PRESS RELEASE FOR THE FINANCIAL RESULTS OF ELGEKA FOR THE YEAR 2013
Thessaloniki, March 31st, 2014
Remarkable resistance exhibited activities of Group’s companies in 2013, despite the very harsh domestic economic environment due to the ongoing six-year recession, the great reduction in disposable income and stifling liquidity conditions. Sales fell slightly, operating cash flow remained positive and led to a reduction in bank borrowing, while providing the opportunity for radical restructuring of the balance sheet, redefining business objectives and commitment a series of actions regarding the restrain of operation cost and transformation of the operating model.
Consolidated turnover for 2013 amounted to 311,5 million euro compared to 323,0 million euro, presenting a decrease of 3,6%. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were zero compared to 5,0 million euro in the corresponding year. Pre-tax loss from continuing operations amounted to 21,0 million euro compared to 10,6 million euro in 2012. Loss after tax and non-controlling interest amounted to 25,3 million euro comparing to 12,1 million euro in 2012, significantly affected by extraordinary, non-recurring events, such as impairment of goodwill and customers relationships, charge of deferred tax, as well as the loss from discontinued operations.
During the second half of 2013, ELGEKA Group implemented a reorganization plan through the disengagement from loss-making activities and a drastic reduction of operating cost. In addition, they were made all necessary provisions for impairment of assets, in order to fully reflect the financial position of the Group based on the current conditions of the economy.
The main activities of the program were the following:
1. Immediate termination of loss-making activities.
It was decided and implemented the cessation of the wholesale business of ARISTA S.A. (ex VITA PI S.A.), the sale of wholesale store MEDIHELM S.A. and the inactivation of the pharmaceutical company SAMBROOK S.A. These actions while are painful in the short term, creating a one-off loss of 8,6 million euro, will secure the healthiness in the long-term, ridding the Group of multiple, repeated economic bleeding.
2. Drastic reduction of the operating cost of the Group’s companies.
It was decided and implemented, with a peak in implementing the first two months of 2014, a series of actions to reduce costs in areas such as transportation services, rent of warehouses and fees framework aimed at saving of 7,5 million euro per year.
3. Reposition of activities and priorities.
There were focus on the exploitation of comparative advantages of the Group having as a basic criterion that of effectiveness. Based on this framework, it was decided to cease the partnerships of marginal or negative efficiency, the maximization of synergies within the Group, the emphasis on products of Greek producers and private label products, the centralization of services, the creation and promotion of innovative products.
4. Creation of provisions with an aim the update in the current levels of intangible, mainly, assets.
It concerns the valuation of investments participations and customers relationships, the fair value of investment property and the recoverable amount of trade receivables, which experienced a decrease, either due to the discontinuation of loss-making activities or because of the recession, leading to a total reduction of the equity of the Group and the parent, ELGEKA S.A., by 17,3 million euro and 23,2 million euro respectively.
The Group’s strategy for the next three years is developed in the following areas:
I. Restructuring of the operating model of the Group’s companies through the fundamental review of the existing structures and processes, based on existing best practices in order to reduce operating cost and increase efficiency.
II. Qualitative upgrading of its managerial personnel by attracting experienced and capable executives from the broader market, beyond the renewal that has been achieved during the previous months.
III. Redefining the commercial objectives of the Group’s companies on the basis of gained experience and given the fact of continued depression in consumer spending.
IV. Focus on existing activities that have significant growth potential (Logistics, food, etc.).
The Summary Financial Data and Information for the year 01.01.2013 – 31.12.2013, as well as the Annual Financial Statements of the same year, are available today Monday, March 31, 2014, in the Company’s website (www.elgeka.gr), as well as in Hellenic Exchanges Group’s website (www.helex.gr).