OREANDA-NEWS. Summarized selected financial indicators of the Group for 12 months 2013 compared to 12 months 2012 and 31.12.2013 compared to 31.12.2012 were as follows:

in thousands of EUR

12m 2013

12m 2012

Change

Revenue

121 680

123 519

-1.5%

EBITDA

19 235

22 130

-13.1%

Net profit for the period

11 866

16 093

-26.3%

Net profit attributable equity holders of the Parent company

10 945

14 151

-22.7%

Earnings per share (EUR)

0.28

0.36

-23.1%

Operating cash flow for the period

18 612

4 907

279.3%

in thousands of EUR

31.12.2013

31.12.2012

Change

Total assets

76 629

75 837

1.0%

Total current assets

55 080

55 847

-1.4%

Total equity attributable to equity holders of the Parent company

52 370

51 396

1.9%

Loans and borrowings

79

47

68.1%

Cash and cash equivalents

19 165

16 260

17.9%

Margin analysis, %

12m 2013

12m 2012

Change

Gross profit

35.2

34.2

3.0%

EBITDA

15.8

17.9

-11.7%

Net profit

9.8

13.0

-25.0%

Net profit attributable equity holders of the Parent company

9.0

11.5

-21.8%

Financial ratios, %

31.12.2013

31.12.2012

Change

ROA

13.2

18.3

-27.6%

ROE

19.7

28.8

-31.8%

Price to earnings ratio (P/E)

9.6

7.6

26.4%

Current ratio

4.7

4.6

1.3%

Quick ratio

2.6

2.6

-1.7%

Consolidated Statement of Financial Position in thousands of EUR

31.12.2013

31.12.2012

ASSETS

Current assets

Cash and cash equivalents

19 165

16 260

Prepayments

196

243

Trade and other receivables

10 846

14 746

Inventories

24 873

24 598

Total current assets

55 080

55 847

Non-current assets

Long-term receivables

0

1

Investments in associates

124

164

Available-for-sale investments

497

492

Deferred tax asset

460

231

Intangible assets

719

443

Investment property

1 592

1 618

Property, plant and equipment

18 157

17 041

Total non-current assets

21 549

19 990

TOTAL ASSETS

76 629

75 837

LIABILITIES AND EQUITY

Current liabilities

Borrowings

79

47

Trade and other payables

10 837

11 171

Tax liabilities

905

1 008

Total current liabilities

11 821

12 226

Non-current liabilities

Deferred tax liability

1 953

2 162

Total non-current liabilities

1 953

2 162

Total liabilities

13 774

14 388

Equity

Share capital

11 820

15 760

Share premium

13 822

13 822

Treasury shares

-224

-20

Statutory reserve capital

1 306

1 306

Unrealised exchange rate differences

-1 214

15

Retained earnings

26 860

20 513

Total equity attributable to equity holders of the Parent company

52 844

51 396

Non-controlling interest in equity

10 011

10 053

Total equity

62 855

61 449

TOTAL EQUITY AND LIABILITIES

76 629

75 837

Business environment

Silvano Fashion Group with its brand portfolio is a recognized market leader in the lingerie segment in Russia, Belarus, Ukraine, has exceptionally strong foothold in other Russian-speaking countries (including Kazakhstan and Moldova) and is a recognized player in the Baltic consumer markets.

The 4th quarter of 2013 is characterized by the drop in sales of Silvano Fashion Group compared to the respective period a year ago. The sales volumes decreased in both wholesale segment as well as in the retail segment in our own stores and partner stores in our main markets. The turnover for Q4 2013 decreased by 2 744 thousand euros (-10.7%) compared to the Q4 in 2012. In addition to this, the currencies of the main markets of the Silvano Fashion Group became weaker, especially the Russia Rouble weakening against the currency basket (-8.3%) and against Euro (-2.5%) in Q4, 2013. From the beginning of 2013, Russia Rouble has depreciated by nearly 11.5% against Euro. At the same time, our production costs in Belarus (labour, rent, utilities, partially materials) have not reduced in Belarus Roubles.

In general, during 2013 the biggest drop in sales affected wholesale segment (100 259 thousand Euros vs. 102 682 thousand Euros in 2012). Sales in the retail segment, including franchise stores, rose to 20 707 thousand Euros compared to 20 167 thousand to the previous year. From the main consumer markets, the main backdrop we experienced in Russia (-3 812 thousand Euros), in Belarus (-700 thousand Euros) and in the Baltic states (-439 thousand Euros). This backdrop was unfortunately not offset by the growth in Ukraine (+2 157 thousand Euros) and in other markets (+955 thousand Euros).

According to the World Bank data, the economic growth (measured in GDP) in 2013 constitutes less than 2%. One of the factors describing the economic situation in Russia is the deterioration in consumer sentiment and business confidence, explained by the gloomy outlook of the global economy. Silvano Fashion Group was directly affected by the reduced purchasing power (weaker Russia's Rouble) and reduced sales. Together with the wholesales segment, Russia generated annual sales of 71 326 thousand EUR, down from 75 138 thousand EUR a year ago. As of end of 2013, there are 383 Milavitsa stores in Russia.

Belarus economic growth is stalling because of cooling economic climate of its main export market - Russia. Primarily due to rapid income growth in the first half of the year, the consumption held firm. Starting from the second half of the year, the overall consumption delayed; for instance, the Group's sales in Belarus in Q4 2013 decreased compared to previous year. Much of the near future of the market has to do with the recovery in the export markets, as well as with the competitiveness of Belarus as a sourcing country for Russian manufacturers. There are a total of 53 stores operated directly by the Group and 5 franchise stores. The Group's sales revenue in Belarus reached 30 794 thousand EUR for 12 months of 2013 compared to 31 494 thousand EUR for the same period a year ago.

Ukraine was our stellar star for the first half of the year. The sales revenue advanced to 8 514 thousand EUR for 12 months of 2013 compared to 6 357 thousand EUR for the same period a year ago. Strength of our local franchise and wholesales partners were the driving factor for our sales. Given the political abrupt and sluggish economy, and probable weakness of Ukrainian Hryvnia (the currency managed to hold stable during 2013, but has de facto devalued by nearly 25% by the issuance of the report), 2014 sales are hard to predict. There are 101 franchise stores in total in the country as of end of 2013.

In the Baltics, the Group primarily operates via own stores and franchise partners. The Group operates 9 own stores, complemented by 34 partner stores in the region. The sales in the Baltic countries aggregated 2 733 thousand EUR for 12 months of 2013, compared to 3 172 EUR for the same period a year ago.

As referred to in our earlier quarterly reports, the other markets, with Kazakhstan in the lead, aggregated 8 313 thousand EUR in sales for 2013, compared to 7 358 thousand EUR a year before. The Group is making efforts to increase sales in other markets in 2014, as well.

On the store openings, Q4 2013 net increase (including openings and store closures primarily due to relocations) for Milavitsa stores were 29 units and 2 units under the Lauma Lingerie brand. The Group therefore operated directly and via franchise a total of 679 stores (net increase of 95 stores compared to end of 2012). Total geography of our franchise partners now covers more than 20 countries, including Milavitsa and Lauma Lingerie branded stores.

Financial performance

The Group's sales amounted to 121 680 thousand EUR during 12 months of 2013, representing a 1.5% decrease as compared to the same period of previous year. Overall, wholesales decreased by 2.5% and retail sales increased - by 2.7%.

The Group's reported gross profit margin during Q4 improved year-on-year basis and stood at 33.61%, reported gross margin was 26.32% in the respective period of previous year. For 12 months of 2013, the gross margin aggregated 35.23%, compared to 34.2% a year ago. Consolidated operating profit for Q4 2013 amounted to 67 thousand EUR, compared to 478 thousand EUR in Q4 2012. For 12 months of 2013 the operating profit stood at 16 716 thousand EUR compared to 19 522 thousand EUR a year ago. The main reason for the drop is related to higher distribution expenses. The consolidated operating profit margin was 13.7% for 12 months of 2013 (15.8% in 12 months of 2012).

Consolidated net profit attributable to equity holders of the Parent company for Q4 2013 amounted to 236 thousand EUR, compared to 1 666 thousand EUR in Q4 2012. The net profit attributable to equity holders of the Parent company for 12 months of 2013 amounted to 10 945 thousand EUR, compared to 14 151 thousand EUR a year ago; net profit margin attributable to equity holders of the Parent company for 12 months of 2013 was 9.0% against 11.5% in 12 months of 2012.

Financial position

As of 31 December 2013 consolidated assets amounted to 76 629 thousand EUR representing an increase by 1.0% as compared to the position as of 31 December 2012.

Trade and other receivables decreased by 3 900 thousand EUR as compared to 31 December 2012 and amounted to 10 846 thousand EUR as of 31 December 2013. Inventory balance increased by 275 thousand EUR and amounted to 24 873 thousand EUR as of 31 December 2013. Changes in trade debtors and stock balance were in line with the seasonality trend of the business.

Equity attributable to equity holders of the Parent company increased by 974 thousand EUR and amounted to 52 370 thousand EUR as of 31 December 2013.

Current liabilities decreased by 405 thousand EUR during 12 months of 2013. Current and non-current loans and borrowings increased by 32 thousand EUR to 79 thousand EUR as of 31 December 2013.