Last update: 08.07.2024 02:04 (GMT+3)
AS BALTIKA FINANCIAL RESULTS 27.04.2005
Comments on the financial results of AS Baltika for the 1st quarter
of 2005
General results
The unaudited consolidated net sales of AS Baltika for the 1st
quarter of 2005 were EEK 150.2m (EUR 9,6m) and the net income was
EEK 10.4m (EUR 0.67m). Compared to the 1st quarter of 2004, the
sales income increased by 15% and the net income increased by EEK
9.8m (EUR 0.63m); the net income of the 1st quarter of 2004 was EEK
0.6m (EUR 0.04,m).
Sales income
The consolidated sales of Baltika Group in the 1st quarter broke
down across the segments as follows:
(EEK millions) 1Q2005 1Q2004 Change
Retail sales 111.71 79.26 + 41%
Wholesale 34.12 39.53 - 14%
Subcontracting 0.54 11.53 - 95%
Other sales income 3.85 0.3
TOTAL 150.22 130.62 + 15%
* EUR 1 = EEK 15.6466
In connection with the establishment of OÜ Baltika Tailor, in which
Baltika has a 50% holding, the consolidated net sales for 2005 do
not include the subcontracting results of this company. The retail
and wholesale sales of Baltika’s own brands totalled EEK 145.83m
(EUR 9.32m), having grown by 24% compared to the 1st quarter of the
previous year.
Retail sales
Baltika had good sales results in the 1st quarter. A better managed
discount period in January and February and the successfully
launched sale of spring collections in March yielded a sales income
of EEK 111.7m (EUR 7.1m) from Baltika’s own retail system in the 1st
quarter of the year, which is by 41% more (EEK 32.4m) than in the
same period last year (retail sales income EEK 79.26m/EUR 5.07m,
respectively). The relative share of sales income from Baltika’s own
retail system increased to 74% of total sales, as compared to 61% in
the 1st quarter of last year. Sales efficiency (sales/m2) increased
by 19% compared to the 1st quarter of the previous year. Like-for-
like sales (sales on comparable areas) increased by 11%. Nearly a
half of the increase in sales income was attributable to overall
system growth and the rest related to improved efficiency.
Baltika’s largest fast fashion brand Monton accounted for 53% of the
1st quarter’s retail sales and amounted to EEK 58.6m, which is by
EEK 10.4m (+44%) more than in the same period last year. Sales
growth was the greatest for CHR/Evermen, i.e. 77% more than in the
same period last year, totalling EEK 28.8m. Baltman’s sales
increased by 59%, the total sales income was EEK 12.1m. Monton and
CHR women’s collection showed a particular sales success.
The differences in brand sales growth were related to market
segmentation – in order to find an optimum structure of the brand
portfolio for each retail market.
Retail sales increased in all of Baltika’s retail markets in the 1st
quarter, especially in Estonia (29%), Latvia (27%) and the Ukraine
(24%). The largest retail market according to sales income was the
Estonian domestic market (EEK 28.6m), followed by Lithuania (EEK
27.3m) and the Ukraine (EEK 18.7m). The sales on Baltika’s newest
retail market – Russia – amounted to EEK 12.4m in the 1st quarter.
Baltika Grupp had 76 shops (11,465 m2 of sales area) at the end of
March, broken down across the markets as follows:
Number of shops
31.03.2005
Estonia 23
Lithuania 16
Latvia 10
The Ukraine 11
Russia 8
Poland 8
TOTAL 76
One new shop was opened in Estonia in the 1st quarter and three
shops were closed down (one in Estonia, Poland and the Ukraine each)
due to the termination of commercial lease contracts.
Compared to the 1st quarter of 2004, the retail system of Baltika
Grupp has increased by ten shops, eight of which were added via
joint enterprises in Russia.
Wholesale
The wholesale sales of own products in the 1st quarter, of which
CHR/EV and Baltman accounted for 63%, totalled EEK 34,12m, which was
less than last year by EEK 5.5m.
Financial results
Baltika earned a gross income of EEK 73.3m (EUR 4.7m) in the 1st
quarter, which was EEK 15.9m (EUR 1.0m) more than in the same period
last year. The growth in gross income was achieved through sales
efficiency and growth of the retail system. More successful discount
periods, a more exact price policy and higher first price margins
compared to the previous year contributed to higher gross margins;
the gross margin was 48.8% (43.9% in the 1st quarter of 2004).
The net income of Baltika Grupp after taxes and minority
shareholding was EEK 10.4m (EUR 0.67m).
Operating expenses increased mainly in connection with the system
growth; comparable expenses have increased less than the average
inflation indicator.
Exchange rate fluctuations did not have a significant impact on the
quarter’s results, since loss from sales in roubles and hryvnas, was
compensated for by an increase of dollar-based purchases from China.
Balance sheet
The consolidated balance sheet total of Baltika as of 31 March 2005
was EEK 321.7m (EUR 20.6m), having increased by EEK 4.5m(EUR 0.29m)
since the beginning of the year. Inventories have decreased in the
system by EEK 2,9m (EUR 0,2m) since the beginning of the year,
totalling EEK 142.5m (EUR 9.1m). Accounts receivable have increased
by EEK 13.7m (EUR 0.9m) since the beginning of the year, which is
due to the seasonal wholesale cycle.
Loan repayments to banks amounted to EEK 5.4m (EUR 0.35m). An
additional EEK 9,3m of overdraft was used to finance the spring
season’s purchases and reduce accounts payable.
Accounts payable have decreased by EEK 4,1m (EUR 0.3m) since the
beginning of the year, totalling EEK 27m (EUR 1.73m). Accounts
payable amounted to EEK 57.4m (EUR 3.7m) at the end of the 1st
quarter of 2004, having thus nearly halved in 2005.
Investments
A total of EEK 2.1m (EUR 0.14m) was invested in fixed assets in the
1st quarter, of which EEK 1.3m (EUR 0.1m) was invested in the
development of retail trade and EEK 0.5m (EUR 0.04m) was used toward
improvements of the information system. Investments in production
totalled EEK 0.2m (EUR 0.02m).
Personnel
As of 31 March 2005, Baltika Grupp employed 1684 people, including
981 in production and 559 in retail sale; 418 people worked outside
Estonia. Compared to the beginning of the year, the number of
employees has decreased by 20 people.
Change in income statement format
AS Baltika uses a new format of income statement from the year 2005.
The need for changing the format arose from the group’s strategy to
change from a production to a retail sale enterprise. The new format
of income statement takes better account of the peculiarities of
Baltika Group as a retail group, has a clearer income and expenses
structure and allows for a better segmentation of the group’s
results. The income statements for 2004 are reformatted following
the comparability principle. The new format of income statement
corresponds to IAS 1 requirements pertaining to mandatory entries
and the presentation of financial statements.
The main ratios of the group as of 31 March 2005 were:
31 March 2005 31 March 2004
Sales growth % 15 15
in the quarter
Percentage of retail sales 74 61
in net sales
Number of shops 76 66
Retail selling area (m2) 11 465 10 000
Gross margin % 48.8 43.9
(net sales-cost of goods/
net sales)
Markets managed via 6 6
6
Operating income / net sales, % 5,47 1,94
Net profit / net sales, % 6,91 0,45
Net sales / 12 months’
average inventories 4,05 2,83
Return on equity 21,7 -13,4
(12 months’ net profit / 12
months’ average equity), %
Return on assets (12 months’ 8,2 -5,7
net profit /12 months’
average assets)
INCOME STATEMENT
(consolidated,unaudited)
th. EEK I Q 2005 I Q 2004 2004
Sales 150217 130618 581878
Cost of goods sold 76899 73241 303429
Gross profit 73318 57377 278449
Selling and marketing costs -48145 -39170 -185126
Administrative expenses -19229 -17650 -71155
Other operating income 3949 2823 1692
Other operating expenses -1681 -846 -5073
Operating profit 8212 2534 18787
Financial income and expenses -64 -1647 -4771
incl financial income from investments 957 0 -714
in joint venture
financial income from other 497 168 3309
investments
interest expenses -1493 -1792 -6683
foreign exchange gain (losses) -45 6 -1501
other financial income (expenses) 20 -29 818
Profit (loss) before corporate income 8148 887 14016
tax
Income tax expense -370 0 947
Net profit (loss) 7778 887 14963
Share of net profit belonging to -2605 301 -1738
minority interest
Share of net profit belonging to 10383 586 16701
parent
Basic earnings (loss) per share 1.84 0.11 3.01
Diluted earnings (loss) per share 1.84 0.10 3.01
INCOME STATEMENT
(consolidated, unaudited)
th. EUR I Q I Q 2004
2005 2004
Sales 9601 8348 37189
Cost of goods sold 4915 4681 19393
Gross profit 4686 3667 17796
Selling and marketing costs -3077 -2503 -11832
Administrative expenses -1229 -1128 -4548
Other operating income 252 180 108
Other operating expenses -107 -54 -324
Operating profit 525 162 1201
Financial income and expenses -4 -105 -305
incl financial income from investments in 61 0 -46
joint venture
financial income from other 32 11 211
investments
interest expenses -95 -115 -427
foreign exchange gain (losses) -3 0 -96
other financial income (expenses) 1 -2 52
Profit (loss) before corporate income tax 521 57 896
Income tax expense -24 0 61
Net profit (loss) 497 57 956
Share of net profit belonging to minority -166 19 -111
interest
Share of net profit belonging to parent 664 37 1067
Basic earnings (loss) per share 0.12 0.01 0.19
Diluted earnings (loss) per share 0.12 0.01 0.19
Balance sheet
(consolidated, unaudited)
th.EEK
ASSETS 31.03.2005 31.03.2004 31.12.2004
Current assets
Cash and bank 6 350 9 012 12 515
Short-term investments 1 100 545 603
Trade receivables 41 239 57 727 27 501
Other receivables and prepaid 11 168 16 253 10 012
expenses
Inventories 142 534 148 396 145 460
Total current assets 202 391 231 933 196 091
Non-current assets
Investments in joint ventures 2 052 0 1 095
Investment properties 7 500 0 7 500
Deferred income tax receivable 4 349 4 876 4 349
Other non-current assets 2 936 3 296 2 837
Tangible fixed assets 74 826 85 871 77 325
Intangible fixed assets 27 617 13 337 27 983
Total non-current assets 119 280 107 380 121 089
TOTAL ASSETS 321 671 339 313 317 180
LIABILITIES AND OWNER`S EQUITY
Current liabilities
Debt obligations 76 734 67 969 74 504
Supplier payables 27 036 57 354 31 154
Tax liabilities 10 158 13 374 12 669
Accrued expenses 13 402 13 337 10 515
Other short-term liabilities 160 118 924
Total current liabilities 127 490 152 152 129 766
Non-current liabilities
Long-term borrowings 45 944 69 527 45 944
Total non-current liabilities 45 944 69 527 45 944
TOTAL LIABILITIES 173 434 221 679 175 710
OWNER`S EQUITY 148 237 117 634 141 470
Share capital (par value) 56 340 54 994 56 340
Share premium 44 508 42 491 44 508
Mandatory legal reserve 4 800 4 800 4 800
Other reserves 21 983 18 084 21 983
Retained profit 193 -16 508 -16 508
Profit for the accounting 10 383 586 16 701
period
Exchange rate differencies 5 697 5 767 6 622
Minority interest 4 333 7 420 7 024
TOTAL LIABILITIES AND OWNER`S 321 671 339 313 317 180
EQUITY
Balance sheet
(consolidated, unaudited)
th.EUR
ASSETS 31.03.2004 31.03.2004 31.12.2004
Current assets
Cash and bank 406 576 800
Short-term investments 70 35 39
Trade receivables 2 636 3 689 1 758
Other receivables and prepaid 714 1 039 640
expenses
Inventories 9 110 9 484 9 297
Total current assets 12 935 14 823 12 532
Non-current assets
Investments in joint ventures 131 0 70
Investment properties 479 0 479
Deferred income tax receivable 278 312 278
Other non-current assets 188 211 181
Tangible fixed assets 4 782 5 488 4 942
Intangible fixed assets 1 765 852 1 788
Total non-current assets 7 623 6 863 7 739
TOTAL ASSETS 20 559 21 686 20 271
LIABILITIES AND OWNER`S EQUITY
Current liabilities
Debt obligations 4 904 4 344 4 762
Supplier payables 1 728 3 666 1 991
Tax liabilities 649 855 810
Accrued expenses 857 852 672
Other short-term liabilities 10 8 59
Total current liabilities 8 148 9 724 8 294
Non-current liabilities
Long-term borrowings 2 936 4 444 2 936
Total non-current liabilities 2 936 4 444 2 936
TOTAL LIABILITIES 11 084 14 168 11 230
OWNER`S EQUITY 9 474 7 518 9 042
Share capital (par value) 3 601 3 515 3 601
Share premium 2 845 2 716 2 845
Mandatory legal reserve 307 307 307
Other reserves 1 405 1 156 1 405
Retained profit 12 -1 055 -1 055
Profit for the accounting 664 37 1 067
period
Exchange rate differencies 364 369 423
Minority interest 277 474 449
TOTAL LIABILITIES AND OWNER`S 20 559 21 686 20 271
EQUITY
Ülle Järv
Financial Director
+372 6302 731
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