Consolidated interim report for Q2 and 6 months of 2013 (unaudited)Tallinn, 2013-08-13 17:30 CEST --
Selected Financial Indicators
Summarized selected financial indicators of the Group for 6 months 2013 compared to 6 months 2012 and 30.06.2013 compared to 31.12.2012 were as follows:
|
in thousands of EUR |
6m 2013 |
6m 2012 |
Change |
|
Revenue |
68 947 |
65 501 |
5.3% |
|
EBITDA |
12 131 |
15 424 |
-21.3% |
|
Net profit for the period |
8 335 |
10 974 |
-24.0% |
|
Net profit attributable equity holders of the Parent company |
7 616 |
9 661 |
-21.2% |
|
Earnings per share (EUR) |
0.19 |
0,25 |
-21.2% |
|
Operating cash flow for the period |
6 658 |
2 323 |
186.7% |
|
in thousands of EUR |
30.06.2013 |
31.12.2012 |
Change |
|
Total assets |
86 686 |
75 837 |
14.3% |
|
Total current assets |
63 661 |
55 847 |
14.0% |
|
Total equity attributable to equity holders of the Parent company |
55 723 |
51 396 |
8.4% |
|
Loans and borrowings |
137 |
47 |
191.5% |
|
Cash and cash equivalents |
20 408 |
16 260 |
25.5% |
|
Margin analysis, % |
6m 2013 |
6m 2012 |
Change |
|
Gross profit |
33.9 |
38.8 |
-12.7% |
|
EBITDA |
17.6 |
23.5 |
-25.3% |
|
Net profit |
12.1 |
16.8 |
-27.8% |
|
Net profit attributable equity holders of the Parent company |
11.0 |
14.7 |
-25.1% |
|
Financial ratios, % |
30.06.2013 |
31.12.2012 |
Change |
|
ROA |
15.0 |
32.2 |
-53.4% |
|
ROE |
22.7 |
50.9 |
-55.5% |
|
Price to earnings ratio (P/E) |
8.6 |
5.5 |
55.6% |
|
Current ratio |
3.6 |
3.6 |
1.3% |
|
Quick ratio |
2.3 |
2.1 |
7.9% |
Consolidated Statement of Financial Position
|
in thousands of EUR |
30.06.2013 |
31.12.2012 |
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
20 408 |
16 260 |
|
Prepayments |
430 |
243 |
|
Trade and other receivables |
18 745 |
14 746 |
|
Inventories |
24 078 |
24 598 |
|
Total current assets |
63 661 |
55 847 |
|
|
|
|
|
Non-current assets |
|
|
|
Long-term receivables |
1 |
1 |
|
Investments in associates |
140 |
164 |
|
Available-for-sale investments |
520 |
492 |
|
Deferred tax asset |
214 |
231 |
|
Intangible assets |
602 |
443 |
|
Investment property |
1 690 |
1 618 |
|
Property, plant and equipment |
19 858 |
17 041 |
|
Total non-current assets |
23 025 |
19 990 |
|
TOTAL ASSETS |
86 686 |
75 837 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities |
|
|
|
Borrowings |
137 |
47 |
|
Trade and other payables |
15 628 |
11 171 |
|
Tax liabilities |
1 700 |
1 008 |
|
Total current liabilities |
17 465 |
12 226 |
|
|
|
|
|
Non-current liabilities |
|
|
|
Deferred tax liability |
2 268 |
2 162 |
|
Total non-current liabilities |
2 268 |
2 162 |
|
Total liabilities |
19 733 |
14 388 |
|
|
|
|
|
Equity |
|
|
|
Share capital |
15 760 |
15 760 |
|
Share premium |
13 822 |
13 822 |
|
Treasury shares |
-20 |
-20 |
|
Statutory reserve capital |
1 306 |
1 306 |
|
Other reserves |
0 |
0 |
|
Unrealised exchange rate differences |
-586 |
15 |
|
Retained earnings |
25 441 |
20 513 |
|
Total equity attributable to equity holders of the Parent company |
55 723 |
51 396 |
|
Non-controlling interest in equity |
11 230 |
10 053 |
|
Total equity |
66 953 |
61 449 |
|
TOTAL EQUITY AND LIABILITIES |
86 686 |
75 837 |
Consolidated Income Statement
|
in thousands of EUR |
Q2 2013 |
Q2 2012 |
6m 2013 |
6m 2012 |
|
Revenue |
36 888 |
36 413 |
68 947 |
65 501 |
|
Cost of goods sold |
-23 691 |
-23 103 |
-45 564 |
-40 062 |
|
Gross Profit |
13 197 |
13 310 |
23 383 |
25 439 |
|
|
|
|
|
|
|
Distribution expenses |
-4 141 |
-3 802 |
-8 385 |
-6 947 |
|
Administrative expenses |
-1 746 |
-2 251 |
-3 404 |
-4 020 |
|
Other operating income |
126 |
207 |
434 |
559 |
|
Other operating expenses |
-769 |
-65 |
-1 158 |
-788 |
|
Operating profit |
6 667 |
7 399 |
10 870 |
14 243 |
|
|
|
|
|
|
|
Currency exchange income/(expense) |
-591 |
-852 |
-595 |
-466 |
|
Other finance income/(expenses) |
151 |
126 |
408 |
312 |
|
Net financial income |
-440 |
-726 |
-187 |
-154 |
|
|
|
|
|
|
|
Profit (loss) from associates using equity method |
16 |
119 |
8 |
122 |
|
Profit before tax and gain/(loss) on net monetary position |
6 243 |
6 792 |
10 691 |
14 211 |
|
Income tax expense |
-1 360 |
-1 843 |
-2 655 |
-3 208 |
|
Profit before gain/(loss) on net monetary position |
4 883 |
4 949 |
8 036 |
11 003 |
|
|
|
|
|
|
|
Gain (loss) on net monetary position |
-382 |
-107 |
299 |
-29 |
|
Profit for the period |
4 501 |
4 842 |
8 335 |
10 974 |
|
Attributable to : |
|
|
|
|
|
Equity holders of the Parent company |
4 089 |
4 328 |
7 616 |
9 661 |
|
Non-controlling interest |
412 |
514 |
719 |
1 313 |
|
Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR |
0.10 |
0.11 |
0.19 |
0.25 |
Business environment
Silvano Fashion Group with its brand portfolio is a recognized market leader in the lingerie segment in Russia, Belarus, Ukraine, has exceptionally strong foothold in other Russian-speaking countries (including Kazakhstan and Moldova) and is a recognized player in the Baltic consumer markets.
As pointed out by several intimate apparel producers, the cold weather impacted the sales in the Q1, but we see that Q2 has somewhat leveled out the weather-related excuses. What we actually saw during Q2 was the reduction of inventories both in-house (Milavitsa and Lauma brands), but also the reduction of the inventories of our franchise partners, that is reflected by the improved receivables of Silvano Fashion Group. Overall, H1 2013 sales measured by quantity was somewhat weaker than planned, but in monetary terms exceeded our expectations.
Looking more specifically at our core markets, Russia’s sales have remained stable vis-à-vis H1 2012. Our local competitors are dropping the enthusiasm on extensive growth plans for the current year. For the last 6 months, the Central Bank of Russia’s (CBR) refinancing rate has remained high (CBR left the main policy rates unchanged in its June 10 meeting in responds to remaining inflationary pressures), referring to high lending cost, hence also lower consumption of the Russians. Further to this, the private deposits in Russia show a tendency of growth that refers to more cautionary spending in light of uncertainties. Nevertheless, our core brands Milavitsa and Lauma are doing relatively well in this environment. When we look more deeply into the changing structure of retailing (opening of new shopping centers, including also in the regions) this explains our continuous expansion of the store count in the country.
Quantitatively, Russia, our core market in terms of total sales and total number of stores (375 stores in total), showed 41 288 thousand EUR in sales for H1 2013 compared to 39 813 thousand in H1 2012. Going forward, tighter access to credit, via higher interest rates and the likelihood of more prudent lending practices by banks, will translate to weaker household consumption.
Belarus rides on the tides of strong local currency and expanding private household consumption. Thanks to the own retail network in the country, we have been able to enjoy better margins from the business in both local currency and in Euro terms. Since it is our second-largest (home) market, its net monetary effect on our Profit and Loss statement is significant. Simply said, we sell more like-for-like basis both in units as well as in monetary terms. In Belarus, the Group operates directly and via franchise a total of 56 stores. Our sales in Belarus totalled 16 558 thousand EUR for H1 2013 compared to 15 516 thousand in H1 2012. The country’s GDP growth during H1 2013 compared to H1 2012 stood at 1.4% according to Belstat.
Ukraine, Kazakhstan and Moldova showed good dynamics in H1 2013. We experienced growth in sales, in number of store openings and in sales volumes in all three regions. Given the significance of Kazakhstan and Moldova in the growth formula, the management of the company devotes more time to these regions in the near future. Ukraine with its 92 franchise stores of Milavitsa and Lauma Lingerie generated net sales of 5 159 thousand EUR in H1 2013, compared to 4 015 thousand EUR in H1 2012.
Baltic economies continue performing well. According to Swedbank estimates, the Baltic States shall outperform the rest of the EU, with Estonia, Latvia and Lithuania GDP growth estimates for 2013 of 3.3%, 4.3% and 4.0%, respectively. The Group operates directly and indirectly via franchise 39 stores in the region, whereas our sales there totalled 1 292 thousand EUR in H1 2013.
On the store openings, H1 2013 the net increase (including openings and store closures primarily due to relocations) for Milavitsa stores was 46 units and 6 units under the Lauma Lingerie brand. The Group therefore operated directly and via franchise a total of 636 stores (net increase of 52 stores compared to end of 2012). Total geography of our franchise partners now covers more than 20 countries, including Milavitsa and Lauma Lingerie branded stores.
Financial performance
Positive effect of the devaluation on the cost side has been leveled out by increased expenses for labor, outsourcing, and utilities and to some extent materials sourced from Belarus. Group applies hyperinflationary accounting rules according to IAS 29 on business conducted in Belarus.
The Group`s sales amounted to 68 947 thousand EUR during H1 2013, representing a 5.3% increase as compared to the same period of previous year. Overall, wholesales increased by 4.0% and retail sales – by 12.2%.
The Group’s reported gross profit margin during Q2 improved (compared to Q1) hence H1 2013 total was 33.9%, reported gross margin was 38.8% in the respective period of previous year. Consolidated operating profit for H1 2013 amounted to 10 870 thousand EUR, compared to 14 243 thousand EUR in H1 2012. The consolidated operating profit margin was 15.8% (21.7% in H1 2012).
Consolidated net profit attributable to equity holders of the Parent company amounted to 7 616 thousand EUR in H1 2013, compared to 9 661 thousand EUR in H1 2012; net profit margin attributable to equity holders of the Parent company was 11% against 14.7% in H1 2012.
Financial position
As of 30 June 2013 consolidated assets amounted to 86 686 thousand EUR representing an increase of 14.3% as compared to the position as of 31 December 2012.
Trade and other receivables increased by 3 999 thousand EUR as compared to 31 December 2012 and amounted to 18 745 thousand EUR as of 30 June 2013. Inventory balance decreased by 520 thousand EUR and amounted to 24 078 thousand EUR as of 30 June 2013. 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 4 327 thousand EUR and amounted to 55 723 thousand EUR as of 30 June 2013.
Current liabilities increased by 5 239 thousand EUR during H1 2013. Current and non-current loans and borrowings increased by 90 thousand EUR to 137 thousand EUR as of 30 June 2013.
Sales structure
Sales by markets
|
in thousands of EUR |
6m 2013 |
6m 2012 |
Change |
|
6m 2013
% from sales |
6m 2012
% from sales |
|
Russia |
41 288 |
39 813 |
1 475 |
|
59.9% |
60.8% |
|
Belarus |
16 558 |
15 516 |
1 042 |
|
24.0% |
23.7% |
|
Ukraine |
5 159 |
4 015 |
1 144 |
|
7.5% |
6.1% |
|
Baltics |
1 292 |
1 825 |
-533 |
|
1.9% |
2.8% |
|
Other markets |
4 650 |
4 332 |
318 |
|
6.7% |
6.6% |
|
Total |
68 947 |
65 501 |
3 446 |
|
100.0% |
100.0% |
The majority of lingerie sales revenue during H1 2013 in the amount of 41 288 thousand EUR was generated in Russia, accounting for 59.9% of total sales. The second largest market was Belarus, where sales reached 16 558 thousand EUR, contributing 24.0% of lingerie sales (both retail and wholesale). Out of the 4 650 thousand EUR sales in the other markets major part is attributed to Kazakhstan and Moldova.
Sales by business segments
|
in thousands of EUR |
6m 2013 |
6m 2012 |
Change |
|
6m 2013
% from sales |
6m 2012
% from sales |
|
Wholesale |
57 562 |
55 332 |
2 230 |
|
83.5% |
84.5% |
|
Retail |
11 183 |
9 966 |
1 217 |
|
16.2% |
15.2% |
|
Other operations |
202 |
203 |
-1 |
|
0.3% |
0.3% |
|
Total |
68 947 |
65 501 |
3 446 |
|
100.0% |
100.0% |
During H1 2013 wholesale revenue amounted to 57 562 thousand EUR, representing 83.5% of the Group’s total revenue (H1 2012: 84.5%). The main wholesale regions were Russia, Ukraine, Belarus, Kazakhstan and Moldova.
Total lingerie retail sales of the Group in H1 2013 amounted to 11 183 thousand EUR, representing a 12.2% increase as compared to the previous year.
As of 30 June 2013 there were altogether 636 Milavitsa and Lauma branded shops. Own retail operations were conducted in Belarus and Latvia. As of the end of H1 2013 the Group operated 60 own retail outlets. As of 30 June 2013, there were 544 Milavitsa branded shops operated by Milavitsa trading partners in Russia, Ukraine, Moldova, Kazakhstan, Uzbekistan, Kyrgyzstan, Latvia, Azerbaijan, Armenia, Germany, South Africa, Lithuania, Estonia, Georgia, United Arab Emirates, Iran, Slovenia, Belgium and Italy. Additionally, as of 30 June 2013, there were 32 Lauma Lingerie retail outlets operated by Lauma Lingerie trading partners in Lithuania, Latvia, Estonia, Belarus and Albania. For Lauma Lingerie, the Group expects further openings in Russia in the near future.
Investments
During 6 months 2013 the Group’s investments into property, plant and equipment totaled 3 085 thousand EUR. Main investments were made into equipment and facilities to improve logistic facilities and maintain effective production for future periods.
Personnel
As of 30 June 2013, the Group employed 3 212 employees including 399 in retail. The rest were employed in production, wholesale, administration and support operations.
Total salaries and related taxes during 6 months 2013 amounted to 12 890 thousand EUR. The remuneration of key management of the Group, including the key executives of the subsidiaries, totaled 391 thousand EUR.
Decisions made by governing bodies during 6 months 2013
On 28 June 2013 Silvano Fashion Group held its regular Annual General Meeting of Shareholders. The Meeting adopted following decisions.
-
The Meeting approved the 2012 Annual Report.
-
The Meeting decided to distribute dividends in the amount 0.10 EUR per share (record date 12.07.2013, paid out on 15.07.2013).
-
The Meeting decided to reduce the share capital of the Company by reducing the nominal value of the shares by 0.10 EUR per share (record date 12.07.2013, to be paid out after the registration of the capital reduction is completed) and amend the Articles of Association accordingly.
-
The Meeting decided to adopt a share buy-back program in the following: effective period until 30.06.2014; maximum number of shares to be acquired not more than 400,000; maximum share price 2.50 EUR per share.
-
The Meeting decided to recall Mr. Pavel Daneyko from the Supervisory Board due to the expiration of his term, and appointed Mr. Mart Mutso as the new Supervisory Board member.
-
The Meeting decided to re-appoint AS PricewaterhouseCoopers as the Group`s auditor for financial year 2013.
In June, Silvano Fashion Group established a 100% subsidiary in Latvia (SIA Linret) for holding purposes. At the date of the issuance of the report, the company had no commercial activities. Aleksei Kadõrko
CFO
Silvano Fashion Group
+372 6845 000
aleksei.kadorko@silvanofashion.com
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