Consolidated interim report for Q3 and 9 months of 2016

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News Desk 2018
Consolidated interim report for Q3 and 9 months of 2016 (unaudited)

Tallinn, 2016-11-04 17:46 CET (GLOBE NEWSWIRE) -- Selected Financial Indicators

Summarized selected financial indicators of the Group for 9 months of 2016 compared to 9 months of 2015 and 30.09.2016 compared to 31.12.2015 were as follows:

in thousands of EUR 09m 2016 09m 2015 Change
Revenue 45 642 51 871 -12,0%
EBITDA 15 978 13 484 18,5%
Net profit for the period 9 381 8 331 12,6%
Net profit attributable equity holders of the Parent company 9 117 7 908 15,3%
Earnings per share (EUR) 0,25 0,21 18,2%
Operating cash flow for the period 12 969 14 264 -9,1%
       
in thousands of EUR 30.09.2016 31.12.2015 Change
Total assets 55 159 53 635 2,8%
Total current assets 43 540 40 870 6,5%
Total equity attributable to equity holders of the Parent company 43 583 40 194 8,4%
Cash and cash equivalents 26 097 21 274         22,7%
       
       
Margin analysis, % 09m 2016 09m 2015 Change
Gross profit 55,4 46,2 19,9%
EBITDA 35,0 26,0 34,7%
Net profit 20,6 16,1 28,0%
Net profit attributable equity holders of the Parent company 20,0 15,2 31,0%
       
Financial ratios, % 30.09.2016 31.12.2015 Change
ROA 18,9 17,4 8,6%
ROE 25,3 23,7 6,8%
Price to earnings ratio (P/E) 7,7 5,0 54,2%
Current ratio 5,8 4,2 36,0%
Quick ratio 4,0 2,6 50,0%

  Consolidated Statement of Financial Position

in thousands of EUR Note 30.09.2016 31.12.2015
ASSETS      
Current assets      
Cash and cash equivalents   26 097 21 274
Current loans granted   6 6
Trade and other receivables 2 3 757 4 120
Inventories 3 13 680 15 470
Total current assets   43 540 40 870
       
Non-current assets      
Investments in associates   0 1
Available-for-sale investments   349 372
Deferred tax asset   763 465
Intangible assets   306 443
Investment property   1 040 1 130
Property, plant and equipment 4 9 161 10 354
Total non-current assets   11 619 12 765
  TOTAL ASSETS   55 159 53 635
       
LIABILITIES AND EQUITY      
Current liabilities      
Trade and other payables 5 5 805 7 985
Tax liabilities   1 753 1 661
Total current liabilities   7 558 9 646
       
Non-current liabilities      
Deferred tax liability   33 13
Total non-current liabilities   33 13
Total liabilities   7 591 9 659
       
Equity      
Share capital 6 11 400 11 400
Share premium   11 914 11 914
Treasury shares 6 -2 084 -579
Statutory reserve capital   1 306 1 306
Unrealised exchange rate differences   -15 311 -16 238
Retained earnings   36 358 32 391
Total equity attributable to equity holders of the Parent company   43 583 40 194
Non-controlling interest   3 985 3 782
Total equity   47 568 43 976
  TOTAL EQUITY AND LIABILITIES   55 159 53 635

 Consolidated Income Statement

in thousands of EUR Note 3Q 2016 3Q 2015   09m 2016 09m 2015
Revenue 8 15 047 17 373   45 642 51 871
Cost of goods sold   -6 975 -8 972   -20 346 -27 893
Gross Profit   8 072 8 401   25 296 23 978
             
Distribution expenses   -2 420 -2 312   -6 650 -7 095
Administrative expenses   -1 216 -1 544   -3 481 -4 809
Other operating income   81 78   250 324
Other operating expenses   -231 -282   -789 -854
Operating profit   4 286 4 341   14 626 11 544
             
Currency exchange income/(expense)   -26 1 938   -2 520 907
Other finance income/(expenses)   43 73   144 333
Net financial income   17 2 011   -2 376 1 240
             
Profit (loss) from associates using equity method   0 1   0 1
Profit before tax and gain/(loss) on net monetary position 4 303 6 353   12 250 12 785
             
Income tax expense   -1 055 -1 074   -2 869 -4 454
  Profit before gain/(loss) on net monetary position   3 248 5 279   9 381 8 331
             
Profit for the period   3 248 5 279   9 381 8 331
Attributable to :            
   Equity holders of the Parent company   3 131 5 152   9 117 7 908
   Non-controlling interest   117 127   264 423
             
Earnings per share from profit attributable to equity holders of the Parent company, both basic and diluted (EUR) 7 0,08 0,13   0,25 0,21
             
               

Business results and financial position  

The Group`s sales amounted to 45 642 thousand EUR during 9 months of 2016, representing a 12.0% decrease as compared to the same period of previous year.

The Group’s reported gross profit margin during 9 months of 2016 continued to improve increasing to 55.4%, reported gross margin was 46.2% in the respective period of previous year.

Over the year the Group managed to cut its production, commercial and administrative expenses. Compared to 9 months of 2016 commercial and administrative expenses diminished respectively by 6.3% and 27.6%. Personnel expenses decreased 26.1%; total number of employees increased by 1.7% compared to the end of 9 months of 2015.

Consolidated operating profit for 9 months of 2016 increased by 26.7% to 14 626 thousand EUR, compared to 11 544 thousand EUR in 9 months of 2015. The consolidated operating profit margin was 32.0% for 9 months of 2016 (22.3% in 9 months of 2015). Consolidated EBITDA for 9 months of 2016 was 15 978 thousand EUR, which is 35.0% in margin terms compared to 13 484 thousand EUR and 26.0% for 9 months of 2015.

Reported consolidated net profit attributable to equity holders of the Parent company for 9 months of 2016 increased by 15.3% and amounted to 9 117 thousand EUR, compared to net profit of 7 908 thousand EUR in 9 months of 2015, net profit margin attributable to equity holders of the Parent company for 9 months of 2016 was 20.0% against 16.1% in 9 months of 2015.

As of 30 September 2016 consolidated assets amounted to 55 159 thousand EUR representing an increased by 2.8% as compared to the position as of 31 December 2015.

Trade and other receivables decreased by 363 thousand EUR as compared to 31 December 2015 and amounted to 3 757 thousand EUR as of 30 September 2016. Inventory balance decreased by 1 790 thousand EUR and amounted to 13 680 thousand EUR as of 30 September 2016.

Equity attributable to equity holders of the Parent company increased by 3 389 thousand EUR and amounted to 43 583 thousand EUR as of 30 September 2016. Current liabilities decreased by 2 088 thousand EUR during 9 months of 2016.

Group`s results for 9 months of 2016 were defined by continued challenges in economies of its major sales markets – Russia, Belarus and Ukraine. Previously undermined by devaluations and high inflation rates purchasing power in region`s countries remains low, future expectations are still more on a negative or neutral side, therefore it is hard to see some kind of relatively fast recovery in growth rates of economies under discussion.

Russian statistics are somewhat improving compared to 2015, inflation rate is currently 6.9% in y-o-y basis and 3.9% from the beginning of the year. GDP declined by 0.7% during 8 months of 2016. Russian economy is starting to adapt to new reality, but purchasing power of population in real terms is still falling and in August decreased by 1,1%.  Retail sales in Russian market has been stable in last months and decreased in August only by 0.1% compared last year. Group`s sales on Russian market totalled 25 170 thousand EUR, decline is 7.1% compared to 9 months of 2015. In local currency sales grew by 7.1% during 9 months. Group`s Russian subsidiary opened 12 more stores in Q3 of 2016, 2 more stores were opened in October 2016. The Group will continue opening own stores.

Belarusian economy at the moment isn`t demonstrating signs of stabilisation yet, GDP decreased by 3.1% in Q1 and 1.4% in Q2 2016 y-o-y basis. Annual average inflation rate is 12% and in September was reported 11.1%, slowing down a bit from August`s 11.8%. During 7 months 2016, real household income fell by 7% y-o-y basis. International financial institutions predict that in 2016 Belarusian GDP will fall by around 2%, inflation rate will be 11.5-12.5%. Retail turnover in comparable prices in Belorussia declined during 9 months by 3.1%. Major factors behind this are believed to be unreformed economy, particularly public sector and state-controlled entities, impact of recession in main trading partner – Russia, continued pressure on Belarusian rouble, low demand for consumption, high level of debts in economy. Group`s sales in Belarus in 9 months of 2016 were 13 885 thousand EUR and diminishing by 18.3% compared to 9 months of 2015. Sales in local currency increased by 7.5% at the same period. In Belarus the Group will focus on improving profitability of its retail business and will also continue to expand our store chain there depending on availability of reasonably priced selling areas.

Ukraine economy is expected to return to positive growth in 2016, supported by improving consumer and investor confidence, gradually rising real incomes easing of credit conditions, however the recovery is expected to be slow and fragile. Group`s sales in Ukraine in 9 months of 2016 reached the level of 1332 thousand EUR, which is 3.7% less than previous year. Sales in local currency increased by 14.3% during same period.

Sales by markets

Group`s sales results by markets measured in EUR:

in thousands of EUR 09m 2016 09m 2015 Change, EUR Change, % 09m 2016, % of sales 09m 2015, % of sales
Russia 25 170 27 086 -1 916 -7,1% 55,1% 52,2%
Belarus 13 885 16 986 -3 101 -18,3% 30,4% 32,7%
Ukraine 1 332 1 383 -52 -3,7% 2,9% 2,7%
Baltics 1 018 1 412 -394 -27,9% 2,2% 2,7%
Other markets 4 237 5 003 -766 -15,3% 9,4% 9,7%
Total 45 642 51 871 -6 229 -12,0% 100,0% 100,0%

The majority of lingerie sales revenue during 9 months of 2016 in the amount of 25 170 thousand EUR was generated in Russia, accounting for 55.1% of total sales. The second largest market was Belarus, where sales reached 13 885 thousand EUR, contributing 30.4% of lingerie sales.

Group sales in its 3 major markets – Russia, Belarus and Ukraine – were 88.4% of its total sales. Measured in local currencies sales growth was accordingly 7.1%, 7.5% and 14.3%.

  9m 2016 9m 2015 Change Change, %
Russia, th RUR 1 918 073 1 791 251 126 822 7,1%
Belarus, th BYN 31 069 28 911 2 158 7,5%
Ukraine, th UAH 37 787 33 067 4 720 14,3%

Sales by business segments

in thousands of EUR 09m 2016 09m 2015 Change, EUR Change, % 09m 2016, % from sales 09m 2015, % from sales
Wholesale 33 650 39 122 -5 472 -14,0% 73,7% 75,4%
Retail 11 853 12 722 -869 -6,8% 26,0% 24,5%
Other operations 139 27 112 414,1% 0,3% 0,1%
Total 45 642 51 871 -6 229 -12,0% 100,0% 100,0%

During 9 months of 2016 wholesale revenue decreased by 14.0% and amounted to 33 650 thousand EUR, representing 73.7% of the Group’s total revenue (9 months of 2015: 75.4%). The main wholesale regions were Russia, Belarus and Ukraine.

Group´s retail revenue decreased by 6.8% and amounted to 11 853 thousand EUR, this represents 26.0% of the Group`s total revenue. The decrease in retail revenue is mainly attributable to Belarusian operations.

Own & franchise store locations by countries Own Franchise Total
Russia 22 387 409
Ukraine 0 50 50
Belarus 56 10 66
Baltics 8 25 33
Other regions 0 122 122
Total 86 594 680

At the end of the reporting period the Group and its franchising partners operated 631 Milavitsa and 49 Lauma Lingerie branded stores, including 86 stores operated directly by the Group.

Investments

During 9 months of 2016 the Group’s investments into property, plant and equipment totalled 571 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 30 September 2016, the Group employed 2 063 employees, including 362 in retail. The rest were employed in production, wholesale, administration and support operations.

Total salaries and related taxes during 9 months of 2016 amounted to 8 798 thousand EUR (11 673 thousand EUR in 9 months of 2015). The remuneration of key management of the Group, including the key executives of all subsidiaries, totalled 704 thousand EUR.

Decisions made by governing bodies during 9 months 2016

On June 29, 2016 Silvano Fashion Group held its regular Annual General Meeting of Shareholders. The Meeting adopted following decisions.

  • The Meeting approved the 2015 Annual Report.
  • The Meeting decided to distribute dividends in the amount 0.15 EUR per share (record date 13.07.2016, payment completed on 15.07.2016).
  • The Meeting decided to re-appoint AS PricewaterhouseCoopers as the Group`s auditor for financial year 2016.
  • 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 29th of June 2015;
  • The Meeting decided to adopt a share buy-back program in the following: effective period until 30.06.2017; maximum number of shares to be acquired not more than 1 000 000; maximum share price 2.70 EUR per share.

On October 31, 2016, the decrease of share capital of Silvano Fashion Group AS was registered in the Commercial Register based on the resolutions adopted by the General Meeting of Shareholders of the Company held on June 29, 2016. The new registered share capital of the Company is 11 100 000 euros, which is divided into 37 000 000 ordinary shares with nominal value of 0.30 euros per share.

Kati Kusmin

Member of the Management Board

Silvano Fashion Group Tel +372 6845 000 E-mail: info@silvanofashion.com

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