Published: 2016-08-30 17:24:17 CEST
Skano Group
Half Year financial report

Financial results, 6 months 2016

THE FIRST HALF IN SHORT

Consolidated net sales of the first half of 2016 were 9.0 mil. euros, representing an 8% decrease compared to the same period in 2015 (net sales 9.8 mil. euros in H1 2015). At the same time, consolidated EBITDA amounted to -23 thousand euros (EBITDA 524 thousand euros in H1 2015).   Reducing the stock volumes of own produced goods negatively influenced the EBITDA of the first half of 2016 through changes in inventories in the amount of 466 thousand euros (In H1 2015 the increase in stock had a positive effect to EBITDA in the amount of 324 thousand euros).

The turnover Skano Fibreboard OÜ Pärnu factory (incl. Isotex) was 3.8 mil. euros, what was in the same level as in H1 2015, the operating profit of the first half was 116 thousand euros compared with the operating profit 332 thousand euros last year.  

The turnover of Skano Fibreboard OÜ Püssi factory was 2.4 mil. euros, representing 8,3% decrease in the first half compared to the same period in 2015. Operating loss amounted to 148 thousand euros compared with the operating loss 113 thousand euros last year.

Sales mainly decreased in our core markets. As our main foreign markets Russia and Finland are still very weak due to the general economic situation we have been continuously expanding the list of our target markets and made significant efforts in product development. 

The priority of the management of the company is continuously to ensure the sales of the production of both factories in order to guarantee the maximum production capacity and efforts are taken in this direction on an on-going basis.

Sales of Suomen Tuulielijona OY in H1 2016 decreased 12.4% compared to last year, which amounted to 2.6 mil. euros (2.9 mil euros in H1 2015). Suomen Tuulileijona OY is the wholesaler of Skano fibreboard products in Finland.

The turnover of Skano Furniture Factory OÜ in Pärnu decreased in the first quarter by 15.4% and amounted to 2.1 mil. euros. The operating loss of the first quarter was 293 thousand euros as in 2015 the operating loss of the same period was 147 thousand euros. In the first half of 2016 sales to Finland decreased due to very weak demand by 14.5% as compared to 2015. In addition to seeking new sales possibilities in the current markets the company has made considerable effort to enter into new markets like UK, France and USA and to extend the product ranges.

The turnover of Skano Furniture OÜ retail chain decreased 16,1% as compared to the same period last year being 1.1 mln. Euros. 

Retail sale decreased in all markets and is still very weak in Ukraine due to the conflict and difficult economic situation. The sales of Skano Furniture Factory OÜ own furniture still forms a considerable part of the retail sale and it enables the furniture factory to operate more profitably than it would be possible without its own retail chain.

INCOME STATEMENT

Consolidated net sales of the first half in 2016 was 9.0 mil. euros (9.8 mil. euros in same period of 2015) representing an 8% decrease compared to H1 2015. Consolidated operating loss amounted to 455 thousand euros (operating profit 104 thousand euros in same period 2015). The consolidated operating margin was -5.1% (1.1% in H1 2015). Consolidated net loss amounted to 624 thousand euros (compared to net loss 51 thousand euros in H1 2015), and the net margin was -6.9% (-0.5% in H1 2015).

POSITION OF FINANCIAL STATEMENT

As of 30.06.2016 the total assets of Skano Group AS amounted to 13.0 mil. euros (30.06.2015: 14.0 mil. euros). The liabilities of the company accounted for 67% (30.06.2015: 63%) thereof, i.e. 8.7 mil. euros (30.06.2015: 8.9 mil. euros).

Receivables and prepayments amounted 1.5 mil. euros what is 0.3 mil. euros less than in H1 2015 (30.06.2015: 1.8 mil. euros). Inventories have decreased 0.3 mil euros with 12 months, amounting to 1.5 mil. euros on 30.06.2016. (30.06.2015: 1.8 mil. euros). Property, plant and intangibles amounted to 8.3 mil euros decreased by 0.3 mil. euros mainly as a result of depreciation.

Short-term loans have decreased by 0.3 mil. euros and amounted to 1.6 mil. euros in 30.06.2016 which was a result of usage of bank overdraft and factoring and restructuring of the loan between short- and long-term payment schedule (30.06.2015: 1.9 mil. euros). Supplier payables, tax liabilities, other payables, including payables to employees, and provisions amounted to 2.7 mil. euros (30.06.2015: 2.7 mil. euros).

Long-term loans have increased by 0.2 mil euros and amounted to 4.2 mil. euros in 30.06.2016 (31.03.2015: 4.0 mil. euros). The increase was caused by restructuring of the loan between short- and long-term payment schedule.

Current and non-current liabilities have decreased by 0.2 mil. euros to 8.7 mil. euros (30.06.2015: 8.9 mil. euros).

 

DIVISIONAL REVIEW:

NET SALES BY BUSINESS SEGMENTS

 

  th EUR % of net sales
  H1 2016 H1 2015 H1 2016 H1 2015
Skano Fibreboard OÜ 6,265 6,494 69.8% 66.5%
Skano Furniture Factory OÜ 2,137 2,525 23.8% 25.9%
Skano Furniture OÜ retail 1,074 1,287 12.0% 13.2%
Suomen Tuulileijona OY 2,573 2,937 28.7% 30.1%
Elimination -3,072 -3,482 -34.2% -35.7%
TOTAL 8,977 9,761 100.0% 100.0%

 

NET SALES BY GEOGRAPHICAL SEGMENTS

 

  th EUR % of net sales
  H1 2016 H1 2015 H1 2016 H1 2015
Finland 3,529 3,968 39.3% 40.7%
Estonia 1,461 1,574 16.3% 16.1%
Russia 1,297 1,551 14.4% 15.9%
Great Britain 560 515 6.2% 5.3%
Portugal 429 6 4.8% 0.1%
Latvia 374 379 4.2% 3.9%
Sweden 324 333 3.6% 3.4%
South Africa 172 423 1.9% 4.3%
Lithuania 162 202 1.8% 2.1%
Ukraine 163 178 1.8% 1.8%
Denmark 79 91 0.9% 0.9%
Germany 73 83 0.8% 0.9%
Other countries 354 458 3.9% 4.7%
TOTAL 8,977 9,761 100.0% 100.0%

Regarding the markets, turnover has increased in Great Britain and in new market Portugal. The total turnover has decreased due to decrease in main markets in Finland and Russia.

OPERATING PROFIT(LOSS) BY BUSINESS SEGMENTS

 

th EUR H1 2016 H1 2015
Skano Furniture Factory -293 -147
Skano Furniture retail -100 -160
Skano Fibreboard -31 219
Suomen Tuulileijona OY -54 35
Elimination 23 157
TOTAL -455 104
Net financial costs -166 -152
Income tax -3 -3
NET PROFIT -624 -51

 

SKANO FIBREBOARD

The net sales of Skano Fibreboard (together with daughter company Suomen Tuulileijona OY) in the first half of 2016 amounted to 6.3 mil. euros and operating loss to 85 thousand euros. In the same period last year, the turnover of Skano Fibreboard totaled to 6.6 mil. euros and the operating profit 254 thousand euros. In 2016 the decrease in the stock of own produced goods affected the operating loss through changes in inventories.    

The decrease in sales in the first half compare to last year took place in our main markets in Finland and Russia. Sales increased most in Great Britain and Portugal. The increase in sales does not cover in full the decrease in main markets

 NET SALES BY GEOGRAPHICAL SEGMENTS

 

  th EUR % of net sales
  H1 2016 H1 2015 H1 2016 H1 2015
Finland (incl. to Suomen Tuulileijona OY) 2,707 3,041 43.5% 46.3%
Estonia 802 820 12.7% 12.5%
Russia 584 800 9.3% 12.2%
Great Britain 546 496 8.7% 7.6%
Portugal 429 6 6.8% 0.1%
Sweden 324 333 5.1% 5.1%
South Africa 172 423 2.7% 6.4%
Latvia 175 132 2.8% 2.0%
Denmark 79 91 1.3% 1.4%
Germany 73 83 1.2% 1.3%
Other countries 373 337 5.9% 5.1%
TOTAL 6,264 6,562 100.0% 100.0%

 

 

th EUR Net sales Operating Profit
  H1 2016 H1 2015 H1 2016 H1 2015
Pärnu fibreborad factory 3,058 2,837 185 338
Püssi fibreboard factory 2,446 2,667 -148 -113
Pärnu interior boards factory (Isotex) 760 990 -69 -6
TOTAL 6,264 6,494 -32 219

 

The net sales of the Pärnu fibreboard factory increased 7.8 % in the first half of 2016 compared to the same period of 2015 and amounted to 3.1 mil. euros.

The turnover of Püssi fibreboard factory amounted to 2.4 mil. euros decreasing 8.3% compared to the same period in 2015 (turnover 2.7 mil. euros in H1 2015).

 

FURNITURE PRODUCTION

The net sales of the Skano Furniture Factory in the first half amounted to 2.1 mil. euros and operating loss to 293 thousand euros. In the same period last year, the turnover of the factory amounted to 2.5 mil. euros and the operating loss to 147 thousand euros. As compared to the previous year the turnover of the factory has decreased 15.4%. The sales decrease was mainly due to sales decrease in Finland.

 

FURNITURE FACTORY SALES BY COUNTRIES

 

  th EUR % of net sales
  H1 2016 H1 2015 H1 2016 H1 2015
Finland 786 919 36.8% 36.4%
Russia 713 751 33.4% 29.7%
Other countries 104 242 4.9% 9.6%
Subsidiaries 534 613 25.0% 24.3%
TOTAL 2,137 2,525 100.0% 100.0%

 

SKANO FURNITURE

FURNITURE RETAIL SALES

Skano Group AS retail business is operated by a private limited company Skano Furniture OÜ and its subsidiaries in Latvia, Lithuania and Ukraine. Skano has totally 10 stores in Tallinn (3), Tartu, Pärnu, Riga, Vilnius, Kiev (2) and Kharkiv at the end of the half in 2016.

RETAIL SALES BY COUNTRIES

 

  th EUR % of net sales Number of stores
  H1 2016 H1 2015 H1 2016 H1 2015 30.06.16 30.06.15
Estonia 650 729 60.6% 57.0% 5 5
Latvia 199 247 18.5% 19.3% 1 1
Lithuania 109 172 10.2% 13.4% 1 1
Ukraine 115 131 10.7% 10.2% 3 4
TOTAL 1,073 1,279 100.0% 100.0% 10 11

 

Retail sale amounted to 1,1 mil. euros in the first half of 2016 and operating loss 100 thousand euros (sales 1,3 mil. euros and operating loss 160 thousand euros in H1 2015). Operating loss contains also a loss from a drop of currency exchange rate of hryvnia 38 thousand euros (in H1 2015: exchange rate loss 243 thousand euros).

 

FORECAST AND DEVELOPMENT

SKANO FIBREBOARD. Skano Fibreboard sales in H2 2016 will be similar compared to sales of the same period last year. Sales in our core markets are lower due to weak demand which we expect to compensate with sales in new markets. On the other hand we see already better results in efficiency even with lower production volumes compared to last year as a result of the recent production improvement plan. Also the cost control gives better results.

In July 2016 we received Sintef Certification, which has no opened the doors to sell our wind barrier boards on the Norwegian market.

SKANO FURNITURE FACTORY. In H2 2016 the sales of the furniture factory are showing uptrend compared to the same period in 2015 because of new buyers. Also new product ranges and alternative products made of wood will give the additional sales. Cost savings will give the positive effect to the results of H2

SKANO FURNITURE RETAIL SALES. We expect steady sales in the Baltics but decrease in Ukraine due to political and economic instability. 

FINANCIAL HIGHLIGHTS

 

th EUR H1 2016 H1 2015 H1 2014
Income statement      
Revenue 8,977 9,761 10,701
EBITDA -23 524 531
EBITDA margin -0.3% 5.4% 5.0%
Operating profit -455 104 87
Operating margin -5.1% 1.1% 0.8%
Net profit -624 -51 -44
Net margin -6.9% -0.5% -0.4%
 
Balance sheet (30.06)      
Total assets 13,005 14,032 15,133
Return on assets -2.8% -0.4% -0.3%
Equity 4,293 5,136 6,737
Return on equity -8.5% -1.0% -0.7%
Debt-to-equity ratio 67.0% 63.4% 55.5%
 
Share (30.06)      
Closing price 0.556 0.805 1.000
Earnings per share -0.08 -0.01 -0.01
Price-earnings ratio -6.95 -80.50 -100.00
Book value of a share 0.95 1.14 1.50
Market to book ratio 0.59 0.71 0.67
Market capitalization 2,501 3,622 4,499

 

EBITDA = Earnings before interest, taxes, depreciation and amortization

EBITDA margin = EBITDA / Revenue

Operating margin = Operating profit / Revenue

Net margin = Net profit / Revenue

Return on assets = Net profit / Total assets

Return on equity = Net profit / Equity

Debt-to-equity ratio = Liabilities / Total assets

Earnings per share = Net profit / Total shares

Price-earnings ratio = Closing price / Earnings per share

Book value of a share = Equity / Total shares

Market to book ratio = Closing price / Book value of a share

Market capitalization = Closing price * Total shares

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

th EUR 30.06.2016 31.12.2015 30.06.2015
       
Cash and bank 106 292 306
Receivables and prepayments (Note 1) 1,510 997 1,806
Inventories (Note 2) 3,085 3,426 3,355
Total current assets 4,701 4,715 5,467
       
Investment property (Note 3) 406 406 407
Tangible fixed assets (Note 4) 7,849 8,120 8,133
Intangible fixed assets (Note 5) 49 21 25
Total fixed assets 8,304 8,547 8,565
       
TOTAL ASSETS 13,005 13,262 14,032
       
       
Debt obligations (Note 6) 1,641 1,253 1,932
Payables and prepayments (Note 7) 2,672 2,684 2,708
Short-term provisions (Note 8) 8 15 8
Total current liabilities 4,321 3,952 4,648
       
Non-current debt obligations (Note 6) 4,163 4,163 4,013
Non-current provisions (Note 8) 228 228 235
Total non-current liabilities 4,391 4,391 4,248
       
Total liabilities 8,712 8,343 8,896
       
Share capital at nominal value (Note 9) 2,699 2,699 2,699
Issue premium 364 364 364
Statutory capital reserve 288 288 288
Other reserves 5 7 2
Currency translation 9 7 (129)
Retained profits 1,552 1,965 1,963
Net profit (loss) for the year (Note 10) (624) (411) (51)
Total equity 4,293 4,919 5,136
       
TOTAL LIABILITIES AND EQUITY 13,005 13,262 14,032

 

 

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

 

th EUR Q2 2016 Q2 2015 H1 2016 H1 2015
         
         
RETURN ON SALES (Note 11) 4,432 4,653 8,977 9,761
         
Cost of production sold (3,710) (3,652) (7,438) (7,574)
         
Gross profit 722 1,001 1,539 2,187
         
Marketing expenses (765) (793) (1,638) (1,627)
General administrative expenses (155) (179) (301) (353)
Other income 61 200 69 266
Other expenses (50) (161) (124) (369)
         
Operating profit (loss) (Note 11) (187) 68 (455) 104
Financial income and financial expenses (80) (80) (166) (152)
         
Profit (loss) before taxes (267) (12) (621) (48)
Prepaid income tax (1) 0 (3) (3)
         
NET PROFIT (LOSS) FOR THE PERIOD (268) (12) (624) (51)
         
Basic earnings per share (Note 10) (0.06) (0.00) (0.14) (0.01)
Diluted earnings per share (Note 10) (0.06) (0.00) (0.14) (0.01)
         
Other comprehensive income:        
Currency translation differences 34 (64) 2 (113)
         
TOTAL COMPREHENSIVE INCOME (234) (76) (622) (164)
           

The planned time of publishing of interim report of the third quarter of 2016 is week 48 (28-30th of November 2016)

 

Gregory Devine Grace

CEO

+372 4478 338

greg.grace@skanogroup.com


Skano 2016 Q2 interim report ENG.PDF