CONSOLIDATED FINANCIAL RESULTS 12M 2009

In 2009 consolidated turnover declined by 14.93% reaching €220.65 mil. from €259.37 mil. last year. The drop in the Group’s consolidated turnover reflects the reduced consumer spending and the continuing adverse macroeconomic environment as well as the negative impact from currency movements, and is in accordance to management’s guidance. Excluding the FX translation effect, Group sales reduced by c. 7%. Despite operating in a continuously deteriorating economic environment, the downward trend eased during Q4 2009, predominantly aided by the stabilisation towards the end of the year of the currency devaluation in the Group’s foreign markets, as well as the end of the inventory reduction that was implemented in H1 2009. More specifically, Group sales reduced by 9.49% in Q4 2009 vs the last quarter of 2008, which corresponds to a 3% reduction excluding the FX translation impact.

Gross profit reduced by 16.27% to €110.58 mil. in 2009 from €132.06 mil. Gross profit margin settled at 50.12% versus 50.92%, partly affected by the adverse currency movements. Nevertheless, the negative impact was in part offset by the high participation of the own brands portfolio as well as more competitive raw material prices.

Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) posted a decrease of 27.81% to €27.08 mil. in 2009 from €37.51 mil. in 2008, while the EBITDA margin stood at 12.27% from 14.46% in the respective prior-year period.

Earnings before Interest and Tax (EBΙΤ) reached €23.44 mil. from €33.78 mil., reduced by 30.60% and EBIT margin was reduced from 13.02% in 2008 to 10.63% in 2009, exceeding the estimated EBIT margin of 10%.

Earnings before taxes (EBT) settled at €21.47 mil. from €32.74 mil. in 2008, a reduction of 34.41% compared to last year.

Earnings after taxes and minorities reached €16.88 mil., reduced by 33.50% compared to 2008 and the EATAM margin settled at 7.65% from 9.79%, exceeding the estimated margin of 6.82%. Including the one-off tax of €0.49 mil. EATAM settled at 16.39 mil., reduced by 35.42% compared to 2008..

Sarantis Group financial results were in line with the management’s guidance in terms of turnover, while exceeded the expectations in terms of profitability. More specifically, Group EBITDA exceeded by 6% the estimate of €25.5 mil., while the EBIT stood 7% higher than the projections. The earnings before tax were by 15% above the guidance of €18.75 mil., while EATAM stood 13% improved compared to the estimate of €15 mil. Including the one-off tax, EATAM exceeded management’s guidance by 9%.

Despite the challenging macroeconomic environment Sarantis Group has successfully continued to generate solid cashflows, a fact attributed largely to management’s focus behind the efficient working capital management and cost saving initiatives.

More specifically, the Group’s operating working capital settled at €64.10 mil. in 2009, improved compared to €71.17 mil. during 2008 and €76.50 mil. in 9M 2009. Operating working capital requirements over sales settled at 29.05% in 2009 vs 33.68% in 9M 2009 and 27.44% in 2008.

At the same time the Group benefits from a healthy capital structure and low leverage. In 2009, total Group’s bank debt reached €56.98 mil. from €64.92 mil. in 2008, reduced by 12.24%. The Group’s net debt further reduced to €9.2 mil. from €24.68 mil. in 9M 2009 and €29.31 mil. in 2008

It should be mentioned that the adverse conditions in the consumer sector as well as the unfavorable foreign exchange rates in the Group’s foreign markets had a negative effect on the Group with all the business categories decreasing in sales during 2009 versus the previous year. Nonetheless, it should be noted that there is an improvement during the last quarter of 2009 mainly resulting from the stabilization of the currency devaluation in the Group’s foreign markets during the last quarter of 2009.

During 2009 the Household Products turnover declined by 13.08%, reaching €96.32 mil. from €110.81 mil. last year. Own brands within this SBU reduced by 9.82% while their participation to the SBU’s turnover increased to 99.28% from 95.70%.

During Q4 2009 the Household Products sales reduced by 8.83% vs Q4 2008, improved over the 19.37% decrease of the third quarter of 2009.

During 2009 Cosmetics recorded a sales decline of 16.79% amounting to €94.39 mil. from €113.44 mil. in 2008. In this SBU, own brands demonstrate a decline of 20.63% and their contribution to total turnover also dropped to 67.56% from 70.83%.

Cosmetics exhibited improved sales during Q4 2009 compared to the previous quarters of 2009, as Q4 2009 sales dropped by 13.88% vs Q4 2008, while Q3 2009 drop was equal to 18.63%.

The category of Other Sales also had a satisfactory performance during Q4 2009 mainly driven by the subcategory of the Selective Products, which outperformed the previous quarters presenting a 21.10% increase in Q4 2009 versus Q4 2008.

In terms of the Group’s operating profit, the negative impact of the weak consumer environment, the deteriorating trading conditions and the currency devaluation in the group’s foreign countries is partly offset by the realization of cost cutting initiatives.

Additionally, it is worth to note that during 2009 the Household Products have proven to be more resilient in terms of profitability partly thanks to lower commodity costs.

More specifically, Household products EBIT, reversing the previous quarter’s trend, increased in 2009 by 24.42% to €11.11 mil. from €8.93 mil. in 2008. Their contribution to total EBIT increased from 26.44% in 2008 to 47.41% in 2009, while their EBIT margin reached 11.54% from 8.06%. Own brands of this category posted an EBIT growth of 25.21% during 2009, reaching €11.06mil.

Cosmetics EBIT decreased in 2009 by 71.62% compared to 2008. The Cosmetics EBIT margin during 2009 settled at 4.33% vs 12.68% in 2008. The operating profits of own brands within this category stood at €3.35 mil. during 2009 from €12.03 mil. in 2008, reduced by 72.12%.

The Estee Lauder JV income settled at €6.17 mil. in accordance with management’s estimates.

Looking at the geographical analysis, in 2009 the Greek market was influenced by the drastic inventory reduction that took place mainly during the first half of 2009 as well as the weak consumer spending and the challenging trading conditions that prevailed in the market throughout the year as a result of the adverse macroeconomic environment.

More specifically, sales in the Greek market dropped by 14.30% during 2009, reaching €91.49 mil. from €106.75 mil. in 2008.

However, during the fourth quarter of 2009 Greece exhibited an improved performance in terms of sales versus the previous quarters of 2009, aimed by the Luxury Cosmetics subcategory and the Household Products.

In terms of the EE market and more specifically the Group’s old countries of operation, the sales drop is largely attributed to the currency devaluation as well as the deteriorating consumption trends in the majority of the EE counties.

In particular, the old countries posted a decline of 15.06% in 2009 versus the previous year, which consists of a c. 2% sales drop in local currency and a c. 13% average currency devaluation . It is worth to note that the old countries’ local currency sales contraction eased during Q4 2009 at 2.5% compared to the drop of c. 6% observed in Q3 2009.

As far as EBIT is concerned, the Greek EBIT during 2009 was reduced by 13.15% to €16.49 mil. It is worth to mention that during the fourth quarter the Greek EBIT stood at €5.10 mil increased by 42.75% versus the respective quarter last year and improved over the performance of this year’s previous quarters. Excluding the Estee Lauder JV income, the Greek EBIT reached €2.50 mil. in Q4 2009 which corresponds to a 87% increase compared to last year’s last quarter.

This improvement stems partly from the improvement during Q4 2009 in the subcategory of Luxury Cosmetics and the Household Products.

The Greek EBIT margin, excluding the EL JV income, stood at 11.28% in 2009 from 11.32% last year.

The old countries recorded an EBIT reduction of 53.01% to €6.95 mil in 2009 from €14.80 mil in 2008. The old countries EBIT margin settled at 5.39% in 2009 vs 9.74% in 2008.

Sarantis Group 2009 financial results were according to management’s expectations and reflect the highly challenging trading environment. Despite operating in a continuously deteriorating economic environment, the downward trend eased during the fourth quarter of 2009, aided by the stabilization towards the end of the year of the currency devaluation in the EE region, the end of the key accounts destocking process, as well as the timely implementation of cost saving initiatives and the management’s tight focus on working capital and solid cahflow generation.

As the economic uncertainty remains, the management expects the difficult trading conditions will persist in 2010 and the emphasis will be placed on aligning the business cost structure with the expected sales growth.

At the same time the Group remains focused on its strategic pillars of growth that consist of organic growth of the core business activities and emphasis on Sarantis own brands portfolio, increase of the existing market shares of own brands in the EE region, continuous examination of the situation in the economies of the Group’s foreign countries and modification of the business where deemed necessary according to the new market conditions and finally emphasis on the examination of possible acquisition targets in the old countries of operation, as long as market share, profitability and cost structure allow for synergies.