THE 4th QUARTER 2016 IN SHORT

Consolidated net sales of the 2016 were 17.5 mil. euros, representing an 9,3% decrease compared to the same period in 2015 (18.6 mil. euros in 2015). Consolidated EBITDA amounted to 100 thousand euros (EBITDA 739 thousand euros in 2015).   Reducing the stock volumes of own produced goods negatively influenced the EBITDA of 2016 through changes in inventories in the amount of 529 thousand euros (In 2015 the increase in stock had a positive effect to EBITDA in the amount of 477 thousand euros).

The turnover of Skano Fibreboard OÜ together with its Finnish subsidiary in 2016 was 12.1 mil. euros (2015: 12.6 mil. euros). The operating loss in 2016 was 96 thousand euros (in 2015 operating profit 268 thousand euros).  

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 and in making the production process more effective with the aim to reduce costs.

The turnover of Skano Furniture Factory OÜ was 4.2 mil. euros, including the amount of 1.0 mil. euros sales to group retail companies (2015 respectively 4.8 mil. euros and 1.2 mil. euros). The sales decreased in 2016 by 11.8% and amounted. The decrease in sales has turned to small increase during 4Q 2016. The operating loss in 2016 was 658 thousand euros compare to the operating loss in the amount of 634 thousand euros in 2015.The operating loss includes the write-offs of the receivables from subsidiaries respectively 202 thousand euros in 2016 and 265 thousand euros in 2015. The operating loss was also affected by decrease of inventories through changes in inventory of finished goods. 2016 costs were higher also due to one-off redundancy cots what will give the good start for the year 2017. In 2016 sales to Finland decreased by 17.3% due to very weak demand as compared to the same period in 2015. In addition to seeking new sales possibilities in the current markets the company has made considerable effort to enter into new markets and to lower the production costs.

The priority of the management of the company is continuously to ensure the sales quantity of the produced goods from both factories in order to maximize production efficiency and efforts are taken in this direction on an on-going basis.

The turnover of Skano Furniture OÜ retail chain was 2,2 mil. euros what is 13.2% lower than in 2015. The trend turned to positive side in 4Q 2016.  The sales of Skano Furniture Factory OÜ own furniture still forms a considerable part of the retail sales.

INCOME STATEMENT

Consolidated net sales in 2016 was 17.5 mil. euros (18.8 mil. euros in 2015) representing an 6.8% decrease compared to 2015. Consolidated operating loss amounted to 730 thousand euros (101 thousand euros in 2015). The consolidated operating margin   was         -4.21% (-0,5% in 2015).

Consolidated net loss in 2016 amounted to 1.0 mi. euros (compared to net loss 0.4 mil. euros in 2015), and the net margin was -3.8% (-0.2% in 2015).

POSITION OF FINANCIAL STATEMENT

As of 31.12.2016 the total assets of Skano Group AS amounted to 12.0 mil. euros (31.12.2015: 13.3 mil. euros). The liabilities of the company accounted for 67.4% from the total assets (31.12.2015: 62.9%), amounted of 8.1 mil. euros (31.12.2015: 8.3 mil. euros).

Receivables and prepayments amounted 1.0 mil. euros and were on the same level as of 31.12.2015 (31.12.2015: 1.0 mil. euros). Inventories have decreased for the amount of 0.6 mil euros with 12 months, amounting to 2.8 mil. euros on 31.12.2016. (31.12.2015: 3.4 mil. euros). Property, plant and intangibles amounted to 8.1 mil. euros as of 31.12.2016 (8,5 mil.  euros as of 31.12.2015).

Current and non-current liabilities have decreased by 0.2 mil. euros to 8.1 mil. euros (31.12.2015: 8.3 mil. euros).

DIVISIONAL REVIEW:

NET SALES BY BUSINESS SEGMENTS

  th EUR % of net sales
  2016 2015 2016 2015
Fibreboards production and sales 12,170 12,696 69.5% 67.6%
Furniture production and sales 4,235 4,801 24.2% 25.6%
Furniture retail 2,203 2,537 12.6% 13.5%
Group transactions (1,106) (1,245) (6.3%) (6.6%)
TOTAL 17,502 18,789 100.0% 100.0%

NET SALES BY GEOGRAPHICAL SEGMENTS

  th EUR % of net sales
  2016 2015 2016 2015
Finland 6,060 6,912 34.6% 36.8%
Estonia 3,129 3,256 17.9% 17.3%
Russia 2,878 3,351 16.4% 17.8%
Great Britain 1,244 1,206 7.1% 6.4%
Latvia 760 774 4.3% 4.1%
Portugal 717 235 4.1% 1.3%
Sweden 596 574 3.4% 3.1%
Ukraine 394 400 2.3% 2.1%
Lithuania 406 434 2.3% 2.3%
SAR 288 493 1.6% 2.6%
Germany 206 160 1.2% 0.9%
Denmark 123 158 0.7% 0.8%
Other countries 701 836 4.0% 4.4%
TOTAL 17,502 18,789 100.0% 100.0%

Regarding the markets. turnover has increased in our new market Portugal and in Great Britain. The decrease in turnover was mainly because of lower sales in Russia and Finland.

PROFIT BY BUSINESS SEGMENTS

th EUR 2016 2015
Fibreboards production and sales (96) 268
Furniture production and sales (658) (634)
Furniture retail (83) (352)
Elimination 107 617
TOTAL (730) (101)
Net financial costs (310) (301)
Income tax (5) (9)
NET PROFIT (1,045) (411)

SKANO FIBREBOARD including SUOMEN TUULILEIJONA

The net sales of Skano Fibreboard in 2016 amounted to 12.1 mil. euros and operating loss to 96 thousand euros. In the same period 2015 the turnover of Skano Fibreboard totalled 12.6 mil. euros and the operating profit totalled 268 thousand euros. The decrease in the stock of finished production affected negatively the operating result trough changes in inventories of finished goods.  

The decrease in sales in 2016 compare to last year was mainly because of decrease of sales in Finland and Russia, total decrease in these markets was 860 thousand euros. In 2015 Finnish and Russian market was 57.7% from the total sales, in 2016 the share was 52,8%. Sales increased most in Portugal.

 NET SALES BY GEOGRAPHICAL SEGMENTS

  th EUR % of net sales
  2016 2015 2016 2015
Finland 4,597 5,134 41.3% 44.6%
Estonia 1,682 1,752 13.8% 13.7%
Russia 1,527 1,850 11.5% 13.1%
Great Britain 1,146 1,163 9.1% 8.3%
Portugal 717 235 5.6% 0.8%
Sweden 596 573 4.8% 4.6%
Latvia 397 305 2.7% 2.2%
SAR 288 493 2.4% 4.4%
Lithuania 175 102 1.3% 0.7%
Denmark 123 158 1.2% 1.4%
Germany 140 160 1.2% 1.2%
Other countries 682 683 5.2% 4.9%
TOTAL 12,070 12,608 100.0% 100.0%

SKANO FURNITURE

FURNITURE PRODUCTION

The net sales of the Skano Furniture Factory in 2016 amounted to 4.2 mil. euros including sales to group retail operations 1.0 mil. euros. Operating loss was 658 thousand euros. In 2015 the turnover of the factory amounted to 4.8 mil. euros and the operating loss to 634 thousand euros. The decrease in sales was 11.8% mainly due to sales decrease in Finland. The operating loss was negatively affected by decrease in inventories through changes in finished goods inventories.

FURNITURE FACTORY SALES BY COUNTRIES

  th EUR % of net sales
  2016 2015 2016 2015
Finland 1,463 1,770 35.5% 36.5%
Russia 1,349 1,501 32.7% 31.2%
Other countries 417 373 8.2% 8.1%
Group retail companies 1,007 1,157 23.6% 24.2%
TOTAL 4,236 4,801 100.0% 100.0%

FURNITURE RETAIL SALES

Skano group retail business is operated by a private limited daughter company Skano Furniture OÜ and its subsidiaries in Latvia, Lithuania and Ukraine. As of 31.12.2016 Skano has totally 8 stores: two stores in Tallinn, one store in Tartu, one store in Pärnu, one store in Riga, one store in Vilnius, one store in Kiev and one store in Kharkiv. In October 2016, the shop in Tallinn Rocca al Mare was closed and the shop in Pärnu Road was enlarged. Also, one shop in Kiev was closed in October 2016.

RETAIL SALES BY COUNTRIES

  th EUR % of net sales Number of stores
  2016 2015 2016 2015 2016 2015
Estonia* 1,330 1,472 60.4% 58.0% 4 5
Latvia 363 469 16.5% 18.5% 1 1
Ukraine** 278 264 12.6% 10.4% 2 4
Lithuania 231 332 10.5% 13.1% 1 1
TOTAL 2,202 2,537 100.0% 100.0% 8 11

* In October 2016, the shop in Tallinn Rocca al Mare centre was closed and the amount of shops in Estonia remained 4.

** In October 2016, the shop in Kiev Arax centre was closed and the 2 shops remain in Ukraine.

Retail sale amounted to 2.2 mil. euros in 2016 (2015: 2.5 mil. euros) what is 13.2% less than in 2015. Operating loss in 2016 was 83 thousand euros (2015: 352 thousand euros). Operating loss in 2015 contains a loss from a drop of currency exchange rate of hryvnia in the amount of 243 thousand euros and inter-company receivable write-offs in the amount of 125 thousand euros.

FORECAST AND DEVELOPMENT

SKANO FIBREBOARD. 2017 has started with the bigger sales in our core market in Finland. We are planning to enter to European biggest fibreboard market in Germany and the negotiations with the local sales agents are in process. We expect to compensate the lower sales in our core markets with sales in new markets. The improvement program of our production process is in work and the aim is to lower the production costs.

In July 2016, Skano Fibreboard OÜ received Sintef Certification, which has now opened the doors to sell our wind barrier boards on the Norwegian market, the negotiations are in process.

SKANO FURNITURE FACTORY. The cost cut program in 2016 gives a better start to 2017 and even with the lower sales volumes to earn profit. At the same time the cooperation with Great Britain and Norwegian agents are under negotiations to increase the sales in Great Britain and to enter into Norwegian market.

SKANO FURNITURE RETAIL SALES. We expect steady sales in the Baltics in 2017. The cost savings improve the profitability of the business unit. The Ukrainian subsidiary is planned to sell during 1Q 2017 to minimise the risk of the political and economic instability. At the same time, we expect to continue the sales to Ukraine in cooperation with the partners.

FINANCIAL HIGHLIGHTS

th EUR 2016 2015 2014
Income statement      
Revenue 17 502 18 789 20 330
EBITDA 100 739 -312
EBITDA margin 0,6% 3,9% -1,5%
Operating profit -730 -101 -1 199
Operating margin -4,2% -0,5% -5,9%
Net profit -1 045 -411 -1 481
Net margin -6,0% -2,2% -7,3%
 
Balance sheet (30.09)      
Total assets 11 964 13 262 13 329
Return on assets -8,7% -3,1% -11,1%
Equity 3 900 4 919 5 300
Return on equity -26,8% -8,4% -27,9%
Debt-to-equity ratio 67,4% 63,8% 57,5%
 
Share (30.09)      
Closing price 0,460 0,730 0,850
Earnings per share -0,23 -0,09 -0,33
Price-earnings ratio -2,00 -8,11 -2,58
Book value of a share 0,87 1,09 1,18
Market to book ratio 0,53 0,67 0,72
Market capitalization 2 070 3 284 3 824

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 31.12.2016 31.12.2015
     
Cash and bank 184 292
Receivables and prepayments 965 997
Inventories 2,760 3,426
Total current assets 3,909 4,715
     
Investment property 405 406
Tangible fixed assets 7,584 8,120
Intangible fixed assets 66 21
Total fixed assets 8,055 8,547
     
TOTAL ASSETS 11,964 13,262
     
Debt obligations 1,176 1,253
Payables and prepayments 2,497 2,684
Short-term provisions 15 15
Total current liabilities 3,688 3,952
     
Non-current debt obligations 4,163 4,163
Non-current provisions 213 228
Total non-current liabilities 4,376 4,391
     
Total liabilities 8,064 8,343
     
Share capital at nominal value 2,699 2,699
Issue premium 364 364
Statutory capital reserve 288 288
Other reserves 2 7
Currency translation 40 7
Retained profits 1,552 1,965
Net profit (loss) for the year (1,045) (411)
Total equity 3,957 4,919
     
TOTAL LIABILITIES AND EQUITY 11,964 13,262

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

th EUR 4Q 2016 4Q 2015  2016  2015
         
RETURN ON SALES 3,873 4,225 17,502 18,789
         
Cost of production sold (3,350) (3,543) (14,425) (14,870)
         
Gross profit 522 682 3,077 3,919
         
Marketing expenses (589) (807) (2,939) (3,203)
General administrative expenses (136) (183) (595) (705)
Other income 27 61 98 342
Other expenses (131) (34) (371) (454)
         
Operating profit (loss) (307) (281) (730) (101)
Financial income and financial expenses (69) (75) (309) (301)
         
Profit (loss) before taxes (376) (356) (1,039) (402)
Prepaid income tax (2) (5) (6) (9)
         
NET PROFIT (LOSS) FOR THE PERIOD (378) (361) (1,045) (411)
         
Basic earnings per share (0.08) (0.08) (0.23) (0.09)
Diluted earnings per share (0.08) (0.07) (0.23) (0.09)
         
Other comprehensive income:        
Currency translation differences 23 97 33 23
         
TOTAL COMPREHENSIVE INCOME (355) (264) (1,012) (388)
           

The planned time of publishing of interim report of the first quarter of 2017 is week 22 in 2017 (30-31th of May 2017)

Torfinn Losvik

Member of the Management Board

+372 569 90 988

This email address is being protected from spambots. You need JavaScript enabled to view it.

 
Skano 2016 4Q interim report ENG.pdf