Börsiteade

Pealkiri

Consolidated interim report for Q3 and 9 months 2012

Teade

Tallinn, 2012-11-15 18:42 CET (GLOBE NEWSWIRE) --


Summarized selected financial indicators of the Group for 9m 2012 compared to
9m 2011 and 30.09.2012 compared to 31.12.2011 were as follows: 

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in thousands of EUR                                   9m 2012   9m 2011   Change
--------------------------------------------------------------------------------
Revenue                                               97 907    86 549    13.10%
EBITDA                                                20 942    31 049   -32.60%
Net profit for the period                             14 555    33 646   -56.70%
Net profit attributable equity holders of the         12 485    27 638   -54.80%
 Parent company                                                                 
Earnings per share (EUR)                               0.32      0.70    -54.70%
Operating cash flow for the period                    8 107     22 402   -63.80%
                                                                                
--------------------------------------------------------------------------------
in thousands of EUR                                  30.09.12  31.12.11   Change
--------------------------------------------------------------------------------
Total assets                                          73 933    68 485    8.00% 
Total current assets                                  55 801    51 881    7.60% 
Total equity attributable to equity holders of the    49 071    42 464    15.60%
 Parent company                                                                 
Loans and borrowings                                    58        20     190.00%
Cash and cash equivalents                             17 944    17 967    -0.10%
                                                                                
--------------------------------------------------------------------------------
Margin analysis, %                                    9m 2012   9m 2011   Change
--------------------------------------------------------------------------------
Gross profit                                           36.3      51.1    -29.10%
EBITDA                                                 21.4      35.9    -40.40%
Net profit                                             14.9      38.9    -61.80%
Net profit attributable equity holders of the          12.8      31.9    -60.10%
 Parent company                                                                 
                                                                                
--------------------------------------------------------------------------------
Financial ratios, %                                  30.09.12  31.12.11   Change
--------------------------------------------------------------------------------
ROA                                                    17.9      32.2    -44.40%
ROE                                                    28.8      50.9    -43.30%
Price to earnings ratio (P/E)                           8.9       5.5     60.90%
Current ratio                                           4.6       3.6     27.40%
Quick ratio                                             3         2.1     40.80%

Underlying formulas:

EBITDA = net profit for the period + depreciation and amortisation + net
financial income + income tax expense + gain on net monetary position 
Gross profit margin = gross profit / revenue
EBITDA margin = EBITDA / revenue
Net profit margin = net profit / revenue
Net profit margin attributable to equity holders of the Parent company = net
profit attributable to equity holders of the Parent company / revenue 
ROA (return on assets) = net profit attributable to owners of the Company for
the last 4 quarters/ average total assets 
ROE (return on equity) = net profit attributable to owners of the Company for
the last 4 quarters/ average equity attributable to equity holders of the
Company 
EPS (earnings per share) = net profit attributable to owners of the Company/
weighted average number of ordinary shares 
Price to earnings ratio = Share price at the end of reporting period/earnings
per share, calculated based on the net profit attributable to owners of the
Company for the last 4 quarters 
Current ratio = current assets / current liabilities
Quick ratio = (current assets – inventories) / current liabilities

Business environment

We reported that the core markets the Group enjoy recovery in consumption and
contribute to steady, organic growth of our business already in Q2 report, and
that has not changed for Q3. Our Q3 sales numbers exceed those for both 2011
and 2010 comparable numbers. In June 2012 a 500th store was opened under
Milavitsa franchise. By end of Q3 total number of stores operated by Group and
by franchise partners reached a total of 555. Geography of our franchise
partners now covers more than 20 countries. 

Russia, our core market in terms of total sales and total number of stores,
showed 12% growth in sales for 9 months compared to previous year. Belarus, our
number 2 market, matched the growth rate of Russia. The CIS (Commonwealth of
Independent States) markets growth stands beyond 20% on average for the period.
Demand in Ukraine and the Baltic States is solid. 

On our main market, Russia’s economic growth is undisputable, though with some
deceleration. By Rosstat preliminary data, the country’s GDP in Q3 advanced by
2.8%, which indicates a cumulative GDP growth from the beginning of the year by
3.8%. This also confirms the forecast data (according to EIU/Planet Retail
data) on Russia, Turkey and Poland that are thought to be the fastest growing
retail markets after China (Russia’s retail growth averages nearly 14% for near
future). 

Belarus economy showed seasonally weaker numbers for the GDP growth, yet
exceeding the averages for the EU. By Belstat, Q3 GDP growth stood at 1.9%, for
9 months 2012: 2.5%. The inflation (consumer price index) rose by 16.1% from
the beginning of the year, contributing continuously to the consumer demand.
Sales in Belarus totalled 24 508 thousand EUR for 9 months 2012, a growth of
12% over the sales of the comparable period last year. 

The reflection of the Ukrainian economy by the State Statistics Service showed
real GDP decrease by 1.3% in Q3 2012 compared to year earlier. Ukrainian sales
totalled 5 740 thousand EUR for 9 months 2012, showing an improvement of 19%
year-to-year basis. 

Baltic economies continue performing well. Estonia’s GDP growth amounted to
3.4% in the Q3 2012. Latvia’s GDP shows higher growth rates compared to
Eurozone countries, whereas the Q3 2012 GDP growth was 5.3%. Lithuania’s
preliminary GDP growth indication is 4.4% for Q3 2012. Our sales in the region
totalled 2 530 thousand EUR in 9 months 2012, up from 2 306 thousand EUR in 9
months of 2011. 

At the end of the reporting period the Group and its franchising partners
operated 555 Milavitsa and Lauma Lingerie stores, an increase of 93 stores over
the number a year ago, including 56 stores operated directly by the Group and
the rest of them by franchising partners. The Group’s retail focus remains
similar to previous year - promoting and supporting franchising partners mixed
with own retail development. 

Financial performance

Positive effect of the devaluation on the cost side has been levelled out by
increased expenses for labour, utilities and to some extent materials sourced
from Belarus. But main impact on results is coming from hyperinflationary
accounting, which requires us to apply certain accounting methods that have
negative influence on Group`s reported financial results and margins in 2012.
Mainly this is due to the fact that Group`s major part of production expenses
is generated in Belarus and Group has to hyperinflate them according to IAS 29
(9 m 2012 inflation rate in Belarus was more than 16%). But on the other hand
Group`s sales in Russia are conducted via its subsidiaries and are not
hyperinflated. 

The Group`s sales amounted to 97 907 thousand EUR during 9 months 2012,
representing a 13.1% increase as compared to the same period of previous year.
Overall, wholesales increased by 12.6% and retail sales – by 16.1%. 

The Group’s reported gross profit margin during 9 months 2012 decreased and was
36.3%, as compared to 51.1% in the respective period of previous year.
Consolidated operating profit for 9 months 2012 amounted to 19 044 thousand
EUR, compared to 30 008 thousand EUR in 9 months 2011. The consolidated
operating profit margin was 19.5% (34.7% in 9 months 2011). Consolidated net
financial income amounted to 874 thousand EUR in 9 months 2012, respective
amount in 9 months 2012 was 13 407 thousand EUR. 

Effective tax rate for 9 months 2012 amounted to 31% (23% in 9 months 2011).
Notwithstanding the decrease of income tax rate in Belarus from 24% to 18%
starting from 1 January 2012, effective tax rate increased compared to 9m 2011.
This is due to the facts that the Group fully utilized accumulated tax losses
in Russia and the Parent company collected dividends from its subsidiary. 

Consolidated net profit attributable to equity holders of the Parent company
amounted to 12 485 thousand EUR in 9 months 2012, compared to 27 638 thousand
EUR in 9 months 2011; net profit margin attributable to equity holders of the
Parent company was 12.8% against 31.9% in 9 months 2011. 

Financial position

As of 30 September 2012 consolidated assets amounted to 73 933 thousand EUR
representing an increase of 8.0% as compared to the position as of 31 December
2011. 

Property, plant and intangibles balances increased by 1 241 thousand EUR as
compared to 31 December 2011 the key reason being the hyperinflation effect on
opening balance. 

Trade receivables increased by 5 126 thousand EUR as compared to 31 December
2011 and amounted to 17 241 thousand EUR as of 30 September 2012. Inventory
balance decreased by 1 722 EUR thousand and amounted to 19 826 thousand EUR as
of 30 September 2012. Changes in trade debtors and stock balance were in line
with the seasonality trend of the business. 

Hyperinflation effect on opening balance had a positive impact on the Group’s
equity attributable to equity holders of the Parent company comprising 4 121
thousand EUR as of 30 September 2012. On the overall basis, equity attributable
to equity holders of the Parent company increased by 6 607 thousand EUR and
amounted to 49 071 thousand EUR as of 30 September 2012. 

Current liabilities increased by 2 241 thousand EUR in 9 months 2012. Current
and non-current loans and borrowings increased by 38 thousand EUR to 58
thousand EUR as of 30 September 2012. 

Sales structure

Sales by markets

in thousands of EUR  9m 2012  9m 2011  Change       9m 2012       9m 2011
                                               % from sales  % from sales
-------------------------------------------------------------------------
Russia                59 560   53 199   6 361         60.8%         61.5%
Belarus               24 508   21 868   2 640         25.0%         25.3%
Ukraine                5 740    4 811     929          5.9%          5.6%
Baltics                2 530    2 306     224          2.6%          2.7%
Other markets          5 568    4 365   1 203          5.7%          5.0%
Total                 97 907   86 549  11 358        100.0%        100.0%



Sales in the major markets demonstrated a positive trend in terms of pieces
sold in 9 months 2012 as compared to the respective period in 2011. 

The majority of lingerie sales revenue during 9 months 2012 in the amount of 59
560 thousand EUR was generated in Russia, accounting for 60.8% of total sales
during 9 months 2012. The second largest market was Belarus, where sales
reached 24 508 thousand EUR, contributing 25% of lingerie sales (both retail
and wholesale) as compared to 21 868 thousand EUR in 9 months 2011. Out of the
5 568 thousand EUR sales in the other markets major part is attributed to
Kazakhstan and Moldova. 

Sales by business segments

in thousands of EUR  9m 2012  9m 2011  Change       9m 2012       9m 2011
                                               % from sales  % from sales
-------------------------------------------------------------------------
Wholesale             81 759   72 634   9 125         83.5%         83.9%
Retail                15 817   13 621   2 196         16.2%         15.7%
Other operations         331      294      37          0.3%          0.3%
Total                 97 907   86 549  11 358        100.0%        100.0%

During 9 months 2012, wholesale revenue amounted to 81 759 thousand EUR,
representing 83.5% of the Group’s total revenue (9 months 2011: 83.9%). The
main wholesale regions were Russia, Belarus, Ukraine, Kazakhstan, Moldova and
the Baltic States. 

Total lingerie retail sales of the Group in 9 months 2012 amounted to 15 817
thousand EUR, representing a 16% increase as compared to the previous year.
Certain part of the growth is attributable to inflationary environment in
Belarus, growth of sales measured in units totalled approximately 12.5% for 9
months 2012 over the same period last year. 

As of 30 September 2012 there were altogether 555 Milavitsa and Lauma branded
shops. Own retail operations are conducted in Belarus and Latvia. As of the end
of 9 months 2012 the Group operated 56 own retail outlets (net increase of 2
stores in Q3 2012) with a total area of 4 914 square meters. As of 30 September
2012, there were 471 Milavitsa branded shops operated by Milavitsa trading
partners in Russia, Belarus, Ukraine, Moldova, Kazakhstan, Uzbekistan,
Kyrgyzstan, Latvia, Azerbaijan, Armenia, Germany, South Africa, Lithuania,
Estonia, Georgia, United Arab Emirates, Iran, Slovenia, Belgium and Italy,
resulting in net increase of 15 shops in Q3 2012, and increase by 81 shops
compared to the end of Q3 2011. Additionally, as of 30 September 2012, there
were 28 Lauma Lingerie retail outlets operated by Lauma Lingerie trading
partners in Lithuania, Latvia, Estonia, Belarus and Albania. For Lauma
Lingerie, the Group expects openings in Ukraine and Russia in the near future. 

Production

Total volume of production of the Group amounted to 17 092 thousand pieces
during 9 months 2012, representing a 11.6% increase as compared to respective
period in the previous year. 

Investments

During 9 months 2012 the Group’s investments totalled 1 102 thousand EUR with
investments into retail amounting to 151 thousand EUR. Other investments were
made into equipment and facilities to maintain effective production and to add
capacity for production and logistics for future periods. 

Personnel

As of 30 September 2012, the Group employed 3 222 employees including 396 in
retail. The rest were employed in production, wholesale, administration and
support operations. 

Total salaries and related taxes in 9 months 2012 amounted to 15 933 thousand
EUR. The remuneration of key management of the Group totalled EUR 374 thousand
EUR. 



Consolidated Statement of Financial Position

in thousands of EUR                                       30.09.2012  31.12.2011
--------------------------------------------------------------------------------
ASSETS                                                                          
Current assets                                                                  
Cash and bank                                                 17 944      17 967
Prepayments                                                      790         251
Trade and other receivables                                   17 241      12 115
Inventories                                                   19 826      21 548
Total current assets                                          55 801      51 881
                                                                                
Non-current assets                                                              
Long-term receivables                                              2          14
Investment in associates                                         143         127
Other investments                                                483         424
Deferred tax asset                                               186         236
Intangible assets                                                273         170
Investment property                                            1 601       1 430
Property, plant and equipment                                 15 444      14 203
Total non-current assets                                      18 132      16 604
TOTAL ASSETS                                                  73 933      68 485
                                                                                
LIABILITIES AND EQUITY                                                          
Current liabilities                                                             
Borrowings                                                        58          20
Trade on other payables                                       10 241      10 391
Tax liabilities                                                1 872       4 001
Total current liabilities                                     12 171      14 412
                                                                                
Non-current liabilities                                                         
Deferred tax liability                                         2 742       1 921
Total non-current liabilities                                  2 742       1 921
Total liabilities                                             14 913      16 333
                                                                                
Equity                                                                          
Share capital                                                 15 800      15 800
Share premium                                                 14 070      14 070
Treasury shares                                                 -308        -308
Statutory reserve capital                                      1 306         231
Other reserves                                                     0          63
Unrealised exchange rate differences                              28          72
Retained earnings                                             18 175      12 536
Total equity attributable to equity holders of the            49 071      42 464
 Parent company                                                                 
Non-controlling interest in equity                             9 949       9 688
Total equity                                                  59 020      52 152
TOTAL EQUITY AND LIABILITIES                                  73 933      68 485



Consolidated Income Statement

in thousands of EUR                           Q3 2012  Q3 2011  9m 2012  9m 2011
--------------------------------------------------------------------------------
Revenue                                        32 406   30 355   97 907   86 549
Cost of goods sold                            -22 347  -13 254  -62 409  -42 311
Gross Profit                                   10 059   17 101   35 498   44 238
                                                                                
Distribution expenses                          -2 982   -2 421   -9 929   -8 029
Administrative expenses                        -1 738   -1 857   -5 758   -4 858
Other operating income                            -63       65      496      468
Other operating expenses                         -475     -647   -1 263   -1 811
Operating profit                                4 801   12 241   19 044   30 008
                                                                                
Currency exchange income/(expense)                920   -1 609      454   12 679
Other finance income/(expenses)                   108      241      420      728
Net financial income                            1 028   -1 368      874   13 407
                                                                                
Profit from associates using equity method       -113       -1        9       13
Profit before tax                               5 716   10 872   19 927   43 428
                                                                                
Income tax expense                             -2 902   -2 517   -6 110   -9 782
Profit before gain/(loss) on net monetary       2 814    8 355   13 817   33 646
 position                                                                       
                                                                                
Gain on net monetary position                     767        0      738        0
Profit for the period                           3 581    8 355   14 555   33 646
Attributable to :                                                               
Equity holders of the Parent company            2 824    6 915   12 485   27 638
Non-controlling interest                          757    1 440    2 070    6 008
                                                                                
Earnings per share from profit attributable      0.07     0.18     0.32     0.70
 to equity holders of the Parent company,                                       
 both basic and diluted (EUR)                                                   






         Aleksei Kadõrko
         Chief Financial Officer
         +372 6845 000
         [email protected]