Consolidated interim report for Q3 and 9 months of 2013 (unaudited)Tallinn, 2013-11-08 18:00 CET --
Selected Financial Indicators
Summarized selected financial indicators of the Group for 9 months 2013 compared to 9 months 2012 and 30.09.2013 compared to 31.12.2012 were as follows:
in thousands of EUR |
9m 2013 |
9m 2012 |
Change |
Revenue |
98 812 |
97 907 |
0.9% |
EBITDA |
18 501 |
20 942 |
-11.7% |
Net profit for the period |
11 747 |
14 555 |
-19.3% |
Net profit attributable equity holders of the Parent company |
10 709 |
12 485 |
-14.2% |
Earnings per share (EUR) |
0.27 |
0.32 |
-14.2% |
Operating cash flow for the period |
15 274 |
8 107 |
72.9% |
in thousands of EUR |
30.09.2013 |
31.12.2012 |
Change |
Total assets |
80 945 |
75 837 |
6.7% |
Total current assets |
58 928 |
55 847 |
5.5% |
Total equity attributable to equity holders of the Parent company |
56 981 |
51 396 |
10.9% |
Loans and borrowings |
145 |
47 |
208.5% |
Cash and cash equivalents |
24 708 |
16 260 |
52.0% |
Margin analysis, % |
9m 2013 |
9m 2012 |
Change |
Gross profit |
35.6 |
36.3 |
-1.8% |
EBITDA |
18.7 |
21.4 |
-12.5% |
Net profit |
11.9 |
14.9 |
-20.0% |
Net profit attributable equity holders of the Parent company |
10.8 |
12.8 |
-15.0% |
Financial ratios, % |
30.09.2013 |
31.12.2012 |
Change |
ROA |
15.0 |
32.2 |
-53.4% |
ROE |
22.3 |
50.9 |
-56.1% |
Price to earnings ratio (P/E) |
8.1 |
5.5 |
47.6% |
Current ratio |
5.6 |
3.6 |
55.5% |
Quick ratio |
3.6 |
2.1 |
72.3% |
Consolidated Statement of Financial Position
in thousands of EUR |
30.09.2013 |
31.12.2012 |
ASSETS |
|
|
Current assets |
|
|
Cash and cash equivalents |
24 708 |
16 260 |
Prepayments |
412 |
243 |
Trade and other receivables |
12 956 |
14 746 |
Inventories |
20 852 |
24 598 |
Total current assets |
58 928 |
55 847 |
|
|
|
Non-current assets |
|
|
Long-term receivables |
0 |
1 |
Investments in associates |
137 |
164 |
Available-for-sale investments |
501 |
492 |
Deferred tax asset |
203 |
231 |
Intangible assets |
714 |
443 |
Investment property |
1 616 |
1 618 |
Property, plant and equipment |
18 846 |
17 041 |
Total non-current assets |
22 017 |
19 990 |
TOTAL ASSETS |
80 945 |
75 837 |
|
|
|
LIABILITIES AND EQUITY |
|
|
Current liabilities |
|
|
Borrowings |
145 |
47 |
Trade and other payables |
9 076 |
11 171 |
Tax liabilities |
1 304 |
1 008 |
Total current liabilities |
10 525 |
12 226 |
|
|
|
Non-current liabilities |
|
|
Deferred tax liability |
2 251 |
2 162 |
Total non-current liabilities |
2 251 |
2 162 |
Total liabilities |
12 776 |
14 388 |
|
|
|
Equity |
|
|
Share capital |
15 760 |
15 760 |
Share premium |
13 822 |
13 822 |
Treasury shares |
-170 |
-20 |
Statutory reserve capital |
1 306 |
1 306 |
Unrealised exchange rate differences |
-786 |
15 |
Retained earnings |
27 049 |
20 513 |
Total equity attributable to equity holders of the Parent company |
56 981 |
51 396 |
Non-controlling interest in equity |
11 188 |
10 053 |
Total equity |
68 169 |
61 449 |
TOTAL EQUITY AND LIABILITIES |
80 945 |
75 837 |
Consolidated Income Statement
in thousands of EUR |
Q3 2013 |
Q3 2012 |
9m 2013 |
9m 2012 |
Revenue |
29 865 |
32 406 |
98 812 |
97 907 |
Cost of goods sold |
-18 068 |
-22 347 |
-63 632 |
-62 409 |
Gross Profit |
11 797 |
10 059 |
35 180 |
35 498 |
|
|
|
|
|
Distribution expenses |
-3 739 |
-2 982 |
-12 124 |
-9 929 |
Administrative expenses |
-1 577 |
-1 738 |
-4 981 |
-5 758 |
Other operating income |
62 |
-63 |
496 |
496 |
Other operating expenses |
-764 |
-475 |
-1 922 |
-1 263 |
Operating profit |
5 779 |
4 801 |
16 649 |
19 044 |
|
|
|
|
|
Currency exchange income/(expense) |
272 |
920 |
-323 |
454 |
Other finance income/(expenses) |
313 |
108 |
721 |
420 |
Net financial income |
585 |
1 028 |
398 |
874 |
|
|
|
|
|
Profit (loss) from associates using equity method |
1 |
-113 |
9 |
9 |
Profit before tax and gain/(loss) on net monetary position |
6 365 |
5 716 |
17 056 |
19 927 |
Income tax expense |
-1 249 |
-2 902 |
-3 904 |
-6 110 |
Profit before gain/(loss) on net monetary position |
5 116 |
2 814 |
13 152 |
13 817 |
|
|
|
|
|
Gain on net monetary position |
-1 704 |
767 |
-1 405 |
738 |
Profit for the period |
3 412 |
3 581 |
11 747 |
14 555 |
Attributable to : |
|
|
|
|
Equity holders of the Parent company |
3 093 |
2 824 |
10 709 |
12 485 |
Non-controlling interest |
319 |
757 |
1 038 |
2 070 |
|
|
|
|
|
Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR) |
0.08 |
0.07 |
0.27 |
0.32 |
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.
In broader terms we can notice more positive thinking about the world economy, which is supported by a highly liberal money market policies. Nevertheless, there is a long way until the recovery of the real economy. The quantitative easing has in the first hand been targeted to stimulate the economy, and we feel that the retail sector has been among the winners with increasing consumers purchasing volumes.
We see the signs of recovery in the first hand in Europe, among them the optimism in the Baltics of the (expected) improvement in the consumer sentiment, but also signs of expansion plans of Central- and Eastern Europe retail operators. For the Group it translated into growth in sales in Q3 2013 in Belarus, Ukraine and other markets, but unfortunately not in Russia where breaking the downtrend is expected in early 2014. Looking at the Group’s activities in the given economic environment we have noticed that even with sluggish sales growth the opening of the franchise stores persists, that respectively reduces the less predictable wholesale segment’s influence on the top line sales numbers; we also have noticed that the growth continues and concentrates into “new” markets where the previous economic slump has had a softer effect.
Russia’s economy’s current problem is related to GDP growth rate dropping below 2% According to deputy Economy Minister of Russia, the economy expanded by 1.2% during Q3 2013. Notwithstanding the slowdown there, Silvano continues to expand the franchise network that seems to be the panacea against backdrops in orders in the less predictable wholesale segment. The net new openings for the 3rd quarter have somewhat decreased, mainly due to relocation of old stores into new locations. There are a total of 378 franchise stores in Russia as of end of Q3, which, together with wholesales, generated 58 375 thousand EUR in sales for 9 months 2013 compared to 59 560 thousand EUR a year ago.
Belarus consumption continues strongly. The preliminary GDP data indicates a modest 1.1% y-o-y growth. The driver for growth in consumption is related to the rise of average wages in the country (the data is available for 8 months) by 19.5% to 5.5 million roubles (approximately 440 euros a month). The CPI growth is 11% from the beginning of the year (the CB targets 12% inflation for 2013). Perhaps with moderate slow-down, the retail sector continues to grow in the near future. There are a total of 52 stores operated directly by the Group and 5 franchise stores. Belarus sales revenue reached 24 587 thousand EUR for 9 months of 2013 compared to 24 508 thousand EUR for the same period a year ago.
In Ukraine, the real economy has stalled and political attention is set at foreign politics. Nevertheless, the Group’s results are good thanks to the strength of our local franchise and wholesales partners. Nevertheless, the consumption is built on thin ice, as there are no evident signs of the recovery for the near future. There are 93 franchise stores in total in the country as of end of Q3 2013. The sales revenue advanced to 7 141 thousand EUR for 9 months of 2013 compared to 5 740 thousand EUR for the same period a year ago.
The Baltic markets retail sector shows strength, and we share this view with the rest. One of the components fuelling this growth is increase of wages in Q2 (especially in Estonia), hence stimulating the private consumption. At the time of issuance of the report, no macro data was available. The Group operates 9 own stores, complemented by 32 partner stores in the region. The sales in the Baltic countries aggregated 2 015 thousand EUR for 9 months of 2013, compared to 2 530 EUR for the same period a year ago. The drop in sales is related to the decrease in the re-export related wholesales (the Group has streamlined its sales policy and arranges sales via country-based representative offices).
The other markets, Kazakhstan and Moldova in the top, showed continuously good dynamics during 9 months 2013. The sales into these two countries reached 4 677 thousand EUR for the period compared to 3 692 thousand EUR for the 9 months of 2012. The remaining “other” attributed to a wide scope of countries both in the East and West (2 017 thousand EUR in 9 months of 2013 compared to 1 877 thousand EUR in 2012).
On the store openings, Q3 2013 net increase (including openings and store closures primarily due to relocations) for Milavitsa stores were 10 units and 2 units under the Lauma Lingerie brand. The Group therefore operated directly and via franchise a total of 648 stores (net increase of 66 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
The Group`s sales amounted to 98 812 thousand EUR during 9 months of 2013, representing a 0.9% increase as compared to the same period of previous year. Overall, wholesales increased by 0.17% and retail sales – by 5.04%.
The Group’s reported gross profit margin during Q3 improved year-on-year basis and stood at 39.5%, reported gross margin was 31.0% in the respective period of previous year. For 9 months of 2013, the gross margin aggregated 35.6%, compared to 36.3% a year ago. Consolidated operating profit for Q3 2013 amounted to 5 779 thousand EUR, compared to 4 801 thousand EUR in Q3 2012. For 9 months of 2013 the operating profit stood at 16 649 thousand EUR compared to 19 044 thousand EUR a year ago. The main reason for the drop is related to higher distribution expenses. The consolidated operating profit margin was 16.8% for 9 months of 2013 (19.5% in 9 months of 2012).
Consolidated net profit attributable to equity holders of the Parent company for Q3 2013 amounted to 3 093 thousand EUR, compared to 2 824 thousand EUR in Q3 2012. The net profit attributable to equity holders of the Parent company for 9 months of 2013 amounted to 10 709 thousand EUR, compared to 12 485 thousand EUR a year ago; net profit margin attributable to equity holders of the Parent company for 9 months of 2013 was 10.8% against 12.8% in 9 months of 2012.
Financial position
As of 30 September 2013 consolidated assets amounted to 80 945 thousand EUR representing an increase by 6.7% as compared to the position as of 31 December 2012.
Trade and other receivables decreased by 1 790 thousand EUR as compared to 31 December 2012 and amounted to 12 956 thousand EUR as of 30 September 2013. Inventory balance decreased by 3 746 thousand EUR and amounted to 20 852 thousand EUR as of 30 September 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 5 585 thousand EUR and amounted to 56 981 thousand EUR as of 30 September 2013.
Current liabilities decreased by 1 701 thousand EUR during 9 months of 2013. Current and non-current loans and borrowings increased by 98 thousand EUR to 145 thousand EUR as of 30 September 2013.
Sales structure
Sales by markets
in thousands of EUR |
9m 2013 |
9m 2012 |
Change |
|
9m 2013
% from sales |
9m 2012
% from sales |
Russia |
58 375 |
59 560 |
-1 185 |
|
59.1% |
60.8% |
Belarus |
24 587 |
24 508 |
79 |
|
24.9% |
25.0% |
Ukraine |
7 141 |
5 740 |
1 401 |
|
7.2% |
5.9% |
Baltics |
2 015 |
2 530 |
-515 |
|
2.0% |
2.6% |
Other markets |
6 694 |
5 569 |
1 125 |
|
6.8% |
5.7% |
Total |
98 812 |
97 907 |
905 |
|
100.0% |
100.0% |
The majority of lingerie sales revenue during 9 months of 2013 in the amount of 58 375 thousand EUR was generated in Russia, accounting for 59.1% of total sales. The second largest market was Belarus, where sales reached 24 587 thousand EUR, contributing 24.9% of lingerie sales (both retail and wholesale). Ukraine represented a sales of 7 141 thousand EUR, contributing 7.2% of lingerie sales of the Group.
Sales by business segments
in thousands of EUR |
9m 2013 |
9m 2012 |
Change |
|
9m 2013
% from sales |
9m 2012
% from sales |
Wholesale |
81 900 |
81 759 |
141 |
|
82.9% |
83.5% |
Retail |
16 614 |
15 817 |
797 |
|
16.8% |
16.2% |
Other operations |
298 |
331 |
-33 |
|
0.3% |
0.3% |
Total |
98 812 |
97 907 |
905 |
|
100.0% |
100.0% |
During 9 months of 2013 wholesale revenue amounted to 81 900 thousand EUR, representing 82.9% of the Group’s total revenue (9 months 2012: 83.5%). The main wholesale regions were Russia, Ukraine, Belarus, Kazakhstan and Moldova.
Total lingerie retail sales of the Group in 9 months of 2013 amounted to 16 614 thousand EUR, representing 16.8% of the Group’s total revenue (9 months 2012 16.2%).
As of 30 September 2013 there were altogether 648 Milavitsa and Lauma branded shops. Own retail operations were conducted in Belarus and Latvia. As of the end of 9 months of 2013 the Group operated 61 own retail outlets. As of 30 September 2013, there were 553 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 September 2013, there were 34 Lauma Lingerie retail outlets operated by Lauma Lingerie trading partners in Lithuania, Latvia, Estonia, Belarus and Albania.
Investments
During 9 months 2013 the Group’s investments into property, plant and equipment totalled 3 215 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 September 2013, the Group employed 3 159 employees including 365 in retail. The rest were employed in production, wholesale, administration and support operations.
Total salaries and related taxes during 9 months 2013 amounted to 18 324 thousand EUR. The remuneration of key management of the Group, including the key executives of the subsidiaries, totalled 507 thousand EUR.
Decisions made by governing bodies during 9 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.
Aleksei Kadõrko CFO Silvano Fashion Group +372 6845 000 aleksei.kadorko@silvanofashion.com
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