-   As developed around the globe, Licensee Aggregate Sales up 14.8% year-over-year at Euro 422 million (FY10: Euro 367 million);

-   Performance of excellence echoing across the international marketplace, with standouts being Asia and Oceania (+78%) and the Middle East and Africa (+22%);

-   Royalty income and sourcing commission up 17.2% year-over-year to Euro 38 million (FY10: Euro 32 million);

-   78 new sales outlets flying Group banners unveiled over the course of 2011. Upbeat sales (up 20% year-over-year) at single-branded shops and stores (with Same-Stores Sales steady);

-   Direct turnover at Euro 160 million (FY10: Euro 164 million);

-   EBITDA towers Euro 20 million (FY10: Euro 23 million);

-   Net income attributable Group stretches beyond Euro 8 million (FY10: Euro 8.5 million);

-   Substantial improvement (9.6%) honed by net financial indebtedness.

Turin, February 10, 2012 – As called to meet at the date hereof under the chairmanship of Marco Boglione, the Board of Directors of BasicNet S.p.A. examined, among the other things, the consolidated pre-actuals (*) for the year ended December 31, 2011, pending receipt of the consolidated actuals FY11, which will be submitted for review and approval by the Board on March 21, 2012. 

Meaningful commercial growth continued to resonate across the international landscape hiking, on a comparative basis with FY10, a 14.8% uplift in Group-branded product aggregate sales.  Performance of excellence echoing across the international marketplace: Asia and Oceania +78%; Middle East and Africa +22%; Europe +3.4%, and; the Americas +2.5 %.

International commercial growth echoed pleasingly across the revenue-producing component, which mirrors royalty income and sourcing commission up 17.2% from the year before, stretching forward from Euro 32 million at year-end 2010 to Euro 38 million at year-end 2011, whether due to portfolio new brands spiking bolt-on territorial reach or historic brand sales volumes harnessing organic growth.

Consolidated direct sales delivered for FY11 amount to Euro 122 million (FY10: Euro 132 million). Particularly denting this aggregate was the crushing reality of constrained consumption and resultant financial turmoil across the distribution sector in Italy, as sharpening over the course of FY11. Showing its mettle, the Group continued to carry forward with determination a distribution policy crafted around reshaping its distribution channels, with a keen eye steered toward switching from small-sized multi-branded shops and stores to Group-banner single-branded shops and stores. As a result of the 78 sales outlets unveiled over the course of the year, the total number of Group-banner shops and stores operating across the homeland stretched out to reach 257, thereby churning sales revenue growth in the range of 20% or more year-over-year and a substantially steady volume of

Same-Stores Sales on a constant perimeter basis. Regrettably, quantum leap taken by Group-banner shop and store sales volumes failed to bridge the gap left by sales revenue from single-branded shops and stores, in respect of which portions of sales revenue had to be forsaken inasmuch as mired by multi-pronged and excessive credit risk.

Overhead spiked in general an increase mirroring the powerful thrust exerted to support distribution channel reshaping.

By way of attendant consequence, EBITDA for FY11 towers Euro 20 million (FY10: Euro 23 million).

Net income attributable Group for FY11 stretches beyond Euro 8 million (FY10: Euro 8.5 million).

Financed through internally generated cash flows, capital investment for the year amounts to some Euro 6 million and was ploughed mainly into distribution channel reshaping and, as in prior years, into IT & Computer-System platforms and, not least, into the joint venture Sabelt^® brand acquisition, as put in place in 4Q2011.

More keenly focused working capital management and control over the last twelve months worked toward downsizing year-over-year the inventory balance by Euro 6 million, retreating from Euro 60.2 million as at December 31, 2010 to Euro 54 million as at December 31, 2011, allied by the balance on trade receivables (-Euro 7 million), which retreated from Euro 56.9 million as at December 31, 2010 to Euro 50 million as at December 31, 2011, notwithstanding the Euro 10 million reduction in supplier payables (retreating over the last twelve months from Euro 44 million to Euro 34 million).  

Mirroring a 9.6% improvement, Group net financial indebtedness as at December 31, 2011 stepped back Euro 7.6 million from December 31, 2010.

Powering the route to constant improvement tracked since 2011 onset was cash flow generated from core-business operating activities in the amount of Euro 17 million, of which Euro 14 million by way of operating cash flow and Euro 3 million from optimized management of working capital. Achieving all of this was the noticeable improvement honed in terms of accounts receivable and inventory, which culminated into fixed asset investments being internally financed (Euro 6 million), dividend payouts (Euro 2.9 million), treasury share purchases (Euro 0.9 million) and medium-term borrowings being repaid (some Euro 4 million), thereby drawing down current net financial indebtedness by Euro 3.6 million or more.

The Debt/Equity ratio places in evidence a balanced stance, retreating from 0.99 at December 31, 2010 to 0.84 at December 31, 2011. As such, all of this reflects full compliance with the covenants contemplated under the loan facility agreement entered into part way FY07 in relation to the Superga^® brand acquisition.

FY2011 KEY ACTIVITIES AND EVENTS AT A GLANCE

Business activity across the international marketplace

Upbeat business activity across the international marketplace activities paved the way toward sealing meaningful commercial arrangements for all-new territories and, not least, toward evolving a number of extant partnerships into strategically important territories. Allied by the constant organic growth honed by the licensing sector, those arrangements for all-new territories will drive though bolt-on revenues already with effect from 2H2012.

In particular, inked in respect of the Kappa^® and Robe di Kappa^® brands were all-new brand distribution licensing agreements for Russia and brand distribution repositioning through primary partners for the United States and Canada and Brazil, Panama, Peru, Colombia and Chile.

Inked in respect of the Superga^® brand over the course of the year were all-new and meaningful arrangements for the territorial landscape embracing Vietnam, Singapore and Malaysia and, with effect from FY12, for the territorial landscape embracing China and Hong Kong. FY11 also saw renewal, as a result of identifying new licensees, were arrangements for the territorial landscape embracing the United States, Canada, Mexico and Brazil.  

Also revisited over the course of the year were commercial relations with the Moscow-based Bosco Sport Group, which provide for agreements built around developing the Bosco apparel collection, whether in terms of the Russian teams set to compete at the London Olympic Games 2012 or the Sochi (Russia) Olympics 2014, and the collection earmarked for the Bosco shops and stores scattered across the Russian territorial landscape.

Group-banner sales outlets

As mentioned earlier, continuing to gain momentum was the network of Group-banner shops and stores, with a keen eye steered toward building up more effectively its sphere of reach to end-customers and accelerating the network’s programmed capillary roll-out. Unveiled over the course of FY11 were 78 new shops and stores, of which 45 operating under the Superga^® banner, 32 operating under the RDK^® banner and 1 operating under the K-Way^® banner, thereby bringing to 257 the total number of shops and stores scattered across the homeland.

Sponsorships and Communication

Boldly stepping ahead throughout the review period was communication and sponsorship, joining rank in respect of which in 2H2011 were sponsorship arrangements inked with FISI (Italian Federation for Winter Sports).

New Investments

In October, BasicNet subscribed to a share capital increase in Fashion S.p.A., the titleholder to the Sabelt^® brand for the fashion merchandize categories (apparel and footwear), partaking with a 50% stakeholding. Insofar as the brand’s exclusive world licensee, BasicNet S.p.A. will make available its business model and all the specific applications resulting therefrom, as already made available in the past for the other more recently acquired brands.

Along with the K-Way^® brand and the Jesus^® brand (the latter relaunched through a toxic-free denim collection, the Sabelt^® brand has joined the ranks of the Group’s all-new Fashion division.

Managing Director Franco Spalla comments on the consolidated pre-actuals saying “An exceptional business year has come to pass: the Group passed a number of milestones in 2011 expanding its depth and reach across the international marketplace, whether in commercial or revenue-producing commercial terms, and consolidating above all its market foothold for the years that lie ahead Looking at the Italian marketplace, particularly dented by the harsh financial crisis and anemic consumption, the Group continued to carry forward with determination the project crafted around rolling out Group-branded shops and stores across the homeland, with the attendant consequence being 78 all-new shops and stores being unveiled over the course of the year, as financed through internally generated cash flows. As in the year just ended, continuing to remain a priority for the year ahead ending December 31, 2012 will be enhanced brand footprint across the international territorial landscape and across the homeland.”

(*) Consolidated pre-actuals as yet unaudited

Defined below are the key financial performance indicators as adopted herein:

Direct Turnover: consolidated direct sales plus royalty income and sourcing commissions on purchases

EBITDA: operating margin before depreciation and amortization

Net Financial Indebtedness: difference between financial payables, less cash and cash equivalents, and current/non-current financial assets.

Further information and details on the BasicNet Business Model can be found at: www.basicpress.com/BasicNet4.2.

Paolo Cafasso, the Officer entrusted with the responsibility to draw up the corporate accounting schedules and documents, hereby confirms, pursuant to Section 154-bis, Sub-section 2, of the Financial Act, that the accounting disclosures presented herein agree with the underlying accounting records and ledgers.