Tallinn, 2014-11-11 15:00 CET (GLOBE NEWSWIRE) -- Selected Financial Indicators
Summarized selected financial indicators of the Group for 9 months 2014 compared to 9 months 2013 and 30.09.2014 compared to 31.12.2013 were as follows:
| in thousands of EUR | 9m 2014 | 9m 2013 | Change |
| Revenue | 87 139 | 98 812 | -11.8% |
| EBITDA | 13 025 | 18 501 | -29.6% |
| Net profit for the period | 9 235 | 11 747 | -21.4% |
| Net profit attributable equity holders of the Parent company | 8 431 | 10 709 | -21.3% |
| Earnings per share (EUR) | 0.22 | 0.27 | -20.5% |
| Operating cash flow for the period | 7 621 | 15 274 | -50.1% |
| in thousands of EUR | 30.09.2014 | 31.12.2013 | Change |
| Total assets | 79 114 | 76 629 | 3.2% |
| Total current assets | 57 438 | 55 080 | 4.3% |
| Total equity attributable to equity holders of the Parent company | 58 404 | 52 370 | 11.5% |
| Loans and borrowings | 0 | 79 | -100.0% |
| Cash and cash equivalents | 22 374 | 19 165 | 16.7% |
| Margin analysis, % | 9m 2014 | 9m 2013 | Change |
| Gross profit | 33.9 | 35.6 | -4.8% |
| EBITDA | 14.9 | 18.7 | -20.2% |
| Net profit | 10.6 | 11.9 | -10.9% |
| Net profit attributable equity holders of the Parent Company | 9.7 | 10.8 | -10.7% |
| Financial ratios, % | 30.09.2014 | 31.12.2013 | Change |
| ROA | 11.2 | 13.4 | -16.4% |
| ROE | 16.2 | 19.9 | -18.6% |
| Price to earnings ratio (P/E) | 7.3 | 9.5 | -23.3% |
| Current ratio | 5.0 | 4.7 | 7.5% |
| Quick ratio | 2.9 | 2.6 | 14.5% |
Consolidated Statement of Financial Position
| in thousands of EUR | 30.09.2014 | 31.12.2013 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 22 374 | 19 165 |
| Prepayments | 400 | 196 |
| Trade and other receivables | 10 772 | 10 846 |
| Inventories | 23 892 | 24 873 |
| Total current assets | 57 438 | 55 080 |
| Non-current assets | ||
| Investments in associates | 115 | 124 |
| Available-for-sale investments | 549 | 497 |
| Deferred tax asset | 608 | 460 |
| Intangible assets | 753 | 719 |
| Investment property | 1 725 | 1 592 |
| Property, plant and equipment | 17 926 | 18 157 |
| Total non-current assets | 21 676 | 21 549 |
| TOTAL ASSETS | 79 114 | 76 629 |
| LIABILITIES AND EQUITY | ||
| Current liabilities | ||
| Current borrowings | 0 | 79 |
| Trade and other payables | 6 850 | 10 837 |
| Tax liabilities | 4 617 | 905 |
| Total current liabilities | 11 467 | 11 821 |
| Non-current liabilities | ||
| Deferred tax liability | 266 | 1 953 |
| Total non-current liabilities | 266 | 1 953 |
| Total liabilities | 11 733 | 13 774 |
| Equity | ||
| Share capital | 11 820 | 11 820 |
| Share premium | 13 822 | 13 822 |
| Treasury shares | -1 164 | -224 |
| Statutory reserve capital | 1 306 | 1 306 |
| Other reserves | 0 | 0 |
| Unrealised exchange rate differences | -2 454 | -1 215 |
| Retained earnings | 35 074 | 26 861 |
| Total equity attributable to equity holders of the Parent company | 58 404 | 52 370 |
| Non-controlling interest | 8 977 | 10 485 |
| Total equity | 67 381 | 62 855 |
| TOTAL EQUITY AND LIABILITIES | 79 114 | 76 629 |
Consolidated Income Statement
| in thousands of EUR | 3Q 2014 | 3Q 2013 | 9m 2014 | 9m 2013 | |
| Revenue | 32 479 | 29 865 | 87 139 | 98 812 | |
| Cost of goods sold | -22 110 | -18 068 | -57 605 | -63 632 | |
| Gross Profit | 10 369 | 11 797 | 29 534 | 35 180 | |
| Distribution expenses | -5 184 | -3 739 | -12 777 | -12 124 | |
| Administrative expenses | -2 186 | -1 577 | -5 652 | -4 981 | |
| Other operating income | 206 | 62 | 597 | 496 | |
| Other operating expenses | -402 | -764 | -1 043 | -1 922 | |
| Operating profit | 2 803 | 5 779 | 10 659 | 16 649 | |
| Currency exchange income/(expense) | |||||
| Other finance income/(expenses) | 171 | 313 | 420 | 721 | |
| Net financial income | 311 | 585 | -80 | 398 | |
| Profit (loss) from associates using equity method | -2 | 1 | -1 | 9 | |
| Profit before tax and gain/(loss) on net monetary position | 3 112 | 6 365 | 10 578 | 17 056 | |
| Income tax expense | -1 954 | -1 249 | -4 768 | -3 904 | |
| Profit before gain/(loss) on net monetary position | 1 158 | 5 116 | 5 810 | 13 152 | |
| Gain on net monetary position | 2 444 | -1 704 | 3 425 | -1 405 | |
| Profit for the period | 3 602 | 3 412 | 9 235 | 11 747 | |
| Attributable to : | |||||
| Equity holders of the Parent company | 3 406 | 3 093 | 8 431 | 10 709 | |
| Non-controlling interest | 196 | 319 | 804 | 1 038 | |
| Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR) | 0.09 | 0.08 | 0.22 | 0.27 |
Business environment
The new economic reality, clouted by punishing sanctions, armed conflicts, falling consumer sentiment, weaker currencies and probably an endless list of other factors that can be outlined to reason the companies’ financial strength (or weakness). Nevertheless, the economic situation is the same for all market participants, starting from the consumers and ending with companies satisfying the consumer needs. The economy is also the same for competitors. Therefore we believe that the crisis-like situation is the stress test for the companies on the markets, their business models and their ability to generate profit to their shareholders.
Our economic environment starts from the wallet of our customers. This wallet has shown the tendency to contract, especially where imported goods are concerned. For the clarity reasons, we have outlined the table with the movement of most important currencies to us similar to the previous report (see the appended report).
What described the environment during Q3 was the erosion of expectations for the stabilization of the economic environment, or perhaps, some political intent (that, indeed, took place in case of Ukraine) to stop the non-economic factors influencing the consumers’ ability to spend. Therefore, the consumer weakness in our main consumer markets – Russia, Belarus, Ukraine and Kazakhstan – continued. Looking beyond Q3 (until the end of the year), what we need to factor in is that our main market – Russia – continues to be challenging due to weakening of Russia’s Rouble. Therefore our expectation that currencies would not be an issue for the second half of the FY 2014 proved ungrounded.
In this environment, the company continuously focuses on the profitability of the business. This, in first order, means strict control of the operating expenses and secondly, managing the profitability of the sales (which, to our concern, has been weaker in Q3 due to currency exposure and due to hyperinflation effect on gross margin).
The Group’s sales in Q3 2014 were above the benchmark in Q3 2013, the net sales reached 32 479 thousand EUR, compared to 29 865 thousand EUR a year ago. The corresponding numbers for 9 months of 2014 were 87 139 thousand EUR against 98 812 thousand EUR for 9 months of 2013. The wholesale segment affected both the increase in net sales in Q3 and the decrease in 9 months of 2014.
The wholesale segment contributed 25 043 thousand EUR in Q3 2014 (24 338 thousand EUR in Q3 2013), which translates into 68 450 thousand EUR in 9 months of 2014 (81 900 thousand EUR in 9 months of 2013). The retail segment contributed 7 295 thousand EUR during Q3 2014 (5 431 thousand EUR in Q3 2013), and correspondingly 18 065 thousand EUR for the same period in 2014 (16 614 thousand EUR a year ago). The Company conducted clearance sale in Q3 in its stores it operates in Belarus that has positively affected the sales, but negatively the margins.
Measured by the sales volume, the Q3 sales dynamics year-to-year between the main markets was as follows: Russia 17 037 thousand EUR (17 087 thousand EUR in Q3 2013), Belarus 10 980 thousand EUR (8 029 thousand EUR in Q3, 2013), Ukraine 1 183 thousand EUR (1 982 thousand EUR in Q3, 2013), the Baltic States 898 thousand EUR (723 thousand EUR in Q3, 2013), the other markets contributed 2 380 thousand EUR (2 044 thousand EUR in Q3, 2013).
The net profit to shareholders of the Parent company stood at 3 406 thousand Euros in Q3 2014 compared to 3 093 thousand EUR in Q3, 2013. The corresponding net profit for 9 months of 2014 was 8 431 thousand EUR compared to 10 709 thousand EUR a year ago. The Group’s EBITDA reached 13 025 thousand EUR in 9 months of 2014 compared to 18 501 thousand EUR in the corresponding period of 2013.
The economic outlook for most of our major markets will most likely deteriorate due to non-economic factors (sanctions) and their corresponding effect on the real economies (energy prices, currencies, inflation). For Russia, the real effect is a result of falling energy prices (oil, gas and mineral products, consisting between half to two thirds of the government’s budget income), maturing foreign debt (outflow of capital), and weaker currency (-17% against Euro and -24% against USD from beginning of year, all fuelling import-related inflationary environment). The real economy’s growth in 2014 is questionable. As of end of Q3 2014 the total store count is 382 units in Russia.
Belarus economic growth is stalling because of cooling economic climate of its main export market – Russia. The country has managed targeted inflation policy rather well that also has created some stability for the currency (Belarus Rouble weakened by 2.2% against Euro during 9 months of 2014). There are a total of 54 stores operated directly by the Group and 5 franchise stores. The Group’s sales revenue in Belarus reached 26 491 thousand EUR for 9 months of 2014 compared to 24 587 thousand EUR for the same period a year ago.
Negative information flow regarding Ukraine is continuously on the radar of global media. The currency stabilized in Q3 2014 after dropping 49% against Euro from the beginning of the year. For the Group, the 9 months of 2014 net sales dropped to 3 848 thousand EUR compared to 7 141 thousand EUR for the same period a year ago. We have very vague visibility about the outlook for 2014. There are 97 franchise stores in total in the country as of end of Q3 2014.
In the Baltics, the Group primarily operates via own stores and franchise partners. The Group operates 9 own stores, complemented by 33 partner stores in the region. The sales in the Baltic countries aggregated 2 489 thousand EUR for 9 months of 2014, compared to 2 015 thousand EUR for the same period a year ago.
On the store openings, during 9 months of 2014 net increase (including openings and store closures primarily due to relocations) for Milavitsa stores were 4 units and 3 openings under the Lauma Lingerie brand. The Group therefore operated directly and via franchise a total of 686 stores. Total geography of our franchise partners covers more than 20 countries, including Milavitsa and Lauma Lingerie branded stores.
Financial performance
The Group`s sales amounted to 87 139 thousand EUR during 9 months of 2014, representing a 11.8% decrease as compared to the same period of previous year. Overall, wholesales decreased by 16.4% and retail sales increased by 8.7%.
The Group’s reported gross profit margin during 9 months of 2014 decreased year-to-year to 33.89%, reported gross margin was 35.60% in the respective period of previous year. Consolidated operating profit for 9 months of 2014 amounted to 10 659 thousand EUR, compared to 16 649 thousand EUR in 9 months of 2013. The consolidated operating profit margin was 12.2% for 9 months of 2014 (16.8% in 9 months of 2013). Consolidated EBITDA for 9 months of 2014 was 13 025 thousand EUR, which is 14.9% in margin terms (18 501 thousand EUR and 18.7% for 9 months of 2013).
During Q3 of 2014 the Group distributed profit from subsidiaries to the Parent company, which brought additional 0.5 million EUR in tax expenses. The total tax expense stood at 4 768 thousand EUR for 9 months of 2014 compared to 3 904 thousand EUR during the corresponding period of the last year. In order to reflect changed economic reality during Q3 the Group made a provision in trade receivables in the amount of 1,3 million EUR, additional write-down of inventory were performed as well.
Currency exchange losses in 9 months of 2014 amounted to 500 thousand EUR (323 thousand EUR in 9 months of 2013). Gain on net monetary position, which is highly dependent on inflation rate in Belarus and exchange rates` movements, increased by 4 830 thousand EUR compared to 9 months of 2013. As a result consolidated net profit attributable to equity holders of the Parent company for 9 months of 2014 amounted to 8 431 thousand EUR, compared to 10 709 thousand EUR in 9 months of 2013, net profit margin attributable to equity holders of the Parent company for 9 months of 2014 was 9.7% against 10.8% in 9 months of 2013.
Financial position
As of 30 September 2014 consolidated assets amounted to 79 114 thousand EUR representing an increase by 3.2% as compared to the position as of 31 December 2013.
Trade and other receivables decreased by 74 thousand EUR as compared to 31 December 2013 and amounted to 10 772 thousand EUR as of 30 September 2014. Inventory balance decreased by 981 thousand EUR and amounted to 23 892 thousand EUR as of 30 September 2014. Changes in trade debtors and stock balance were in line with the seasonality trend of the business.
Equity attributable to equity holders of the Parent company increased by 6 034 thousand EUR and amounted to 58 404 thousand EUR as of 30 September 2014.
Current liabilities decreased by 354 thousand EUR during 9 months of 2014. Current and non-current loans and borrowings decreased by 79 thousand EUR to zero balance as of 30 September 2014.
Sales structure
Sales by markets
| in thousands of EUR | 9 months 2014 | 9 months 2013 | Change |
9 months 2014 % from sales |
9 months 2013 % from sales |
| Russia | 47 582 | 58 375 | -18.5% | 54.6% | 59.1% |
| Belarus | 26 491 | 24 587 | 7.7% | 30.4% | 24.9% |
| Kazakhstan | 3 197 | 3 219 | -0.7% | 3.7% | 3.3% |
| Ukraine | 3 848 | 7 141 | -46.1% | 4.4% | 7.2% |
| Moldova | 1 628 | 1 888 | -13.8% | 1.9% | 1.9% |
| Baltics | 2 489 | 2 015 | 23.5% | 2.9% | 2.0% |
| Other markets | 1 903 | 1 587 | 19.9% | 2.2% | 1.6% |
| Total | 87 139 | 98 812 | -11.8% | 100.0% | 100.0% |
The majority of lingerie sales revenue during 9 months of 2014 in the amount of 47 582 thousand EUR was generated in Russia, accounting for 54.6% of total sales. The second largest market was Belarus, where sales reached 26 491 thousand EUR, contributing 30.4% of lingerie sales (both retail and wholesale).
Sales by business segments
| in thousands of EUR | 9 months 2014 | 9 months 2013 | Change |
9 months 2014 % from sales |
9 months 2013 % from sales |
| Wholesale | 68 450 | 81 900 | -16.4% | 78.6% | 82.9% |
| Retail | 18 065 | 16 614 | 8.7% | 20.7% | 16.8% |
| Other operations | 624 | 298 | 109.4% | 0.7% | 0.3% |
| Total | 87 139 | 98 812 | -11.8% | 100.0% | 100.0% |
During 9 months of 2014 wholesale revenue amounted to 68 450 thousand EUR, representing 78.6% of the Group’s total revenue (9 months of 2013: 82.9%). The main wholesale regions were Russia, Ukraine, Belarus, Kazakhstan and Moldova.
Total lingerie retail sales of the Group in 9 months of 2014 amounted to 18 065 thousand EUR, representing 20.7% of the Group’s total revenue (9 months of 2014: 16.8%).
As of 30 September 2014 there were altogether 686 Milavitsa and Lauma branded shops. Own retail operations were conducted in Belarus and Latvia. As of the end of 9 months of 2014 the Group operated 63 own retail outlets. As of 30 September 2014, there were 584 Milavitsa branded shops operated by Milavitsa trading partners in Russia, Ukraine, Moldova, Kazakhstan, Uzbekistan, Kyrgyzstan, Azerbaijan, Armenia, Germany, South Africa, Lithuania, Estonia, Georgia, United Arab Emirates, Iran, Slovenia, Belgium and Italy. Additionally, as of 30 September 2014, there were 39 Lauma Lingerie retail outlets operated by Lauma Lingerie trading partners in Estonia, Latvia, Lithuania, Russia, Ukraine, Saudi Arabia and Albania.
Own & franchise store locations, geography
| Own | Franchise | Total | |
| Russia | 0 | 382 | 382 |
| Ukraine | 0 | 97 | 97 |
| Belarus | 54 | 5 | 59 |
| Baltics | 9 | 33 | 42 |
| Kazakhstan | 0 | 39 | 39 |
| Moldova | 0 | 26 | 26 |
| Other regions | 0 | 41 | 41 |
Investments
During 9 months of 2014 the Group’s investments into property, plant and equipment totalled 258 thousand EUR. Investments were made into equipment and facilities to maintain effective production for future periods.
Personnel
As of 30 September 2014, the Group employed 2 811 employees including 472 in retail. The rest were employed in production, wholesale, administration and support operations.
Total salaries and related taxes during 9 months of 2014 amounted to 18 621 thousand EUR. The remuneration of key management of the Group, including the key executives of the subsidiaries, totalled 905 thousand EUR.
Decisions made by governing bodies during 9 months 2014
On 30 June 2014 Silvano Fashion Group held its regular Annual General Meeting of Shareholders. The Meeting adopted following decisions.
· The Meeting approved the 2013 Annual Report.
· The Meeting decided to distribute dividends in the amount 0.10 EUR per share (record date 14.07.2014, paid out on 15.07.2014).
· The Meeting decided to re-appoint AS PricewaterhouseCoopers as the Group`s auditor for financial year 2014.
· The Meeting decided to cancel the 400 000 own shares acquired within the own share buy-back programme as approved by the shareholders of AS Silvano Fashion Group on 28th of June 2013.
· The Meeting decided to adopt a share buy-back program in the following: effective period until 30.06.2015; maximum number of shares to be acquired not more than 1 000 000; maximum share price 2.00 EUR per share.
On October 16, 2014, the Company announced Extraordinary General Meeting that was held on November 7, 2014 and decided to amend the earlier profit distribution proposal, resulting in additional dividend in amount of 0.20 Euros per share.
Aleksei Kadõrko
Chief Financial Officer
Silvano Fashion Group
info@silvanofashion.com
