OREANDA-NEWS. Baltika's unaudited financial results, fourth quarter and 12 months of 2015.

In connection with Baltika Group’s exit from the Russian retail business, which represented a major line of business of the Group, the 2015 results of the Russian entity’s retail results are presented as discontinued operation and for comparability, the figures for 2014 have been adjusted accordingly.

Baltika’s continued operations 2015 fourth quarter revenue was 13,505 thousand euros, decreasing by 602 thousand euros compared to same period last year. 2015 twelve months revenue was 48,806 thousand euros, which is 2% more than previous year’s comparable figure.

In fourth quarter continued operations retail revenue was 12,413 thousand euros, which is 57 thousand euros more than in the same period last year. In addition to the revenue, which is on the last year level, gross profit margin has recovered as well. Unlike to this year previous quarters, when due to large inventories level and problems with purchasing price the retail gross profit margins were lower, the fourth quarter’s retail sales margin is on the same level as last year.

Wholesale and franchise revenue decreased by 47% in fourth quarter. In addition to the high comparable base in the same period last year (in connection with new franchise stores openings), sales to Eastern-European, Estonian and Finnish partners decreased. In fourth quarter e-com sales increased 16% to 276 thousand euros. In year total sales grew two times (growth 102%) and total e-com revenue was 975 thousand euros.

Baltika ended fourth quarter with 333 thousand euros net profit from continued operations. Previous year same period continued operations’ net profit was 386 thousand euros. 2015 net loss from continued operations is 844 thousand euros. In comparable period the net profit from continued operations was 297 thousand euros.

Impact from Russian subsidiaries sale and results with discontinued operations

In fourth quarter Baltika received 66 thousand euros net loss from Russian retail, in addition Baltika made allowance reserve in amount of 263 thousand euros to sum left in a bankrupted bank ООО Судостроительный банк. In year total Russian retail ended with a 870 thousand euros net loss.

In connection with preparations for sale of Russian companies Baltika revalued all the Russian market assets down in fourth quarter. On Baltika’s consolidated balance, all the Russian current and non-current assets in the amount of 791 thousand euros have been revalued down as at 31 December 2015. In addition to assets Baltika revalued down Russian entities goodwill in the amount of 885 thousand euros and expensed Russian market related currency differences in the amount of 2,969 thousand euros. At the end of year 2015 Baltika made in total 4,645 thousand euros non-cash write-offs recorded in profit and loss statement and non-cash profit in other comprehensive income was 2,969 thousand euros. Due to above-mentioned transactions Baltika’s total assets and equity decreased in amount of 1,676 thousand euros.

With discontinued operations and with non-cash write-offs from sale of Russian market Baltika’s fourth quarter reporting period resulted with a net loss of 4,641 thousand euros. In 2014 fourth quarter Baltika earned a net profit in amount of 420 thousand euros. In year total the net loss was 6,359 thousand euros, in comparable period net loss was 1,263 thousand euros.

Restructure of Baltika’s Russian retail market operations i.e. ending retail operations and continuing operations with franchise partners, allows to focus more on profit-making Baltic markets and developing other sales channels (wholesale, franchise and e-com).

Highlights of the period until the date of release of this quarterly report

  • From November 2nd 2015 Tiina Varam?e started working as an Estonian retail market Director and Member of the Board in Baltman O?. Tiina has a long work experience in Baltika in years 2004-2012 as a Head of Retail Operations Manager and as an Estonian Market Director.
  • In fourth quarter, in October one new Ivo Nikkolo retail shop was opened in Lithuania, Klaipeda Akropolis shopping centre. At the beginning of November in Spain Tenerife Corner shopping centre one new Monton store was added to the franchise channel. At the same time planned closing in Russia continued and Monton store in Krasnador Oz Mall shopping centre was closed.
  • From February 1st 2016 Maigi P?rnik-Pernik continues working as a member of Management Board and is responsible for the finance functions and for the disclosure of information on the exchange.
  • On 9th of February Baltika held a fashion show to launch spring-summer collection. The newest collections were shown in Baltika’s headquarter and after the show collections were available in shops and in e-store. 
  • On 22 February 2016 Baltika signed an agreement with Ellipse Group to sell 100% of shares of Russia’s retail operating company OOO Olivia that owns subsidiaries OOO Stelsing and OOO Plazma. Ellipse Group will continue to cooperate with Baltika as franchise partner and on 22 February cooperation agreement was signed for the next five years. The price received for the entities is approximately 400 thousand euros and it is structured as follows: entities shares sales price is 115 euros and in addition about 400 thousand euros receivable will remain from entities. Amount will be specified on 1 March 2016 according to the amount of inventories and other current assets; payment schedule is agreed for 5 years, but it will depend on Russian entities financial results.
  • Baltika will end representing Blue Inc London brand in Baltics states under the franchise agreement due to low sales efficiency and will close four stores in Estonia and in Latvia turing the first quarter. As a replacement in Tallinn ?lemiste shopping center Baltman store will be opened and in Riga Origo shopping centre Bastion store will be opened. 

Consolidated statement of financial position 

      31 Dec 2015 31 Dec 2014
ASSETS    
Current assets    
Cash and cash equivalents 398 710
Trade and other receivables 1,607 1,890
Inventories 10,424 13,415
Total current assets 12,429 16,015
Non-current assets    
Deferred income tax asset 234 420
Other non-current assets 584 605
Property, plant and equipment 2,910 2,895
Intangible assets 1,944 3,180
Total non-current assets 5,672 7,100
TOTAL ASSETS 18,101 23,115
     
EQUITY AND LIABILITIES    
Current liabilities    
Borrowings 3,009 2,692
Trade and other payables 6,709 7,019
Total current liabilities 9,718 9,711
Non-current liabilities    
Borrowings 3,312 4,584
Other liabilities 283 83
Total non-current liabilities 3,595 4,667
TOTAL LIABILITIES 13,313 14,378
     
EQUITY    
Share capital at par value 8,159 8,159
Share premium 496 809
Reserves 1,182 1,182
Retained earnings 1,310 2,573
Net loss for the period -6,359 -1,263
Currency translation differences 0 -2,723
TOTAL EQUITY 4,788 8,737
TOTAL LIABILITIES AND EQUITY 18,101 23,115

 

Consolidated statement of profit and loss 

  Q4 2015 Q4 2014 2015 2014
Continuing operations        
Revenue 13,505 14,107 48,806 47,865
Client bonus reserve -70 -300 -70 -300
Revenue after client bonus provision 13,435 13,807 48,736 47,565
Cost of goods sold -6,958 -6,859 -25,660 -23,561
Gross profit 6,477 6,948 23,076 24,004
Distribution costs -5,555 -5,459 -21,010 -20,061
Administrative and general expenses -683 -733 -2,603 -2,887
Other operating income 282 11 242 0
Other operating expenses 0 -99 0 -181
Operating profit (-loss) 521 668 -295 875
Finance costs -147 -164 -508 -460
Profit (-loss) before income tax 374 504 -803 415
Income tax expense -41 -118 -41 -118
         
Net profit (-loss) from continuing operations 333 386 -844 297
         
Net loss for the period from discontinued operations -4,974 34 -5,515 -1,560
Net profit (-loss) for the period -4,641 420 -6,359 -1,263
         
Basic earnings per share, EUR -0.11 0.01 -0.16 -0.03
Continuing operations 0.01 0.01 -0.02 0.01
Discontinued operations -0.12 0.00 -0.14 -0.04
Diluted earnings per share, EUR -0.11 0.01 -0.16 -0.03
Continuing operations 0.01 0.01 -0.02 0.01
Discontinued operations -0.12 0.00 -0.14 -0.04