Tallinn, 2015-08-07 17:00 CEST (GLOBE NEWSWIRE) --
Summarized selected financial indicators of the Group for 6 months of 2015 compared to 6 months of 2014 and 30.06.2015 compared to 31.12.2014 were as follows:
| in thousands of EUR | 6m 2015 | 6m 2014 | Change |
| Revenue | 34 498 | 54 660 | -36.9% |
| EBITDA | 8 546 | 9 351 | -8.6% |
| Net profit for the period | 3 052 | 5 633 | -45.8% |
|
Net profit attributable equity holders of the Parent company |
2 756 | 5 025 | -45.2% |
| Earnings per share (EUR) | 0.07 | 0.13 | -44.1% |
| Operating cash flow for the period | 8 241 | -993 | 929.5% |
| in thousands of EUR | 30.06.15 | 31.12.14 | Change |
| Total assets | 58 455 | 67 339 | -13.2% |
| Total current assets | 42 374 | 47 005 | -9.9% |
| Total equity attributable to equity holders of the Parent company | 40 907 | 46 753 | -12.5% |
| Loans and borrowings | 0 | 0 | NA |
| Cash and cash equivalents | 19 364 | 13 308 | 45.5% |
| Margin analysis, % | 6m 2015 | 6m 2014 | Change |
| Gross profit | 45.2 | 35.1 | 28.8% |
| EBITDA | 24.8 | 17.1 | 44.8% |
| Net profit | 8.8 | 10.3 | -14.2% |
|
Net profit attributable equity holders of the Parent company |
8.0 | 9.2 | -13.1% |
| Financial ratios, % | 30.06.15 | 31.12.14 | Change |
| ROA | 9.5 | 11.9 | -20.1% |
| ROE | 13.4 | 17.2 | -22.1% |
| Price to earnings ratio (P/E) | 8.1 | 5.0 | 60.3% |
| Current ratio | 3.1 | 3.6 | -14.0% |
| Quick ratio | 1.8 | 1.6 | 17.0% |
Consolidated Statement of Financial Position
| in thousands of EUR | 30.06.2015 | 31.12.2014 |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 19 364 | 13 308 |
| Current loans granted | 12 | 329 |
| Trade and other receivables | 5 815 | 6 906 |
| Inventories | 17 183 | 26 462 |
| Total current assets | 42 374 | 47 005 |
| Non-current assets | ||
| Long-term receivables | 0 | 241 |
| Investments in associates | 87 | 84 |
| Available-for-sale investments | 445 | 525 |
| Deferred tax asset | 382 | 649 |
| Intangible assets | 541 | 687 |
| Investment property | 1 370 | 1 638 |
| Property, plant and equipment | 13 256 | 16 510 |
| Total non-current assets | 16 081 | 20 334 |
| TOTAL ASSETS | 58 455 | 67 339 |
| LIABILITIES AND EQUITY | ||
| Current liabilities | ||
| Trade and other payables | 10 956 | 9 703 |
| Tax liabilities | 2 704 | 3 335 |
| Total current liabilities | 13 660 | 13 038 |
| Non-current liabilities | ||
| Deferred tax liability | 17 | 283 |
| Total non-current liabilities | 17 | 283 |
| Total liabilities | 13 677 | 13 321 |
| Equity | ||
| Share capital | 11 700 | 11 700 |
| Share premium | 13 066 | 13 066 |
| Treasury shares | -1 453 | -585 |
| Statutory reserve capital | 1 306 | 1 306 |
| Unrealised exchange rate differences | -7 284 | -5 649 |
| Retained earnings | 23 572 | 26 915 |
| Total equity attributable to equity holders of the Parent company | 40 907 | 46 753 |
| Non-controlling interest | 3 871 | 7 265 |
| Total equity | 44 778 | 54 018 |
| TOTAL EQUITY AND LIABILITIES | 58 455 | 67 339 |
Consolidated Income Statement
| in thousands of EUR | 2Q 2015 | 2Q 2014 | 6m 2015 | 6m 2014 |
| Revenue | 21 425 | 27 565 | 34 498 | 54 660 |
| Cost of goods sold | -11 704 | -17 806 | -18 921 | -35 495 |
| Gross Profit | 9 721 | 9 759 | 15 577 | 19 165 |
| Distribution expenses | -2 460 | -3 647 | -4 783 | -7 593 |
| Administrative expenses | -1 556 | -1 842 | -3 265 | -3 466 |
| Other operating income | 123 | 70 | 246 | 391 |
| Other operating expenses | -320 | -332 | -572 | -641 |
| Operating profit | 5 508 | 4 008 | 7 203 | 7 856 |
| Currency exchange income/(expense) | -942 | -362 | -1 031 | -640 |
| Other finance income/(expenses) | 87 | 49 | 260 | 249 |
| Net financial income | -855 | -313 | -771 | -391 |
| Profit (loss) from associates using equity method | 2 | -8 | 0 | 1 |
| Profit before tax and gain/(loss) on net monetary position | 4 655 | 3 687 | 6 432 | 7 466 |
| Income tax expense | -1 254 | -1 200 | -3 380 | -2 814 |
| Profit before gain/(loss) on net monetary position | 3 401 | 2 487 | 3 052 | 4 652 |
| Gain on net monetary position | 0 | 955 | 0 | 981 |
| Profit for the period | 3 401 | 3 442 | 3 052 | 5 633 |
| Attributable to : | ||||
| Equity holders of the Parent company | 3 277 | 3 135 | 2 756 | 5 025 |
| Non-controlling interest | 124 | 307 | 296 | 608 |
| Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR) | 0.08 | 0.08 | 0.07 | 0.13 |
Business environment
Despite the slowing economies of our core markets, the efforts taken to streamline the business have started to bear fruit. Relatively stable currency environment in Q2 also contributed positively to the dynamics of the sales of the Group. Combined with the efforts made on the inventory level optimization, high level of credit control, yielded for us strong gross margin, EBITDA margin and net profit margin result for the first half-year despite the drop in the sales.
After very slow start for our core consumer markets, the seasonally stronger Q2 levelled out some of the losses that occurred during Q1. Nevertheless, we do not see immediate improvement of the economies where our companies sell the products. The GDP figures for Russia, Belarus, Ukraine continuously shows the contraction of the economies there.
After a severe drop in consumption of apparel products in the average price segment in Russia in Q1, the gap in sales comparison has narrowed vis-à-vis last year. Our sales totalled 18 340 thousand EUR for the first 6 months of the year, down by 40% from previous year. Translated into franchise stores result in local currency, the stores sold practically the same amount in Roubles as for the same period a year ago. Wholesale remains the most volatile segment.
In Belarus, our total sales for the 6 months reached 11 169 thousand Euros, down by 28% compared to the results a year ago. The sales in the retail stores remains almost on the level of the last year when measured in local currency (-3.7%), but the wholesales segment has suffered more. On average, we see less visitors and also smaller average purchases in the retail segment there. The country is reporting negative GDP growth for the first 6 months of the year (-3.3%). We are planning conservative growth for store openings, and some recovery in the retail segment for the remaining year.
In Ukraine, the sales are stalling, outpaced by Kazakhstan by total sales volume. We sold for 772 thousand Euros (which is less than for the 3 Baltic states together) to Ukraine during the first 6 months of the year, down by 71% from last year. Should the political and economic climate improve there, the existing store network would allow to forecast proper growth there (in Ukraine, our partners manage in total 90 stores, as for Kazakhstan the total number is 52 and growing).
The market continued to contract also on our other main markets, including the Baltics where we also conduct own retail operations.
We continue to monitor the development of the currency rates, especially the Russia’s Rouble, Belarus Rouble and Ukrainian Hryvnia. The more stable the currencies, the more we see our intermediaries becoming more aggressive on purchases. On the cost side, we are keeping tight control over the overhead costs and continue monitoring the efficiency of our capital usage (especially the inventory and purchasing planning). The more successful we are there, the better we become on the performance of the owners capital that has been entrusted with us by the shareholders.
Financial performance
The Group`s sales amounted to 34 498 thousand EUR during 6 months of 2015, representing a 36.9% decrease as compared to the same period of previous year. Overall, wholesales decreased by 40.0% and retail sales decreased by 21.6%, measured in Euros.
The Group’s reported gross profit margin during 6 months of 2015 increased year-to-year to 45.2%, reported gross margin was 35.30% in the respective period of previous year. Consolidated operating profit for 6 months of 2015 amounted to 7 203 thousand EUR, compared to 7 856 thousand EUR in 6 months of 2014 (the contribution of the Q2 2015 was 5 508 thousand EUR compared to 4 008 thousand EUR in Q2 2014). The consolidated operating profit margin was 20.9% for 6 months of 2015 (14.4% in 6 months of 2014). Consolidated EBITDA for 6 months of 2015 was 8 546 thousand EUR, which is 24.8% in margin terms (9 351 thousand EUR and 17.1% for 6 months of 2014).
During 6 months of 2015 the Group continued with internal restructuring, which will allow us to streamline internal management and intragroup capital allocation. This brought 2.3 million EUR of additional income tax expense. As a result reported consolidated net profit attributable to equity holders of the Parent company for 6 months of 2015 amounted to 2 756 thousand EUR, compared to net profit of 5 025 thousand EUR in 6 months of 2014, net profit margin attributable to equity holders of the Parent company for 6 months of 2015 was 8.0% against 9.2% in 6 months of 2014.
Financial position
As of 30 June 2015 consolidated assets amounted to 58 455 thousand EUR representing decrease by 13.2% as compared to the position as of 31 December 2014.
Trade and other receivables decreased by 1 091 thousand EUR as compared to 31 December 2014 and amounted to 5 815 thousand EUR as of 30 June 2015. Inventory balance decreased by 9 279 thousand EUR and amounted to 17 183 thousand EUR as of 30 June 2015.
Equity attributable to equity holders of the Parent company decreased by 5 846 thousand EUR and amounted to 40 907 thousand EUR as of 30 June 2015. Current liabilities increased by 622 thousand EUR during 6 months of 2015.
Sales structure
Sales by markets
| in thousands of EUR | 6m 2015 | 6m 2014 | Change |
6m 2015 % from sales |
6m 2014 % from sales |
| Russia | 18 340 | 30 545 | -40.0% | 53.2% | 55.9% |
| Belarus | 11 169 | 15 511 | -28.0% | 32.4% | 28.4% |
| Ukraine | 772 | 2 665 | -71.0% | 2.2% | 4.9% |
| Kazakhstan | 1 422 | 1 631 | -12.8% | 4.1% | 3.0% |
| Baltics | 918 | 1 591 | -42.3% | 2.7% | 2.9% |
| Moldova | 500 | 905 | -44.8% | 1.4% | 1.7% |
| Other markets | 1 377 | 1 812 | -24.0% | 4.0% | 3.3% |
| Total | 34 498 | 54 660 | -36.9% | 100.0% | 100.0% |
The majority of lingerie sales revenue during 6 months of 2015 in the amount of 18 340 thousand EUR was generated in Russia, accounting for 53.2% of total sales. The second largest market was Belarus, where sales reached 11 169 thousand EUR, contributing 32.4% of lingerie sales (both retail and wholesale). Volumes in Ukraine decreased significantly to 772 thousand EUR, the drop was also remarkable in the Moldova and the Baltics.
Sales by business segments
| in thousands of EUR | 6m 2015 | 6m 2014 | Change, % | 6m 2015, % from sales | 6m 2014, % from sales |
| Wholesale | 26 038 | 43 407 | -40.0% | 75.5% | 79.4% |
| Retail | 8 446 | 10 770 | -21.6% | 24.5% | 19.7% |
| Other operations | 14 | 483 | -97.0% | 0.0% | 0.9% |
| Total | 34 498 | 54 660 | -36.9% | 100.0% | 100.0% |
During 6 months of 2015 wholesale revenue amounted to 26 038 thousand EUR, representing 75.5% of the Group’s total revenue (6 months of 2014: 79.4%). The main wholesale regions were Russia, Ukraine, Belarus, Kazakhstan and Moldova.
Total lingerie retail sales of the Group in 6 months of 2015 amounted to 8 446 thousand EUR, representing 24.5% of the Group’s total revenue.
As of 30 June 2015 there were altogether 688 Milavitsa and Lauma branded shops. Own retail operations were conducted in Belarus and Latvia. As of the end of Q2 2015 the Group operated 66 own retail outlets. As of 30 June 2015, there were 584 Milavitsa branded shops operated by Milavitsa trading partners. Additionally, as of 30 June 2015, there were 36 Lauma Lingerie retail outlets operated by Lauma Lingerie trading partners.
Own & franchise store locations, geography
| Own | Franchise | Total | |
| Russia | 0 | 373 | 373 |
| Ukraine | 0 | 92 | 92 |
| Belarus | 56 | 8 | 64 |
| Baltics | 10 | 23 | 33 |
| Kazakhstan | 0 | 52 | 52 |
| Moldova | 0 | 26 | 26 |
| Other regions | 0 | 48 | 48 |
Investments
During 6 months of 2015 the Group’s investments into property, plant and equipment totalled 376 thousand EUR. Investments were made into equipment and facilities to maintain effective production for future periods.
Personnel
As of 30 June 2015, the Group employed 2 163 employees including 380 in retail. The rest were employed in production, wholesale, administration and support operations.
Total salaries and related taxes during 6 months of 2015 amounted to 7 407 thousand EUR. The remuneration of key management of the Group, including the key executives of the subsidiaries, totalled 694 thousand EUR.
Decisions made by governing bodies during 6 months 2015
On June 29, 2015 Silvano Fashion Group held its regular Annual General Meeting of Shareholders. The Meeting adopted following decisions.
The Meeting approved the 2014 Annual Report.
The Meeting decided to distribute dividends in the amount 0.10 EUR per share (record date 13.07.2015, payment completed on 15.07.2015).
The Meeting decided to re-appoint AS PricewaterhouseCoopers as the Group`s auditor for financial year 2015.
The Meeting decided to cancel the 1 000 000 own shares acquired within the own share buy-back programme as approved by the shareholders of AS Silvano Fashion Group on 30th of June 2014;
The Meeting decided to adopt a share buy-back program in the following: effective period until 29.06.2016; maximum number of shares to be acquired not more than 1 000 000; maximum share price 2.00 EUR per share.
Aleksei Kadõrko
Chief Financial Officer
Silvano Fashion Group
Tel +372 6845 000
E-mail: info@silvanofashion.com
