Börsiteade

Pealkiri

Consolidated interim report for Q4 and 12 months of 2015 (unaudited)

Teade

Tallinn, 2016-02-19 17:10 CET (GLOBE NEWSWIRE) --


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    10 419     9 097   14.5%
 company                                                                        
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        40 995      46 753  -12.3%
 the Parent company                                                             
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      16.0       9.0   77.0%
 company                                                                        



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              40 995    46 753
 Parent company                                                                 
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      4Q      12m      12m
                                                  2015    2014     2015     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                -80       5      -79        4
 equity method                                                                  
Profit before tax and gain/(loss) on net         3 337   3 196   16 122   13 774
 monetary position                                                              
                                                                                
Income tax expense                                -729  -1 323   -5 183   -6 091
Profit before gain/(loss) on net                 2 608   1 873   10 939    7 683
 monetary position                                                              
                                                                                
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             7      0.07    0.02     0.28     0.23
 attributable to equity holders of the                                          
 Parent company, both basic and diluted                                         
 (EUR)                                                                          

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    12m     12m     Change,    Change,   12m 2015, %    12m 2014, % 
 of EUR         2015    2014    th. EUR       %        of sales       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     -35 608   -35.3%         100.0%         100.0%
                          868                                                   

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   12m     12m     Change,    Change   12m 2015, %     12m 2014, %  
 of EUR        2015    2014    th. EUR     , %      from sales      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             54     566        -513  -90.5%            0.1%            0.6%
 operations                                                                     
Total         65 260     100     -35 609  -35.3%          100.0%          100.0%
                         868                                                    

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 Särgava as a new member of the Management
Board, he replaced Märt Meerits at this position. 

Aleksei Kadõrko
Chief Financial Officer
Silvano Fashion Group
Tel +372 6845 000
E-mail: [email protected]