (25,742) (20,432) (81,499)
(3) It includes:
- industrial depreciation (1,545) (1,096) (5,868)
- general & administrative depreciation (3,541) (3,016) (12,696)
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Sales
Consolidated sales record an increase of 29% to Euro 315.2 million. Footwear sales represent 95% of the consolidated
sales, amounting to Euro 300.5 million, with a 29% increase compared to the same period of 2006. Apparel sales
accounted for 5% of consolidated sales equal to Euro 14.5 million, with a 41% increase.
(Thousands of Euro) I quarter % I quarter % Ch. %
2007 2006
Footwear 300,469 95.3% 232,503 94.8% 29.2%
Apparel 14,495 4.6% 10,261 4.2% 41.3%
Other revenues 269 0.1% 2,541 1.0% (89.4%)
Total 315,233 100.0% 245,305 100.0% 28.5%
Italy remains the Group’s main market accounting for 35% of sales (40% in the same period of 2006) equal to Euro 111.7
million, with a 15% increase.
International markets generated Euro 203.6 million of sales with a 37% growth. In particular, Europe (excluding Italy)
generated 51% of net sales (50% in the same period of 2006) amounting to Euro 161.4 million, with a 32% increase.
(Thousands of Euro) I quarter % I quarter % Ch. %
2007 2006
Italy 111,667 35.4% 96,904 39.5% 15.2%
Germany 49,252 15.6% 43,076 17.6% 14.3%
Iberian peninsula 40,668 12.9% 27,739 11.3% 46.6%
France 26,898 8.5% 18,027 7.3% 49.2%
BeNeLux 22,414 7.1% 17,107 7.0% 31.0%
Austria 13,807 4.4% 10,028 4.1% 37.7%
Switzerland 8,335 2.6% 6,359 2.6% 31.1%
Total Europe 161,374 51.2% 122,336 49.9% 31.9%
USA 6,702 2.1% 4,735 1.9% 41.5%
Other countries 35,490 11.3% 21,330 8.7% 66.4%
Total International 203,566 64.6% 148,401 60.5% 37.2%
Total 315,233 100.0% 245,305 100.0% 28.5%
By distribution channel, “Geox Shop” record a significant growth, up 53% compared to the same period of 2006. At the
end of the first quarter of 2007, this channel represented 20% of net sales.
Sales in the Geox DOS opened by at least 12 months (comparable store sales) increased by 15% (17% at the end of April).
(Thousands of Euro) I quarter % I quarter % Ch. %
2007 2006
Multibrand 253,461 80.4% 204,922 83.5% 23.7%
Franchising 44,969 14.3% 29,685 12.1% 51.5%
DOS 16,803 5.3% 10,698 4.4% 57.1%
Total Geox Shop 61,772 19.6% 40,383 16.5% 53.0%
Total 315,233 100.0% 245,305 100.0% 28.5%
Multibrand shops still represent the Group’s main distribution channel, accounting for 80% of net sales as compared to 84%
of the same period of 2006, with a 24% growth.
In Italy the multibrand channel generated 71% of net sales, for a total of Euro 79.6 million, with a 10% increase. The
Geox Shop channel (franchising and DOS) represents the remaining 29% of domestic sales for a total of Euro 32.1
million, with a 31% increase.
On the international markets, the multibrand channel represents 85% of net sales for a total of Euro 173.9 million, up
31%. The Geox Shops channel recorded sales of Euro 29.7, million with a 87% increase.
7
As of March 31, 2007 the overall number of Geox Shop was 564 (449 of which in franchising and 115 DOS).
During the first quarter 47 new Geox Shops have been opened, of which 2 in Italy, 24 in Europe and 1 in US.
The new openings include, among the others, shops in: Rome, Paris, Los Angeles, Tokyo, Montreal, Toronto,
Vancouver.
March 31, 2007 Dec. 31, 2006 March 31, 2006
Geox of which Geox of which Geox of which
Shops DOS Shops DOS Shops DOS
Italy 212 58 210 57 193 46
Germany 16 4 16 2 11 1
Iberian Peninsula 42 7 35 7 26 7
France 47 15 35 13 27 8
BeNeLux 16 2 16 2 10 2
Austria 24 1 21 1 16 -
Switzerland 9 - 7 - 6 -
Total Europe 154 29 130 25 96 18
USA 13 13 12 12 7 7
Other nations 93 15 81 10 72 8
Nations with license agreements (*) 92 - 84 - 40 -
Total International 352 57 307 47 215 33
Total 564 115 517 104 408 79
(*) Sales from the franchising channel do not include sales from these shops.
Operating and net income results
During the first quarter of 2007 operating and net results as percentage of sales show significant improvements in
comparison to the first quarter of 2006.
• EBITDA of Euro 118.2 million, compared to Euro 85.4 million in the same period of 2006 (+38%), with a 37.5%
margin;
• EBIT of Euro 113.1 million, compared to Euro 81.3 million in the same period of 2006 (+39%), with a 35.9%
margin;
• Net income of Euro 72.5 million, compared to Euro 52.6 million in the same period of 2006 (+38%), with a
23.0% margin.
With regards to the most important cost items, the following are worth highlighting:
• Direct cost of goods sold rose from Euro 113.9 million to Euro 140.5 million (+23%) with a margin on sales of
44.6% from 46.4% in 1Q 2006, showing a significant improvement.
• Selling and distribution costs moved from Euro 12.2 million to Euro 15.1 million (+24%), with a margin on sales of
4.8% (5.0% in 1Q 2006). This improvement has been largely driven by the group’s operating leverage.
• Overheads rose from Euro 23.7 million to Euro 29.3 million (+24%) with a margin on sales of 9.3% (9.7% in 1Q
2006).
• Advertising and promotion costs moved from Euro 10.1 million to Euro 12.1 million (+20%) with a margin on sales
of 3.8% (4.1% in 1Q 2006).
• Tax charges increased to Euro 38.2 million compared to Euro 27.1 million of the same period of 2006, with a
34.5% tax rate.
8
The Group’s Financial Performance
The following table summarizes the reclassified consolidated balance sheet.
(Thousands of Euro) March 31, 2007 Dec. 31, 2006 March 31, 2006
Intangible fixed assets 41,842 38,057 35,686
Tangible fixed assets 32,450 32,070 28,570
Other fixed assets, net 22,076 16,253 17,198
Total fixed assets, net 96,368 86,380 81,454
Operating working capital 242,632 118,296 178,713
Other assets (liabilities), net (54,186) (563) (49,886)
Invested capital 284,814 204,113 210,281
Shareholders’ equity 349,642 276,641 255,792
Severance indemnities, provisions for liabilities and charges 5,744 5,643 4,017
Net financial position (70,572) (78,171) (49,528)
Invested capital 284,814 204,113 210,281
The Group’s shareholders’ equity rose from Euro 276.6 million as of December 2006 to Euro 349.6 million mainly due to
the net result of the period. The net financial position was equal to Euro 70.6 million (Euro 78.2 million at the end of
2006).
The increase in the net operating working capital, from Euro 118.3 million to Euro 242.6 million, is mainly due to the
normal seasonal trends in the sector in which the Group operates.
The table below summarizes the composition and evolution of the net operating working capital and other current assets
(liabilities):
(Thousands of Euro) March 31, 2007 Dec. 31, 2006 March 31, 2006
Inventories 94,019 130,997 62,503
Accounts receivable 239,272 84,159 191,329
Accounts payable (90,659) (96,860) (75,119)
Operating working capital 242,632 118,296 178,713
% on LTM sales (last twelve months sales) 35.6% 19.3% 34.7%
Taxes payable (56,159) (6,002) (52,007)
Other current assets 15,209 20,108 14,011
Other current liabilities (13,236) (14,669) (11,890)
Other assets (liabilities), net (54,186) (563) (49,886)
The increase in the operating working capital as of March 31, 2007 compared to December 31, 2006 is mainly due to the
rise in accounts receivable going from Euro 84.2 million to Euro 239.3 million caused by the concentration of shipments
for the Spring/Summer sales season that occurred in the first three months of the year.
9
The table below summarizes the consolidated cash flow statement for the first quarter of 2007 and 2006 as well as for
the 2006 financial year:
(Thousands of Euro) I quarter I quarter FY
2007 2006 2006
Net income 72,507 52,588 97,262
Depreciation and amortization 5,086 4,112 18,564
Other non-cash items (4,326) (3,018) (323)
73,267 53,682 115,503
Change in operating working capital (124,378) (79,857) (19,043)
Change in other current assets/liabilities 52,072 35,142 (13,349)
Operating Cash flow 961 8,967 83,111
Capital expenditure (9,479) (6,398) (27,382)
Disposals 108 787 845
Capital expenditure, net (9,371) (5,611) (26,537)
Free cash flow (8,410) 3,356 56,574
Dividends - - (22,001)
Change in net financial position (8,410) 3,356 34,573
Net financial position, beginning of the year 78,171 48,401 48,401
Effect of translation differences (59) (125) (623)
Effect of the change in assets and liabilities relating to derivative contracts 870 (2,104) (4,180)
Net financial position, end of the period 70,572 49,528 78,171
The free cash flow of the first three months of 2007 is negative for Euro 8.4 million, mainly due to the increase of the
operating working capital.
The following table summarizes the net financial position:
(Thousands of Euro) March 31, 2007 Dec. 31, 2006 March 31, 2006
Cash and cash equivalents 76,365 84,926 54,746
Financial current assets - excluding derivatives contracts 41 34 -
Bank borrowings and current portion of loans (3,496) (3,256) (2,597)
Net financial position, short term 72,910 81,704 52,149
Financial fixed assets 897 856 -
Long-term portion of loans (1,544) (1,829) (2,137)
Net financial position, long term (647) (973) (2,137)
Net financial position – prior to fair-value adjustment
of derivative contracts 72,263 80,731 50,012
Fair value adjustment of derivative contracts (1,691) (2,560) (484)
Net financial position 70,572 78,171 49,528
10
Significant events during the quarter
No particularly significant events occurred during the quarter other than those already mentioned in the preceding
paragraphs.
Forecast for operations and significant subsequent events
On the basis of the turnover reached in the first quarter of 2007 and the outstanding orders for the current
Spring/Summer season, the management believe that the first six-month of 2007 might close with an increase in sales
compared to the first six months of 2006 with a percentage growth rate in line with that registered as of March 31, 2007.
Regarding the second half of 2007, orders backlog for the Autumn/Winter sales season shows an increase of 27%
compared to the same period of 2006.
11
Consolidated Financial Statements
Income Statement
(Thousands of Euro) I quarter % I quarter % FY %
2007 2006 2006
Net sales 315,233 100.0% 245,305 100.0% 612,258 100.0%
Cost of sales (145,614) (46.2%) (118,227) (48.2%) (302,018) (49.3%)
Gross profit 169,619 53.8% 127,078 51.8% 310,240 50.7%
Selling and distribution costs (15,095) (4.8%) (12,173) (5.0%) (30,882) (5.0%)
General and administrative expenses (29,283) (9.3%) (23,446) (9.6%) (94,195) (15.4%)
Advertising and promotion (12,098) (3.8%) (10,123) (4.1%) (50,257) (8.2%)
EBIT 113,143 35.9% 81,336 33.2% 134,906 22.0%
Net interest (2,391) (0.8%) (1,635) (0.7%) (992) (0.2%)
PBT 110,752 35.1% 79,701 32.5% 133,914 21.9%
Income tax (38,245) (12.1%) (27,113) (11.1%) (36,652) (6.0%)
Net income 72,507 23.0% 52,588 21.4% 97,262 15.9%
Earnings per share [Euro] 0.28 0.20 0.38
Diluted earnings per share [Euro] 0.28 0.20 0.38
Weighted average number of shares:
outstanding
- basic 258,844,000 258,844,000 258,844,000
- diluted 258,844,000 258,844,000 258,844,000
12
Balance Sheet
(Thousands of Euro) March 31, 2007 Dec. 31, 2006 March 31, 2006
ASSETS:
Intangible fixed assets 41,842 38,057 35,686
Tangible fixed assets 32,450 32,070 28,570
Deferred tax assets 16,774 12,466 12,401
Financial fixed assets 897 856 -
Other fixed assets 6,394 5,006 5,911
Total fixed assets 98,357 88,455 82,568
Inventories 94,019 130,997 62,503
Accounts receivable 239,272 84,159 191,329
Other current assets 15,209 20,108 14,011
Financial current assets 71 112 -
Cash and cash equivalents 76,365 84,926 54,746
Current assets 424,936 320,302 322,589
Total assets 523,293 408,757 405,157
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Share capital 25,884 25,884 25,884
Reserves 251,251 153,495 177,320
Net income 72,507 97,262 52,588
Shareholders’ equity 349,642 276,641 255,792
Employee severance indemnities 3,578 3,349 2,775
Provisions for liabilities and charges 2,166 2,294 1,242
Long-term portion of loans 1,544 1,829 2,137
Other long-term payables 1,092 1,219 1,114
Total long-term liabilities 8,380 8,691 7,268
Accounts payable 90,659 96,860 75,119
Other current liabilities 13,236 14,669 11,890
Taxes payable 56,159 6,002 52,007
Financial current liabilities 1,721 2,638 484
Bank borrowings and current portion of loans 3,496 3,256 2,597
Current liabilities 165,271 123,425 142,097
Total liabilities and shareholders’ equity 523,293 408,757 405,157
13
Cash flow statement
I quarter I quarter FY
(Thousands of Euro) 2007 2006 2006
CASH FLOW FROM OPERATING ACTIVITIES:
Net income 72,507 52,588 97,262
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 5,086 4,112 18,564
Increase in (use of) deferred taxes and other provisions (4,619) (3,442) (1,741)
Provision for employee severance indemnities, net 229 89 663
Other non-cash items 64 335 755
760 1,094 18,241
Change in current assets/liabilities:
Accounts receivable (155,254) (116,899) (9,633)
Other assets 3,553 (2,239) (7,217)
Inventories 37,052 45,248 (23,401)
Accounts payable (6,176) (8,206) 13,991
Other liabilities (1,598) 581 3,345
Taxes payable 50,117 36,800 (9,477)
(72,306) (44,715) (32,392)
Operating cash flow 961 8,967 83,111
CASH FLOW USED IN INVESTING ACTIVITIES:
Capital expenditure on intangible fixed assets (5,674) (3,975) (11,193)
Capital expenditure on tangible fixed assets (3,805) (2,423) (16,189)
(9,479) (6,398) (27,382)
Disposals 108 787 845
(Increase) decrease in financial assets (48) 0 (890)
Cash flow used in investing activities (9,419) (5,611) (27,427)
CASH FLOW FROM (USED IN) FINANCING ACTIVITIES:
Increase (decrease) in short-term bank borrowings, net 2,434 246 9
Loans:
- Proceeds - - 2,818
- Repayments (2,478) (10,244) (12,474)
Dividends - - (22,001)
Cash flow from financing activities (44) (9,998) (31,648)
Increase in cash and cash equivalents (8,502) (6,642) 24,036
Cash and cash equivalents, beginning of the period 84,926 61,513 61,513
Effect of translation differences on cash and cash equivalents (59) (125) (623)
Cash and cash equivalents, end of the period 76,365 54,746 84,926
Supplementary information to the cash flow statement:
- Interest paid during the period 54 290 572
- Taxes paid during the period 1,438 517 47,542
14
Statement of Changes in Shareholders’ Equity
Share Legal Share Transla- Other Retained Net Group
income
capital reserve premium tion reserves earnings for the sharehol-
reserve reserve period ders'
equity
Balance as at January 1, 2005 25,850 40 33,227 363 41 28,632 52,751 140,904
Allocation of 2004 results - 1,574 - - - 51,177 (52,751) -
Distribution of dividends - - - - - (15,510) - (15,510)
Capital increase - exercise of stock
options 34 - 1,548 - - - - 1,582
Translation differences - - - 158 - - - 158
Recognition of cost of stock option plans - - - - 960 - - 960
Other movements - - 239 - - - - 239
Valuation of cash flow hedge - - - - 214 - - 214
Net income - - - - - - 75,253 75,253
Balance as at December 31, 2005 25,884 1,614 35,014 521 1,215 64,299 75,253 203,800
Allocation of 2005 results - 2,084 - - - 73,169 (75,253) -
Distribution of dividends - - - - - (22,001) - (22,001)
Translation differences - - - (1,402) - - - (1,402)
Recognition of cost of stock option plans - - - - 1,023 - - 1,023
Valuation of cash flow hedge - - - - (2,041) - - (2,041)
Net income - - - - - - 97,262 97,262
Balance as at December 31, 2006 25,884 3,698 35,014 (881) 197 115,467 97,262 276,641
Allocation of 2005 results - - - - - 97,262 (97,262) -
Translation differences - - - (257) - - - (257)
Recognition of cost of stock option plans - - - - 379 - - 379
Valuation of cash flow hedge - - - - 372 - - 372
Net income - - - - - - 72,507 72,507
Balance as at March 31, 2007 25,884 3,698 35,014 (1,138) 948 212,729 72,507 349,642
15
Explanatory Notes
The economic/financial results of the Group as at March 31, 2007 and for the periods of comparison were prepared on
the basis of Annex 3D to the Issuers’ Regulations no. 11971 of May 14, 1999, and subsequent amendments and
additions.
The quarterly statement as at March 31, 2007, which is not subject to auditing by the Auditing firm, was prepared in
accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB) and the relative standards of interpretation (IFRIC) in force at the time the Statement was drawn
up.
The accounting standards and valuation criteria adopted are the same as those used for the preparation of the annual
consolidated financial statements.
The area of consolidation has not changed since December 31, 2006.
May 15, 2007
On behalf of the Board of Directors
Chairman
Dr. Mario Moretti Polegato
16
