OREANDA-NEWS.

Selected Financial Indicators  

Summarized selected financial indicators of the Group for 12 months of 2015 compared to 12 months of 2014 and 31.12.2015 compared to 31.12.2014 were as follows:

in thousands of EUR 12m 2015 12m 2014 Change
Revenue 65 260 100 868 -35.3%
EBITDA 16 659 15 422 8.0%
Net profit for the period 10 939 10 584 3.4%
Net profit attributable equity holders of the Parent company 10 419 9 097 14.5%
Earnings per share (EUR) 0.28 0.23 18.7%
Operating cash flow for the period 15 708 13 355 17.6%

 

in thousands of EUR 31.12.2015 31.12.2014 Change
Total assets 53 120 67 339 -21.1%
Total current assets 40 453 47 005 -13.9%
Total equity attributable to equity holders of the Parent company 40 995 46 753 -12.3%
Loans and borrowings 0 0 N/A
Cash and cash equivalents 21 274 13 308 59.9%

 

Margin analysis, % 12m 2015 12m 2014 Change
Gross profit 46.8 36.3 28.9%
EBITDA 25.5 15.3 67.0%
Net profit 16.8 10.5 59.7%
Net profit attributable equity holders of the Parent company 16.0 9.0 77.0%

 

Financial ratios, % 31.12.2015 31.12.2014 Change
ROA 18.7 11.9 57.1%
ROE 25.4 17.2 47.6%
Price to earnings ratio (P/E) 4.6 5.0 -7.6%
Current ratio 4.6 3.6 28.5%
Quick ratio 2.9 1.6 81.9%

 Consolidated Statement of Financial Position

in thousands of EUR Note 31.12.15 31.12.14
ASSETS      
Current assets      
Cash and cash equivalents   21 274 13 308
Current loans granted   6 329
Trade and other receivables 2 3 747 6 906
Inventories 3 15 426 26 462
Total current assets   40 453 47 005
       
Non-current assets      
Long-term receivables   0 241
Investments in associates   1 84
Available-for-sale investments   372 525
Deferred tax asset   362 649
Intangible assets   443 687
Investment property   1 130 1 638
Property, plant and equipment 4 10 359 16 510
Total non-current assets   12 667 20 334
TOTAL ASSETS   53 120 67 339
       
LIABILITIES AND EQUITY      
Current liabilities      
Trade and other payables 5 7 607 9 703
Tax liabilities   1 126 3 335
Total current liabilities   8 733 13 038
       
Non-current liabilities      
Deferred tax liability   13 283
Total non-current liabilities   13 283
Total liabilities   8 746 13 321
       
Equity      
Share capital 6 11 400 11 700
Share premium   11 914 13 066
Treasury shares 6 -579 -585
Statutory reserve capital   1 306 1 306
Unrealised exchange rate differences   -15 694 -5 649
Retained earnings   32 648 26 915
Total equity attributable to equity holders of the Parent company   40 995 46 753
Non-controlling interest   3 379 7 265
Total equity   44 374 54 018
TOTAL EQUITY AND LIABILITIES   53 120 67 339

Consolidated Income Statement

in thousands of EUR Note 4Q 2015 4Q 2014   12m 2015 12m 2014
Revenue 8 13 389 13 729   65 260 100 868
Cost of goods sold   -6 833 -6 641   -34 726 -64 246
Gross Profit   6 556 7 088   30 534 36 622
             
Distribution expenses   -2 249 -2 884   -9 344 -15 661
Administrative expenses   -1 354 -1 751   -6 163 -7 403
Other operating income   42 -142   366 455
Other operating expenses   -378 -593   -1 232 -1 636
Operating profit   2 617 1 718   14 161 12 377
             
Currency exchange income/(expense)   759 1 203   1 666 703
Other finance income/(expenses)   41 270   374 690
Net financial income   800 1 473   2 040 1 393
             
Profit (loss) from associates using equity method   -80 5   -79 4
Profit before tax and gain/(loss) on net monetary position 3 337 3 196   16 122 13 774
             
Income tax expense   -729 -1 323   -5 183 -6 091
Profit before gain/(loss) on net monetary position   2 608 1 873   10 939 7 683
             
Gain on net monetary position   0 -524   0 2 901
Profit for the period   2 608 1 349   10 939 10 584
Attributable to :            
   Equity holders of the Parent company   2 511 666   10 419 9 097
   Non-controlling interest   97 683   520 1 487
             
Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR) 7 0.07 0.02   0.28 0.23

Business environment and results

Group`s results for 2015 were affected by the crisis in countries of Eastern Europe. Company`s major markets shrinked substantially. Purchasing power in region`s countries was negatively affected by devaluation of local currencies, high inflation rates, growing unemployment (including latent unemployment) and negative future expectations of consumers. Compared to Group`s functional currency, which is EUR, during 2015 Russian rouble devalued by 17%, Belarusian rouble devalued by 41%, Ukrainian hryvnia devalued by 36% and Kazakh tenge by 68%. As a result, lingerie and apparel markets in core markets of the Group shrinked by 30-40% as estimated by industry analysts.

Over the year the Group managed to cut its production, commercial and administrative expenses. Total number and functions of personnel were also optimised.

Russia demonstrated GDP decline of 3.7% in 2015, yearly inflation rate was 12.9%, retail sales in the country contracted by 10% (including contraction of non-food retail by 18.5%), investments were down by 8.4%, salaries in real terms dropped by 9.5%, unemployment rate is 5.8%. This sad statistics is complemented by disastrous beginning of 2016, major analysts predict further diminishing of GDP up to 2% in 2016, drop in retail sales is believed to be 2%. Despite harsh realities successful Russian businesses managed to keep rouble sales on the same level as in 2014 and increased profitability margins. Our immediate target is to restore our rouble sales in Russia to pre-crisis level and continue to grow them.

Our Russian subsidiary opened Cash & Carry warehouse in Moscow in October 2015 with the aim of increasing availability and offer of Group’s brands, which suffered during 2015 as our wholesale partners were reluctant or unable to keep required level and quality of inventory stock.

Rental prices in Russian capital came down to a reasonable level which allows us to operate stores profitably. During Q4 2015 the Group opened 5 own stores in Russia in Moscow, in January 2016 6th store was opened in Moscow region. 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 GDP decreased by 3.9% in 2015, inflation rate was 12%, investments were down by 15.2%, retail sales measured in BYR stagnated (increase by 0.2%), average salary in December 2015 in USD terms diminished by more than 30% compared to December 2014 and comprised 412 USD. Further diminishing of GDP up to 1% in 2016 is predicted. We will continue growing out retail network in Belarus. Until the end of 2015 landlords (especially in Minsk) refused to acknowledge changes in economy and were reluctant to negotiate over more favourable rental terms. But now we are starting to see changes towards greater flexibility, which should allow us to pursue our development goals there.

Ukraine economic data for 2015 is the worst – GDP declined 13%, inflation rate - 43.3%, nominal growth of retail sales (without adjustment for inflation) is only 9%, this means decline in real terms more than 35%. No surprise that Group sales there dropped there by more than 50%. As business climate remains complicated in Ukraine the Group is working towards establishing more productive relationships with partners there urging them to develop Group brands by offering required support in operational activities.

Kazakhstan data for 2015 is better – near zero GDP growth, inflation rate - 13.6%. During 2015 Kazakhstan was best performing market of the Group as government of the country fought declining oil prices and recession of main trading partners, but since August 2015 Kazakhs let tenge afloat, which is a game changer for this market.

Financial performance

The Group`s sales amounted to 65 260 thousand EUR during 12 months of 2015, representing a 35.3% decrease as compared to the same period of previous year. Overall, wholesales decreased by 37.5% and retail sales decreased by 25.7%, measured in EUR.

The Group’s reported gross profit margin during 12 months of 2015 continued to improve, increasing year-to-year to 46.8%, reported gross margin was 36.3% in the respective period of previous year. Consolidated operating profit for 12 months of 2015 amounted to 14 161 thousand EUR, compared to 12 377 thousand EUR in 12 months of 2014 (the contribution of the Q4 2015 was 2 617 thousand EUR compared to 1 718 thousand EUR in Q4 2014). The consolidated operating profit margin was 21.7% for 12 months of 2015 (12.3% in 12 months of 2014). Consolidated EBITDA for 12 months of 2015 was 16 659 thousand EUR, which is 25.5% in margin terms (15 422 thousand EUR and 15.3% for 12 months of 2014).

During 12 months of 2015 the Group executed internal restructuring, which will allow us to streamline internal management and intragroup capital allocation. This brought 2.4 million EUR of additional income tax expense. As a result reported consolidated net profit attributable to equity holders of the Parent company for 12 months of 2015 amounted to 10 419 thousand EUR, compared to net profit of 9 097 thousand EUR in 12 months of 2014, net profit margin attributable to equity holders of the Parent company for 12 months of 2015 was 16.0% against 9.0% in 12 months of 2014.

Financial position

As of 31 December 2015 consolidated assets amounted to 53 120 thousand EUR representing decrease by 21.1% as compared to the position as of 31 December 2014.

Trade and other receivables decreased by 3 159 thousand EUR as compared to 31 December 2014 and amounted to 3 747 thousand EUR as of 31 December 2015. Inventory balance decreased by 11 036 thousand EUR and amounted to 15 426 thousand EUR as of 31 December 2015.

Equity attributable to equity holders of the Parent company decreased by 5 758 thousand EUR and amounted to 40 995 thousand EUR as of 31 December 2015. Current liabilities decreased by 4 305 thousand EUR during 12 months of 2015.

Sales structure

Sales by markets

in thousands of EUR 12m 2015 12m 2014 Change, th. EUR Change, % 12m 2015, % of sales 12m 2014, % of sales
Russia 34 507 55 266 -20 760 -37.6% 52.9% 54.8%
Belarus 20 896 29 982 -9 085 -30.3% 32.0% 29.7%
Ukraine 1 976 4 352 -2 375 -54.6% 3.0% 4.3%
Baltics 1 832 3 146 -1 314 -41.8% 2.8% 3.1%
Kazakhstan 2 940 3 777 -837 -22.2% 4.5% 3.7%
Other markets 3 109 4 345 -1 236 -28.4% 4.8% 4.3%
Total 65 260 100 868 -35 608 -35.3% 100.0% 100.0%

The majority of lingerie sales revenue during 12 months of 2015 in the amount of 34 507 thousand EUR was generated in Russia, accounting for 52.9% of total sales. The second largest market was Belarus, where sales reached 20 896 thousand EUR, contributing 32.0% of lingerie sales (both retail and wholesale). Volumes in Ukraine decreased significantly to 1 976 thousand EUR, the drop was also remarkable in Kazakhstan, the Other markets and the Baltics.

Sales by business segments

in thousands of EUR 12m 2015 12m 2014 Change, th. EUR Change, % 12m 2015, % from sales 12m 2014, % from sales
Wholesale 49 494 79 144 -29 650 -37.5% 75.8% 78.5%
Retail 15 712 21 158 -5 446 -25.7% 24.1% 21.0%
Other operations 54 566 -513 -90.5% 0.1% 0.6%
Total 65 260 100 868 -35 609 -35.3% 100.0% 100.0%

During 12 months of 2015 wholesale revenue amounted to 49 494 thousand EUR, representing 75.8% of the Group’s total revenue (12 months of 2014: 78.5%). The main wholesale regions were Russia, Belarus, Kazakhstan and Ukraine.

As in any crisis retail sales were more stable and performed better. Retail revenue during 12 months of 2015 amounted to 15 712 thousand EUR, representing 24.1% of the Group’s total revenue.

Own & franchise store locations, geography

  Own Franchise Total
Russia 5 387 392
Ukraine 0 93 93
Belarus 56 6 62
Baltics 10 25 35
Kazakhstan 0 58 58
Moldova 0 26 26
Other regions 0 44 44
Total 71 639 710

At the end of the reporting period the Group and its franchising partners operated 660 Milavitsa and 50 Lauma Lingerie branded stores, including 71 stores operated directly by the Group.

Production, sourcing, purchasing and logistics

During 12 months of 2015 the Group’s investments into property, plant and equipment totalled 574 thousand EUR. Investments were made into equipment and facilities to maintain effective production for future periods.

Personnel

As of 31 December 2015, the Group employed 2 045 employees including 361 in retail. The rest were employed in production, wholesale, administration and support operations.

Total salaries and related taxes during 12 months of 2015 amounted to 14 899 thousand EUR. The remuneration of key management of the Group, including the key executives of all subsidiaries, totalled 1 321 thousand EUR.

Decisions made by governing bodies during 12 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.

  In Q4 2015 the Group named Jarek S?rgava as a new member of the Management Board, he replaced M?rt Meerits at this position.