Tallinn, 2016-05-06 17:10 CEST (GLOBE NEWSWIRE) --
Selected Financial Indicators
Summarized selected financial indicators of the Group for Q1 of 2016 compared to Q1 of 2015 and 31.03.2016 compared to 31.12.2015 were as follows:
| in thousands of EUR | Q1 2016 | Q1 2015 | Change |
| Revenue | 13 358 | 13 073 | 2.2% |
| EBITDA | 4 818 | 2 351 | 104.9% |
| Net profit for the period | 2 114 | -349 | -705.7% |
| Net profit attributable equity holders of the Parent company | 2 159 | -521 | -514.4% |
| Earnings per share (EUR) | 0.06 | -0.01 | -674.0% |
| Operating cash flow for the period | 2 603 | 678 | 284.0% |
| in thousands of EUR | 31.03.2016 | 31.12.2015 | Change |
| Total assets | 54 072 | 53 635 | 0.8% |
| Total current assets | 42 919 | 40 870 | 5.0% |
| Total equity attributable to equity holders of the Parent company | 41 116 | 40 194 | 2.3% |
| Loans and borrowings | 0 | 0 | N/A |
| Cash and cash equivalents | 22 976 | 21 274 | 8.0% |
| Margin analysis, % | Q1 2016 | Q1 2015 | Change | |
| Gross profit | 57.5 | 44.8 | 28.4% | |
| EBITDA | 36.1 | 18.0 | 100.6% | |
| Net profit | 15.8 | -2.7 | -692.8% | |
| Net profit attributable equity holders of the Parent company | 16.2 | -4.0 | -505.6% | |
| Financial ratios, % | 31.03.2016 | 31.12.2015 | Change |
| ROA | 22.0 | 17.4 | 26.4% |
| ROE | 29.5 | 23.7 | 24.3% |
| Price to earnings ratio (P/E) | 4.8 | 5.0 | -4.3% |
| Current ratio | 4.5 | 4.2 | 7.9% |
| Quick ratio | 2.9 | 2.6 | 12.7% |
Consolidated Statement of Financial Position
| in thousands of EUR | Note | 31.03.16 | 31.12.15 |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 22 976 | 21 274 | |
| Current loans granted | 6 | 6 | |
| Trade and other receivables | 2 | 4 770 | 4 120 |
| Inventories | 3 | 15 167 | 15 470 |
| Total current assets | 42 919 | 40 870 | |
| Non-current assets | |||
| Investments in associates | 0 | 1 | |
| Available-for-sale investments | 331 | 372 | |
| Deferred tax asset | 536 | 465 | |
| Intangible assets | 344 | 443 | |
| Investment property | 999 | 1 130 | |
| Property, plant and equipment | 4 | 8 943 | 10 354 |
| Total non-current assets | 11 153 | 12 765 | |
| TOTAL ASSETS | 54 072 | 53 635 | |
| LIABILITIES AND EQUITY | |||
| Current liabilities | |||
| Trade and other payables | 5 | 7 452 | 7 985 |
| Tax liabilities | 2 018 | 1 661 | |
| Total current liabilities | 9 470 | 9 646 | |
| Non-current liabilities | |||
| Deferred tax liability | 13 | 13 | |
| Total non-current liabilities | 13 | 13 | |
| Total liabilities | 9 483 | 9 659 | |
| Equity | |||
| Share capital | 6 | 11 400 | 11 400 |
| Share premium | 11 914 | 11 914 | |
| Treasury shares | 6 | -1 039 | -579 |
| Statutory reserve capital | 1 306 | 1 306 | |
| Unrealised exchange rate differences | -17 015 | -16 238 | |
| Retained earnings | 34 550 | 32 391 | |
| Total equity attributable to equity holders of the Parent company | 41 116 | 40 194 | |
| Non-controlling interest | 3 473 | 3 782 | |
| Total equity | 44 589 | 43 976 | |
| TOTAL EQUITY AND LIABILITIES | 54 072 | 53 635 |
Consolidated Income Statement
| in thousands of EUR | Note | Q1 2016 | Q1 2015 |
| Revenue | 8 | 13 358 | 13 073 |
| Cost of goods sold | -5 677 | -7 217 | |
| Gross Profit | 7 681 | 5 856 | |
| Distribution expenses | -2 015 | -2 323 | |
| Administrative expenses | -1 121 | -1 709 | |
| Other operating income | 83 | 123 | |
| Other operating expenses | -252 | -252 | |
| Operating profit | 4 376 | 1 695 | |
| Currency exchange income/(expense) | -1 519 | -89 | |
| Other finance income/(expenses) | 65 | 173 | |
| Net financial income | -1 454 | 84 | |
| Profit (loss) from associates using equity method | 0 | -2 | |
| Profit before tax | 2 922 | 1 777 | |
| Income tax expense | -808 | -2 126 | |
| Profit for the period | 2 114 | -349 | |
| Attributable to : | |||
| Equity holders of the Parent company | 2 159 | -521 | |
| Non-controlling interest | -45 | 172 | |
| Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR) | 7 | 0.06 | -0.01 |
Business environment
Group`s results for Q1 of 2016 were defined by continued difficulties in economies of its major sales markets. The Group didn`t manage to demonstrate desired growth rate of sales compared to low base of Q1 of 2015, but the Group is holding last year level. Total sales in Q1 of 2016 amounted to 13 358 thousand EUR, up by 2.2% compared to Q1 of 2015. Previously undermined by devaluations and high inflation rates purchasing power in region`s countries remain low, future expectations are still more on a negative or neutral side. Policy makers in CIS countries tend to delay real economic reforms substituting them by rhetoric and cosmetic changes; therefore it is hard to see some kind of relatively fast recovery in growth rates of economies under discussion.
Over the year the Group managed to cut its production, commercial and administrative expenses. Gross profit margin in Q1 of 2016 is up to 57.5% from 44.8% in Q1 of 2015. Compared to Q1 of 2015 commercial and administrative expenses diminished respectively by 13.3% and 34.4%. Personnel expenses decreased by 35%; average quarterly number of employees diminished by 16%, the remaining part is attributable to devaluation of national currencies in Belarus and Russia.
Russian statistics for Q1 of 2016 somewhat improved compared to 2015, inflation rate is falling and is currently under 7% in yearly terms, GDP declined “only” by 1.4% during 3 months of 2016. Russian economy is starting to adapt to new reality. Group`s sales on Russian market totalled 7 675 thousand EUR, growth is 26.3% compared to Q1 of 2015. Group`s Russian subsidiary opened 6th store in January 2016, 2 more stores were opened in April 2016. Depending on opportunities the Group will continue opening own stores. In addition to growing sales and better control of the market this allows further developing of retail concept of Group`s brands to make it more attractive for us and our franchisee retail partners.
Belarusian economy at the moment isn`t demonstrating signs of stabilisation, GDP decreased by 3.6% in Q1 of 2016. Nominal salaries stand still. International financial institutions predict that in 2016 Belarusian GDP will fall by around 3%, inflation rate will be 12% - 15%. Major factors behind this are believed to be unreformed economy (particularly public sector and state-controlled entities), delayed impact of recession in main trading partner – Russia, continued devaluation of Belarusian rouble, low demand for consumption, high level of debts in economy. Share of problematic credits in banking sector is growing, according to official statistics it was 11.55% of banking assets as of the end of March 2016. Group`s sales in Belarus in Q1 of 2016 were 4 071 thousand EUR diminishing by 19.8% compared to Q1 of 2015. In Belarus the Group will focus on improving profitability of its retail business, we will also continue to expand our store chain there depending on availability of reasonably priced selling areas.
Our partners in Kazakhstan as well are struggling with reduced demand of customers and devaluation of national currency. The process of optimisation in number and quality of stores is an ongoing activity there, total number of franchising stores diminished by 7 during Q1 of 2016. Group`s sales to Kazakhstan clients fell by 28% in Q1 of 2016 and amounted to 460 thousand EUR. The Group expects stabilisation of Kazakhstan market in 2016.
Ukraine economy is supposed (particularly IMF projections) to return to positive growth in 2016, supported by improving consumer and investor confidence, gradually rising real incomes, and a gradual easing of credit conditions. Group`s efforts to establish more productive relationships with partners there led to improvement of quarterly sales by 55.5% to the level of 297 thousand EUR, although comparison base is relatively low.
Financial performance
The Group`s sales amounted to 13 358 thousand EUR during Q1 of 2016, representing a 2.2% increase as compared to the same period of previous year. Overall, wholesales increased by 10.9% and retail sales decreased by 18.8%, measured in EUR.
The Group’s reported gross profit margin during Q1 of 2016 continued to improve increasing to 57.5%, reported gross margin was 44.8% in the respective period of previous year. Consolidated operating profit for Q1 of 2016 amounted to 4 376 thousand EUR, compared to 1 695 thousand EUR in Q1 of 2015. The consolidated operating profit margin was 32.8% for Q1 of 2016 (13.0% in Q1 of 2015). Consolidated EBITDA for Q1 of 2016 was 4 818 thousand EUR, which is 36.1% in margin terms (2 351 thousand EUR and 18.0% for Q1 of 2015).
Reported consolidated net profit attributable to equity holders of the Parent company for Q1 of 2016 amounted to 2 159 thousand EUR, compared to net loss of 521 thousand EUR in Q1 of 2015, net profit margin attributable to equity holders of the Parent company for Q1 of 2016 was 16.2% against -4.0% in Q1 of 2015.
Financial position
As of 31 March 2016 consolidated assets amounted to 54 072 thousand EUR representing an increase by 0.8% as compared to the position as of 31 December 2015.
Trade and other receivables increased by 650 thousand EUR as compared to 31 December 2015 and amounted to 4 770 thousand EUR as of 31 March 2016. Inventory balance decreased by 303 thousand EUR and amounted to 15 167 thousand EUR as of 31 March 2016.
Equity attributable to equity holders of the Parent company increased by 922 thousand EUR and amounted to 41 116 thousand EUR as of 31 March 2016. Current liabilities decreased by 176 thousand EUR during Q1 of 2016.
Sales structure
Sales by markets
| in thousands of EUR | Q1 2016 | Q1 2015 | Change, th. EUR | Change, % | Q1 2016, % of sales | Q1 2015, % of sales |
| Russia | 7 675 | 6 077 | 1 598 | 26.3% | 57.5% | 46.5% |
| Belarus | 4 071 | 5 076 | -1 005 | -19.8% | 30.5% | 38.8% |
| Kazakhstan | 460 | 639 | -179 | -28.0% | 3.4% | 4.9% |
| Ukraine | 297 | 191 | 106 | 55.5% | 2.2% | 1.5% |
| Moldova | 232 | 219 | 13 | 5.9% | 1.7% | 1.7% |
| Latvia | 219 | 259 | -40 | -15.4% | 1.6% | 2.0% |
| Estonia | 119 | 58 | 61 | 105.2% | 0.9% | 0.4% |
| Lithuania | 77 | 85 | -8 | -9.4% | 0.6% | 0.7% |
| Other markets | 208 | 469 | -261 | -55.7% | 1.6% | 3.6% |
| Total | 13 358 | 13 073 | 286 | 2.2% | 100.0% | 100.0% |
The majority of lingerie sales revenue during Q1 of 2016 in the amount of 7 675 thousand EUR was generated in Russia, accounting for 57.5% of total sales. The second largest market was Belarus, where sales reached 4 071 thousand EUR, contributing 30.5% of lingerie sales (both retail and wholesale). Volumes in Kazakhstan decreased significantly to 460 thousand EUR, there was a remarkable increase in Ukraine – 55.5%.
Sales by business segments
| in thousands of EUR | Q1 2016 | Q1 2015 | Change, EUR | Change, % | Q1 2016, % from sales | Q1 2015, % from sales |
| Wholesale | 10 208 | 9 208 | 1 000 | 10.9% | 76.4% | 70.4% |
| Retail | 3 131 | 3 857 | -726 | -18.8% | 23.4% | 29.5% |
| Other operations | 19 | 8 | 12 | 154.2% | 0.1% | 0.1% |
| Total | 13 358 | 13 073 | 286 | 2.2% | 100.0% | 100.0% |
During Q1 of 2016 wholesale revenue amounted to 10 208 thousand EUR, representing 76.4% of the Group’s total revenue (Q1 of 2015: 70.4%). The main wholesale regions were Russia, Belarus, Kazakhstan and Ukraine.
Our retail revenue decreased by 18.8% and amounted to 3 131 thousand EUR, this represents 23.4% of the Group`s total revenue. The decrease in retail revenue is mainly attributable to Belarusian operations.
Own & franchise store locations, geography
| Own | Franchise | Total | |
| Russia | 6 | 392 | 398 |
| Ukraine | 0 | 92 | 92 |
| Belarus | 56 | 2 | 58 |
| Baltics | 8 | 25 | 33 |
| Kazakhstan | 0 | 51 | 51 |
| Moldova | 0 | 26 | 26 |
| Other regions | 0 | 40 | 40 |
| Total | 70 | 628 | 698 |
At the end of the reporting period the Group and its franchising partners operated 649 Milavitsa and 49 Lauma Lingerie branded stores, including 70 stores operated directly by the Group.
Production, sourcing, purchasing and logistics
During Q1 of 2016 the Group’s investments into property, plant and equipment totalled 42 thousand EUR. Investments were made mainly into opening and renovating own stores, as well into equipment and facilities to maintain effective production for future periods.
Personnel
As of 31 March 2016, the Group employed 2 041 employees including 355 in retail. The rest were employed in production, wholesale, administration and support operations.
Total salaries and related taxes during Q1 of 2016 amounted to 2 758 thousand EUR (4 241 thousand EUR in Q1 of 2015). The remuneration of key management of the Group, including the key executives of all subsidiaries, totalled 258 thousand EUR.
Aleksei Kadõrko
Chief Financial Officer
Silvano Fashion Group
Tel +372 6845 000
E-mail: info@silvanofashion.com
