Consolidated interim report for Q4 and 12 months of 2014 (unaudited)


Tallinn, 2015-02-27 16:30 CET (GLOBE NEWSWIRE) --  

Selected Financial Indicators  

Summarized selected financial indicators of the Group for 12 months 2014 compared to 12 months 2013 and 31.12.2014 compared to 31.12.2013 were as follows:  

   
in thousands of EUR 31.12.2014 31.12.2013 Change
Total assets 67 350 76 629 -12.1%
Total current assets 46 802 55 080 -15.0%
Total equity attributable to equity holders of the Parent company 46 649 52 370 -10.9%
Loans and borrowings 0 79 -100.0%
Cash and cash equivalents 13 308 19 165 -30.6%
Margin analysis, % 12m 2014 12m 2013 Change
Gross profit 36.3 35.2 3.1%
EBITDA 15.3 16.0 -4.4%
Net profit 10.4 9.8 6.3%
Net profit attributable equity holders of the Parent company 8.9 9.0 -0.9% 
Financial ratios, % 31.12.2014 31.12.2013 Change
ROA 11.8 13.2 -11.0%
ROE 17.0 19.7 -13.6%
Price to earnings ratio (P/E) 5.1 9.6 -47.1%
Current ratio 3.5 4.7 -23.9%
Quick ratio 1.5 2.6 -39.7%
  in thousands of EUR 12m 2014 12m 2013 Change
Revenue 100 868 121 680 -17.1%
EBITDA 15 422 19 472 -20.8%
Net profit for the period 10 457 11 867 -11.9%
Net profit attributable equity holders of the Parent
company
8 993 10 946 -17.8%
Earnings per share (EUR) 0.23 0.28 -17.1%
Operating cash flow for the period 8 643 18 654 -53.7%

 

Consolidated Statement of Financial Position

in thousands of EUR 31.12.14 31.12.13
ASSETS    
Current assets    
Cash and cash equivalents 13 308 19 165
Prepayments 233 196
Current loans granted 329 0
Trade and other receivables 6 470 10 846
Inventories 26 462 24 873
Total current assets 46 802 55 080
     
Non-current assets    
Long-term receivables 241 0
Investments in associates 84 124
Available-for-sale investments 739 497
Deferred tax asset 649 460
Intangible assets 687 719
Investment property 1 638 1 592
Property, plant and equipment 16 510 18 157
Total non-current assets 20 548 21 549
TOTAL ASSETS 67 350 76 629
     
LIABILITIES AND EQUITY    
Current liabilities    
Current borrowings 0 79
Trade and other payables 9 703 10 837
Tax liabilities 3 503 905
Total current liabilities 13 206 11 821
     
Non-current liabilities    
Deferred tax liability 253 1 953
Total non-current liabilities 253 1 953
Total liabilities 13 459 13 774
     
Equity    
Share capital 11 700 11 820
Share premium 13 066 13 822
Treasury shares -585 -224
Statutory reserve capital 1 306 1 306
Unrealised exchange rate differences -5 649 -1 215
Retained earnings 26 811 26 861
Total equity attributable to equity holders of the Parent company 46 649 52 370
Non-controlling interest 7 242 10 485
Total equity 53 891 62 855
TOTAL EQUITY AND LIABILITIES 67 350 76 629

 

Consolidated Income Statement

in thousands of EUR 4Q 2014 4Q 2013 12m 2014 12m 2013
Revenue 13 729 22 868 100 868 121 680
Cost of goods sold -6 641 -15 183 -64 246 -78 815
Gross Profit 7 088 7 685 36 622 42 865
         
Distribution expenses -2 884 -5 076 -15 661 -17 200
Administrative expenses -1 751 -2 125 -7 403 -7 106
Other operating income -142 -1 455 495
Other operating expenses -593 -289 -1 636 -2 211
Operating profit 1 718 194 12 377 16 843
         
Currency exchange income/(expense) 1 214 48 714 -275
Other finance income/(expenses) 270 294 690 1 015
Net financial income 1 484 342 1 404 740
         
Profit (loss) from associates using equity method 5 -4 4 5
Profit before tax and gain/(loss) on net monetary position 3 207 532 13 785 17 588
         
Income tax expense -1 241 10 -6 009 -3 894
Profit before gain/(loss) on net monetary position 1 966 542 7 776 13 694
         
Gain on net monetary position -744 -422 2 681 -1 827
Profit for the period 1 222 120 10 457 11 867
Attributable to :        
   Equity holders of the Parent company 562 237 8 993 10 946
   Non-controlling interest 660 -117 1 464 921
         
Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR) 0.01 0.01 0.23 0.28

 

Business environment

The financial results of the Group for FY 2014 were below the numbers for FY 2013; the economic instability on our core markets continued also in Q4 2014 and it was reflected by the sharp decline of the local currencies there. Yet our balance sheet is strong and the Group is profitable. In FY 2014 we paid the highest cash dividend in the history of the Group (EUR 0.30 per share), we unified the supply terms on our main markets and continued with the cost control programs throughout the whole organisation.

Current economic situation sorts out the supply side of the market: less efficient businesses shall be closed, consolidated or de-leveraged. The financing (cost) of doing business in our core markets has skyrocketed, if attainable at all. One of the expected trends is that the rent prices shall likely drop, facilitating for new store openings. Pure importers without local production capacity are facing higher input cost due to more expensive dollar, and this provides us with an additional competitive advantage.

Already quoted several times before, the economic power games have led to substantial weakening of the currencies of the emerging markets. The worst of the performers being the Ukrainian Hryvnia where the country’s balance sheet is utmost dependent on the foreign donors’ will. The table reflects on how much our consumers in our main markets have been forced to cut their spending measured in the weakening of their buying currency against Euro. 

The last quarter of the year brought no relief in breaking the trend of falling sales (Q4 2014 -40% in cash terms, including hyperinflation effect that affects the last quarter most significantly, against Q4 2013, whole year -17.1%). The drop affected our main markets, with the exception of the Baltic and the Western countries. 

In this environment, we continue focusing on the profitability of the business and on fixed costs. This, in first order, means strict control of the operating expenses, managing the profitability of the sales and active debtors management related to FX risk. We managed to grow the EPS for Q4 2014 compared to Q4 2013.

The Group’s sales in Q4 2014 were significantly lower the benchmark in Q4 2013, the net sales reached 13 729 thousand EUR, compared to 22 868 thousand EUR a year ago. The corresponding numbers for 12 months of 2014 were 100 868 thousand EUR against 121 680 thousand EUR for 12 months of 2013. The wholesale segment affected both the decrease in net sales in Q4 and the decrease in 12 months of 2014.

The wholesale segment contributed 79 144 thousand EUR in 12 months 2014 (100 259 thousand EUR in 12 months 2013). The retail segment contributed 21 158 thousand EUR for 12 months 2014 (20 707 thousand EUR a year ago).

The net profit stood at 1 222 thousand Euros in Q4 2014 compared to 120 thousand EUR in Q4 2013. The corresponding net profit for 12 months of 2014 was 10 457 thousand EUR compared to 11 867 thousand EUR a year ago. The Group’s EBITDA reached 15 422 thousand EUR in 12 months of 2014 compared to 19 472 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 (-48.8% against Euro and -57.8% against USD from beginning of year, all fuelling import-related inflationary environment). As of end of Q4 2014 the total store count is 369 units in Russia.

Belarus economic growth is stalling due to lack of real structural reforms and cooling economic climate of its main export market – Russia. During 2014 at a cost of diminished foreign reserves, taken loans and near zero economic growth the country has managed to hold its currency exchange rate relatively stable. But Belarus had to face reality and in the end of December 2014 - beginning of January 2015 Belarus rouble was devalued by approximately 30% against USD and Euro.  There are a total of 56 stores operated directly by the Group and 8 franchise stores. The Group’s sales revenue in Belarus reached 29 982 thousand EUR for 12 months of 2014 compared to 30 794 thousand EUR for the same period a year ago (both wholesale and retail segment).

Negative information flow regarding Ukraine is continuously on the radar of global media. For the Group, the 12 months of 2014 net sales dropped to 4 352 thousand EUR compared to 8 514 thousand EUR for the same period a year ago. We have very vague visibility about the outlook for 2015. There are 91 franchise stores in total in the country as of end of 2014.

In the Baltics, the Group primarily operates via own stores and franchise partners. The Group operates 10 own stores, complemented by 34 partner stores in the region. The sales in the Baltic countries aggregated 3 146 thousand EUR for 12 months of 2014, compared to 2 733 thousand EUR for the same period a year ago.

During 12 months of 2014 net increase (including openings and store closures primarily due to relocations) of the Milavitsa and Lauma stores totalled a mere 3 units, bringing the total store count to 682 units. 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 100 868 thousand EUR during 12 months of 2014, representing a 17.1% decrease as compared to the same period of previous year. Overall, wholesales decreased by 21.1% and retail sales increased by 2.2%.

The Group’s reported gross profit margin during 12 months of 2014 increased year-to-year to 36.3%, reported gross margin was 35.2% in the respective period of previous year. Consolidated operating profit for 12 months of 2014 amounted to 12 377 thousand EUR, compared to 16 843 thousand EUR in 12 months of 2013. The consolidated operating profit margin was 12.3% for 12 months of 2014 (13.8% in 12 months of 2013). Consolidated EBITDA for 12 months of 2014 was 15 431 thousand EUR, which is 15.3% in margin terms (19 472 thousand EUR and 16.0% for 12 months of 2013).

The Group has made a provision in trade receivables in the amount of 1.18 million EUR for 2014. In summary, consolidated net profit attributable to equity holders of the Parent company for 12 months of 2014 amounted to 8 993 thousand EUR, compared to 10 946 thousand EUR in 12 months of 2013, net profit margin attributable to equity holders of the Parent company for 12 months of 2014 was 8.9% against 9.0% in 12 months of 2013.

Financial position

As of 31 December 2014 consolidated assets amounted to 67 350 thousand EUR representing decrease by 12.1% as compared to the position as of 31 December 2013.

Trade and other receivables decreased by 4 376 thousand EUR as compared to 31 December 2013 and amounted to 6 470 thousand EUR as of 31 December 2014. Inventory balance increased by 1 589 thousand EUR and amounted to 26 462 thousand EUR as of 31 December 2014.

Equity attributable to equity holders of the Parent company decreased by 5 721 thousand EUR and amounted to 46 649 thousand EUR as of 31 December 2014.

Current liabilities increased by 1 385 thousand EUR during 12 months of 2014. Current and non-current loans and borrowings decreased by 79 thousand EUR to zero balance as of 31 December 2014.

Sales structure

Sales by markets

in thousands of EUR 12 months 2014 12 months 2013 Change 12 months 2014
% from sales
12 months 2013
 % from sales
Russia 55 266 71 326 -22.5% 54.8% 58.6%
Belarus 29 982 30 794 -2.6% 29.7% 25.3%
Ukraine 4 352 8 514 -48.9% 4.3% 7.0%
Kazakhstan 3 823 3 824 0.0% 3.8% 3.1%
Baltics 3 146 2 733 15.1% 3.1% 2.2%
Moldova 1 905 2 267 -16.0% 1.9% 1.9%
Other markets 2 394 2 222 7.7% 2.4% 1.8%
Total 100 868 121 680 -17.1% 100.0% 100.0%

The majority of lingerie sales revenue during 12 months of 2014 in the amount of 55 266 thousand EUR was generated in Russia, accounting for 54.8% of total sales. The second largest market was Belarus, where sales reached 29 982 thousand EUR, contributing 29.7% of lingerie sales (both retail and wholesale). Belarus minor drop reflects significantly higher own retail component from the sales structure than on average for the Group. The real growth in sales is observed for the Baltic markets and the Other markets, and this is also one of the targets for the development in the future.

Sales by business segments 

in thousands of EUR 12m 2014 12m 2013 Change, % 12m 2014, % from sales 12m 2013, % from sales
Wholesale 79 144 100 259 -21.1% 78.5% 82.4%
Retail 21 158 20 707 2.2% 21.0% 17.0%
Other operations 566 715 -20.8% 0.6% 0.6%
Total 100 868 121 681 -17.1% 100.0% 100.0%

During 12 months of 2014 wholesale revenue amounted to 79 144 thousand EUR, representing 78.5% of the Group’s total revenue (12 months of 2014: 82.4%). The main wholesale regions were Russia, Ukraine, Belarus, Kazakhstan and Moldova.

Total lingerie retail sales of the Group in 12 months of 2014 amounted to 21 158 thousand EUR, representing 21% of the Group’s total revenue (and minor growth vis-à-vis sales through retail channel in 2013).

As of 31 December 2014 there were altogether 682 Milavitsa and Lauma branded shops. Own retail operations were conducted in Belarus and Latvia. As of the end of 12 months of 2014 the Group operated 66 own retail outlets. As of 31 December 2014, there were 574 Milavitsa branded shops operated by Milavitsa trading partners in Russia, Ukraine, Moldova, Kazakhstan, Uzbekistan, Kyrgyzstan, Azerbaijan, Armenia, Germany, South Africa, Lithuania, Latvia, Estonia, Georgia, United Arab Emirates, Iran, Slovenia, Belgium and Italy. Additionally, as of 31 December 2014, there were 42 Lauma Lingerie retail outlets operated by Lauma Lingerie trading partners in Estonia, Latvia, Lithuania, Russia, Ukraine, Saudi Arabia, Albania, Uganda and Mongolia.

Own & franchise store locations, geography 

  Own Franchise Total
Russia 0 369 369
Ukraine 0 91 91
Belarus 56 8 64
Baltics 10 34 44
Kazakhstan 0 43 43
Moldova 0 26 26
Other regions 0 45 45

Investments

During 12 months of 2014 the Group’s investments into property, plant and equipment totalled 420 thousand EUR. Investments were made into equipment and facilities to maintain effective production for future periods. 

Personnel

As of 31 December 2014, the Group employed 2 749 employees including 481 in retail. The rest were employed in production, wholesale, administration and support operations.

Total salaries and related taxes during 12 months of 2014 amounted to 23 692 thousand EUR. The remuneration of key management of the Group, including the key executives of the subsidiaries, totalled 1 305 thousand EUR.

Decisions made by governing bodies during 12 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
         +372 6845 000
         info@silvanofashion.com


Attachments

SFG Q4 and 12 months 2014 interim report EN 27.02.15.pdf