SFG: Consolidated interim report for Q4 and 12 months of 2015 (unaudited)
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|
|Net profit attributable equity holders of the Parent company||16.0||9.0||77.0%|
|Financial ratios, %||31.12.2015||31.12.2014||Change|
|Price to earnings ratio (P/E)||4.6||5.0||-7.6%|
Consolidated Statement of Financial Position
|in thousands of EUR||Note||31.12.15||31.12.14|
|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|
|Investments in associates||1||84|
|Deferred tax asset||362||649|
|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|
|Trade and other payables||5||7 607||9 703|
|Tax liabilities||1 126||3 335|
|Total current liabilities||8 733||13 038|
|Deferred tax liability||13||283|
|Total non-current liabilities||13||283|
|Total liabilities||8 746||13 321|
|Share capital||6||11 400||11 700|
|Share premium||11 914||13 066|
|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.
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.
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 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%|
|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
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.
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.