Baltika's unaudited financial results, first quarter 2012

Baltika 

10.05.2012 12:03
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Strong sales results supported Baltika in exceeding its expected results for
the first quarter. Owing to the seasonal nature of the retail market, the first
quarter is the weakest for Baltika and the company ended it with a loss of
1,043 thousand euros, a more than two-fold improvement on the loss incurred in
the same period last year. Better than forecasted results, continued cost
control and increasing efficiency support achieving the planned financial
target for 2012, which is an EBITDA of 3 million euros. 

The sales increase in all first quarter months was based on strong collections
and overall growth in consumption in most of Baltika's markets. Although the
average retail sales area was 8% smaller, Baltika's first quarter sales
increased by 872 thousand euros i.e. 7% year over year and sales efficiency
improved by 16%. The main growth driver continued to be the Baltic region but,
considering the decrease in sales area, Russia also posted very good results,
achieving a 16% improvement in sales efficiency. 

The restructuring of retail network in 2011, which finalised with closing
stores in the first quarter of current year, gave results in decreasing
distribution expenses. In the first quarter of 2012 distribution expenses
decreased by 444 thousand euros compared to last year and distribution costs
ratio to net sales has improved by 8 percentage points (52% compared to 60% in
2011). 

An 8% decrease in administrative and general expenses proves that the changes
made in the third quarter of 2011 to streamline management and on-going cost
control are yielding results. In the first quarter operating expenses have
decreased by 503 thousand euros and ratio to net sales has improved by 9
percentage points compared to first quarter of 2011. 

2012 fourth quarter highlights

  -- In February, Baltika began selling under a concession agreement the
     products of the German lifestyle brand Stones in eight of its Baltic
     Baltman and multi-brand stores. The purpose of the move is to improve the
     stores' sales efficiency and to offer the customers a wider product range.
  -- In February, the company opened a new sales channel, the Monton e-store, by
     which the Monton collection has been dispatched to more than 15 European
     countries. In Estonia the e‑store was launched in April concurrently with
     the sale of the Olympic fan collection. The official international launch
     of the e-store and the associated marketing campaign are scheduled for the
     beginning of the autumn season.
  -- According to 2011 year end plans seven stores were closed in the the first
     quarter of 2012 - main closures were in January when four Monton and Mosaic
     stores were closed in Russia, Mosaic brand store in Latvia and Ukraine,
     Baltman store in Lithuania.
  -- In the first quarter, Baltika began working with Catella Corporate Finance
     to find potential buyers for the Baltika Quarter. Company has received
     offers from several potential buyers and sales process is in line with the
     planned time schedule.

The annual general meeting of shareholders was held on 20 April 2012

  -- The annual general meeting decided on simplified reduction of share capital
     to 7,159 thousand euros, which makes the equity required by Commercial Code
     amount to 3,579 thousand euros. The decision ensures compliance with the
     Commercial Code requirement.
  -- The annual general meeting decided the issuance of two types of convertible
     bonds. 5,000,000 convertible bonds (H-Bond) are issued on 10 May 2012 with
     nominal amount of 0.3 euros - every bond gives the owner the right to
     subscribe for one share of the Company, subscription period is 11 May
     2013-10 May 2014. Bonds carry 7.5% interest per annum.
  -- 2,350,000 convertible bonds are issued to the management of the Baltika
     Group of companies on 30 June 2012 with the nominal amount of 0.01 euros.
     Each bond gives the owner the right to subscribe for one share of the
     Company, subscription period is 1 July 2015 to 31 December 2015. The
     subscription price of the share will be the average sales price of the
     share for the preceding three months, e.g. from 19 January 2012 to 19 April
     2012.

Consolidated statement of financial position

                                                      31 March 2012  31 Dec 2011
ASSETS                                                                          
Current assets                                                                  
Cash and bank                                                   482          863
Trade and other receivables                                   1,809        2,189
Inventories                                                   9,146       10,048
Total current assets                                         11,437       13,100
Non-current assets                                                              
Deferred income tax asset                                       838          838
Other non-current assets                                        753          629
Investment property                                           8,549        8,549
Property, plant and equipment                                 7,678        8,031
Intangible assets                                             3,698        3,665
Total non-current assets                                     21,516       21,712
TOTAL ASSETS                                                 32,953       34,812
                                                                                
EQUITY AND LIABILITIES                                                          
Current liabilities                                                             
Borrowings                                                    3,659        3,178
Trade and other payables                                      5,557        6,785
Total current liabilities                                     9,216        9,963
Non-current liabilities                                                         
Borrowings                                                   14,992       15,144
Other liabilities                                                88           83
Total non-current liabilities                                15,080       15,227
TOTAL LIABILITIES                                            24,296       25,190
                                                                                
EQUITY                                                                          
Share capital at par value                                   25,056       25,056
Share premium                                                    89           89
Reserves                                                      2,494        2,494
Retained earnings                                           -17,455      -11,592
Net loss for the period                                      -1,044       -5,863
Currency translation differences                               -649         -727
Total equity attributable to equity holders of the            8,491        9,457
 parent                                                                         
Non-controlling interest                                        166          165
TOTAL EQUITY                                                  8,657        9,622
TOTAL LIABILITIES AND EQUITY                                 32,953       34,812



Consolidated statement of comprehensive income

                                      Q1 2012  Q1 2011
                                                      
Revenue                                12,643   11,771
Cost of goods sold                     -6,188   -5,880
Gross profit                            6,455    5,891
                                                      
Distribution costs                     -6,584   -7,028
Administrative and general expenses      -684     -743
Other operating income                     33        6
Other operating expenses                  -10     -221
Operating loss                           -790   -2,095
                                                      
Finance income                            107       21
Finance costs                            -342     -287
                                                      
Loss before income tax                 -1,025   -2,362
                                                      
Income tax expense                        -18       -3
                                                      
Net loss                               -1,043   -2,364
Loss attributable to:                                 
Equity holders of the parent company   -1,044   -2,364
Non-controlling interest                    1        0
                                                      
                                                      
Other comprehensive income (loss)                     
Currency translation differences           78      132
                                                      
Total comprehensive loss                 -965   -2,232
Comprehensive loss attributable to:                   
Equity holders of the parent company     -966   -2,232
Non-controlling interest                    1        0
                                                      
                                                      
Basic earnings per share, EUR           -0.03    -0.09
Diluted earnings per share, EUR         -0.03    -0.09



Maigi Pärnik
Member of the Management Board
maigi.parnik@baltikagroup.com
News Source: NASDAQ OMX



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Language:     English
Company:      Baltika
              
               
              Estonia
Phone:        
Fax:          
E-mail:       
Internet:     
ISIN:         EE3100003609
WKN:          
 
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