La Perla Fashion Holding N.V.
Registered office: Schiphol Boulevard 127, G4.02, 1118 BG Schiphol, the Netherlands
October 29, 2020
Interim results for the six months ended 30 June 2020
La Perla Fashion Holding N.V. ("La Perla" and together with its consolidated subsidiaries, the "Group"), a luxury fashion holding company incorporating La Perla, a leading designer, manufacturer and retailer of luxury lingerie, nightwear and swimwear, and La Perla Beauty, announces results for the six months ended 30 June 2020.
Financial Overview - Consolidated La Perla Group
€ 000 unless stated | Six months ended 30 June 2020 | Six months ended 30 June 2019 (1) |
Actual | Restated (1) | |
Revenue | 27,531 | 40,314 |
Retail | 22,690 | 36,244 |
Wholesale | 4,615 | 3,363 |
Other | 226 | 707 |
Gross profit | 13,840 | 16,957 |
Gross profit margin (%) | 50 | 42 |
Operating Expenses | (34,912) | (38,666) |
EBITDA(2) | (21,072) | (21,709) |
Operating profit/(loss) | (31,143) | (35,663) |
Profit/(loss) for the year | (41,300) | (44,482) |
Earnings (loss) per share in € | (0.3852) | (0.4305) |
Net cash generated from operating | (19,544) | (25,898) |
activities(3) | ||
Total non-current liabilities | 240,084 | 218,037 |
Total current liabilities | 66,301 | 58,691 |
Cash and cash equivalents | 5,862 | 11,443 |
Net financial debt(4) | 155,800 | 121,218 |
Liabilities related to IFRS 16(5) | 90,057 | 99,112 |
- Reflects adoption of IFRS 16 during the period.
- EBITDA is calculated as Operating Profit/Loss before amortization and depreciation and write-offs
- Lease payments of €8.8 million in HY 2020 and €12.9 million in HY 2019 (restated) are categorized under Cash flow from financing activities
- Net financial debt calculated as Long term borrowings plus Short term borrowings minus Cash and cash equivalents. It excludes Financial lease liabilities
- Refers to Financial lease liabilities
Financial review
Although management was encouraged by a continuation of the second half of 2019's positive trends during the first few weeks of 2020, the Covid-19 crisis significantly affected results during the first half of 2020. The
pandemic brought disruption across the business from the closure of a majority of physical stores for extended periods to supply chain interruptions.
Revenue declined 32%, from €40.3 million to €27.5 million. By channel:
- Retail revenue reduced 37%, approximately 33% on a like-for-like basis
- Ecommerce outperformed physical boutiques and concessions, up high teens o By region, Asia outperformed both EMEA and North America
- Wholesale revenue increased approximately 40%, largely driven by improved first quarter performance against poor deliveries in the previous year
Gross margin increased from 42% to 50%, benefitting a reversal of inventory provisions and a greater proportion of full-price sales, partially offset by increased inventory clearance activity, in the 2020 period relative to 2019.
Operating expenses decreased from €38.7 million in the 2019 period to €34.9 million in 2020. This was driven by reduced marketing and selling expenses largely related to store closures, partially offset by increased G&A expenses due to incremental IT investment and the initial operating expenses of La Perla Beauty.
Depreciation, amortization and write-off decreased from €14.0 million in the 2019 period to €10.1 million in 2020. The reduction was primarily a product of rent concessions and a smaller store portfolio in the 2020 period.
The improvement in operating loss resulted from the above factors.
Outlook, Going Concern and Financing
Given the ongoing Covid-19 crisis and the uncertainty in relation to further impact on the economy and consumer spending, the Group cannot adequately determine the future effect on its business. Therefore, La Perla is currently not providing forward guidance. However, La Perla has concluded that it is appropriate to adopt the going concern basis of accounting in preparing the interim results for the six months ended 30 June 2020. Among others, La Perla's financing arrangements include a loan by Tennor Holding B.V. and La Perla Fashion Finance B.V. in the aggregate principal amount of up to €250 million, which does not mature over the next 12 months. The total amount outstanding under this loan stands at €161.2 million as of 30 June 2020, inclusive of €16.4m of accrued interest and €5.7m of accrued fees.
Enquiries
Seven Dials City, Simon Kelner / James Devas
Tel: +44 (0) 203 740 7483
Email: LaPerla@sevendialscity.com
About La Perla:
La Perla Fashion Holding N.V., a luxury fashion holding company, is the direct shareholder of La Perla Global Management (UK) Limited and its subsidiaries (the "Operating La Perla Group") and La Perla Beauty (UK). La Perla, through the Operating La Perla Group, is a leading designer, manufacturer and retailer of luxury lingerie, nightwear and swimwear. La Perla Beauty is in the initial phase of operation. The group operates under the brand "La Perla". Founded in 1954 in Bologna, Italy, the brand is renowned for its heritage and craftsmanship.
This release may contain forward-looking statements, i.e., statements that do not relate to historical facts or events. By their nature, forward-looking statements involve known and unknown risks and uncertainties, both general and specific. La Perla Fashion Holding N.V. bases these statements on its current plans, estimates, projections and expectations and they relate to events and are based on current assumptions that may not occur in the future. These forward-looking statements may not be indicative of future performance; the actual outcome of the financial condition and results of operations of La Perla Fashion Holding N.V. and its consolidated subsidiaries, and the development of economic conditions, may differ materially from, in particular be more negative than, those conditions expressly or implicitly assumed or described in such statements. Even if the actual results of the La Perla Fashion Holding N.V. or its consolidated subsidiaries, including the financial condition, results of operations and economic conditions, develop in line with the forward-looking statements contained in this press release, there can be no assurance that this will be the case in the future.
La Perla Fashion Holding N.V. Amsterdam
Activity Report & Unaudited interim condensed consolidated financial statements 30 June 2020
Contents | ||
Activity Report...................................................................................................... | 5 | |
Unaudited interim condensed consolidated financial statements 30 June 2020... | 7 | |
Interim condensed consolidated statement of comprehensive income................. | 8 | |
Interim condensed consolidated statement of financial position.......................... | 9 | |
Interim condensed consolidated statement of changes in equity........................ | 10 | |
Interim condensed consolidated cash flow statement......................................... | 11 | |
Notes to the interim condensed consolidated financial statements .................... | 12 | |
1. | Corporate and group information including business, operations and management .................................... | 12 |
2. | Basis of preparation...................................................................................................................................... | 12 |
3. | Revenues ...................................................................................................................................................... | 13 |
4. | Cost of sales ................................................................................................................................................. | 13 |
5. | Loss for the year........................................................................................................................................... | 13 |
6. | Impact of Covid - 19 on condensed consolidated interim financial statements........................................... | 13 |
7. | Information regarding directors and employees........................................................................................... | 14 |
8. | Financial income/(expenses) ........................................................................................................................ | 14 |
9. | Other income and expenses.......................................................................................................................... | 15 |
10. | Taxation...................................................................................................................................................... | 15 |
11. | Intangible assets ......................................................................................................................................... | 16 |
12. | Right-of-use of assets ................................................................................................................................. | 17 |
13. | Property, plant and equipment.................................................................................................................... | 18 |
14. | Other non-current assets............................................................................................................................. | 19 |
15. | Inventories and work-in-progress............................................................................................................... | 19 |
16. | Trade receivables........................................................................................................................................ | 19 |
17. | Other current assets .................................................................................................................................... | 20 |
18. | Cash and cash equivalents.......................................................................................................................... | 20 |
19. | Borrowings................................................................................................................................................. | 20 |
20. | Provisions................................................................................................................................................... | 21 |
21. | Deferred tax liabilities................................................................................................................................ | 21 |
22. | Trade payables............................................................................................................................................ | 21 |
23. | Other current liabilities............................................................................................................................... | 22 |
24. | Analysis and reconciliation of net debt ...................................................................................................... | 22 |
25. | Financial commitments .............................................................................................................................. | 22 |
26. | Subsequent events ...................................................................................................................................... | 22 |
27. | Related party transactions .......................................................................................................................... | 22 |
Activity Report
Covid - 19 impact on global economy, luxury sector and Group's performances
The pandemic started in China in late 2019 and extended to Europe at the end of the first quarter 2020 before reaching the Americas during the second quarter 2020. The consequences of the measures taken by Governments to mitigate the spread of the virus, have had a profound and lasting effect on the global economy in particular customer consumptions, companies' liquidity and operations.
As the virus is still in active circulation and new targeted and general lockdown measures are still having to be implemented, it is difficult to anticipate the trends for the second half of the year and to forecast a recovery in the first half of 2021.
Over the past few years, luxury market growth has been closely correlated to economic growth and financial market performance, and to a high consumer confidence index. It is therefore logical that the luxury sector is being directly affected by the current difficult macro-economic context, which is dragging down consumers' purchasing power and notably their propensity to consume.
The effect in different geographic markets evidently reflects differing local levels of severity of the health crisis and lockdown durations, as well as the extent to which each region is exposed to tourism.
According to Bain & Company/Altagamma study, the global luxury goods market may have contracted by some 25% in the first quarter of 2020. Following on from a second quarter that could see a 50-60% market fall, trends for the second half are very difficult to predict. For the full year the worldwide personal luxury goods market could contract by approximately 20% to 35%, depending on the scenario. Business is not expected to return to 2019 levels until the end of 2021 or even early 2022 in the best-case scenarios, with 2023 projected in more conservative forecasts.
As well as all other luxury sector players, during the first six months 2020, the Group was impacted by the effects of the pandemic both in terms of sales and business operations.
The partial or full closure of its stores due to lockdowns had a very material effect on the Group's revenue. As from late January, stores located in China were gradually closed, followed by a large number of stores in Asia in February. Europe and the Americas closed starting from mid-March. Since the end of April, stores have started to re-open gradually in some countries with the easing of national lockdowns. Other countries impacted by Covid- 19 later in the year, took more time to re-open.
Although the negative impact described above, Covid - 19 has significantly increased the online traffic and sales. During the first half year 2020 the Group had to face some extraordinary costs related to health measures put in place (purchases of hand sanitizer and face masks, exceptional measures for regularly disinfecting premises, etc.) accounted for as recurring expenses.
The rent concessions negotiated with lessors due to the consequences of the Covid - 19 pandemic were immediately recognized in the income statement as negative variable lease payments rather than as an amendment to the associated leases as described in Note 6 to the condensed consolidated interim financial statements.
Business review
2019 was the first full year period under the new ownership. Focus in this phase was essentially on inventory rationalisation and refocus of the product offer.
First half year 2020 was focused on Group restructuring process and on facing Covid - 19 consequences on the business.
Six months 2020 revenues amounted to €27.5 million (six months 2019: €40.3 million), a 32% reported decrease compared with the prior year and comprise sales from the following channels:
HY 2020 | HY 2019 | ||||
€ 000 | % | € 000 | % | ||
Continuing operations | |||||
Net sales Boutique | 13,674 | 59% | 23,833 | 57% | |
Net sales Outlet | 3,407 | 19% | 7,615 | 19% | |
Net sales Online | 5,609 | 11% | 4,796 | 10% |
Net sales Retail | 22,690 | 86% | 36,244 | 90% | |||
Net sales Wholesale | 3,864 | 10% | 2,685 | 9% | |||
Net sales Stock | 751 | 2% | 678 | 3% | |||
Royalties and other income | 226 | 2% | 707 | 1% | |||
27,531 | 100% | 40,314 | 100% |
Decrease in revenues of some 32% compared to previous year period has been mainly driven by store closures due to Covid - 19 pandemic situations around the globe that characterized the first six months 2020. Such event caused a drop of volumes sold in the first half of the year through the traditional channels whilst online sales registered a 17% increase compared with the previous period.
Wholesale revenues increased by 44% at June 2020. The increase was mainly generated in the first quarter compared to a previous period affected by delivery issues.
Although the sales reduction, Group's operating loss was in line with previous year period as a result of a strong restructuring process that has positively impacted Group's performances.
Group net debt as at 30 June 2020 amounted to €155.8 million (2019: €121.2 million) as follows:
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Long term borrowings | 161,651 | 132,650 | ||
Short term borrowings | 11 | 11 | ||
Cash and cash equivalents | (5,862) | (11,443) | ||
155,800 | 121,218 |
For additional details on loan terms please refer to Note 19 of the condensed consolidated interim financial statements.
Long-term borrowings at 30 June 2020 refers mainly to the facilities received from La Perla Fashion Finance B.V. amounting to €161.2 million (2019: €132.7 million including the loan transferred from Tennor Holding B.V. in 2020).
Principal risks and uncertainties for the remaining six months of the year
The main risks and uncertainties to which the Group is exposed in the second half of 2020 are described in the 2019 consolidated financial statements.
Subsequent events
There are no other significant new events of which the Group is aware of that would affect these condensed consolidated interim financial statements at 30 June 2020.
Unaudited interim condensed consolidated financial statements 30 June 2020
Interim condensed consolidated statement of comprehensive income
For the half year ended 30 June 2020
Restated | |||||||
Notes | HY 2020 | HY 2019 | |||||
€ 000 | € 000 | ||||||
Revenue | 3 | 27,531 | 40,314 | ||||
Cost of sales | 4 | (13,691) | (23,357) | ||||
Gross margin | 13,840 | 16,957 | |||||
Marketing and selling expenses | (17,258) | (21,927) | |||||
General and administrative expenses | (17,654) | (16,739) | |||||
Operating loss before amortisation and depreciation | (21,072) | (21,709) | |||||
Amortisation, depreciation & write off | (10,071) | (13,954) | |||||
Operating profit/(loss) | (31,143) | (35,663) | |||||
Financial income/(expenses) | 8 | (10,628) | (9,177) | ||||
Other income and expenses | 448 | 466 | |||||
Profit/(loss) before tax | (41,323) | (44,374) | |||||
Income taxes | 10 | 23 | (108) | ||||
Profit/(loss) for half year | (41,300) | (44,482) | |||||
Items that will not be reclassified subsequently to the profit and loss | |||||||
Actuarial gains/(losses) | - | - | |||||
Deferred taxes on actuarial gains/(losses) | - | - | |||||
Items that may be reclassified subsequently to the profit and loss | - | - | |||||
Exchange differences on translation of operations in | |||||||
foreign currencies | 819 | (760) | |||||
Total other gains/(losses) net of tax effect | 819 | (760) | |||||
Total comprehensive profit/(loss) for the year | (40,481) | (45,242) | |||||
Earnings per share in € | (0.3852) | (0.4305) |
Interim condensed consolidated statement of financial position
For the half year ended 30 June 2020
30 June | 31 December | ||||
Notes | 2020 | 2019 | |||
€ 000 | € 000 | ||||
Non-current assets | |||||
Brand and other intangible assets | 11 | 32,021 | 28,249 | ||
Right of use assets | 12 | 55,762 | 62,218 | ||
Properties, plant and equipment | 13 | 11,861 | 12,278 | ||
Other non-current assets | 14 | 9,299 | 9,526 | ||
Total non current assets | 108,943 | 112,271 | |||
Current Assets | |||||
Inventories and work in progress | 15 | 31,769 | 33,566 | ||
Trade receivables | 16 | 4,978 | 6,013 | ||
Other current assets | 17 | 8,690 | 7,773 | ||
Cash and cash equivalents | 18 | 5,862 | 11,443 | ||
Total current assets | 51,299 | 58,795 | |||
Non-current liabilities | |||||
Long term borrowings | 19 | 161,651 | 132,650 | ||
Long term financial lease liabilities | 66,346 | 72,459 | |||
Provisions | 20 | 7,753 | 8,119 | ||
Deferred tax liabilities | 21 | 102 | 100 | ||
Other non-current liabilities | 4,232 | 4,709 | |||
Total non current liabilities | 240,084 | 218,037 | |||
Current liabilities | |||||
Short term borrowings | 19 | 11 | 11 | ||
Short term financial lease liabilities | 23,711 | 26,653 | |||
Trade payables | 22 | 25,708 | 16,994 | ||
Provisions | 20 | 3,463 | 3,512 | ||
Other current liabilities | 23 | 13,408 | 11,521 | ||
Total current liabilities | 66,301 | 58,691 | |||
Net assets/(liabilities) | (146,143) | (105,662) | |||
Equity | |||||
Share capital | 1,051 | 1,051 | |||
Share premium | 21,741 | 21,741 | |||
Cumulative translation adjustment | 630 | (189) | |||
Other reserves | (8,559) | (8,559) | |||
Retained earnings | (161,006) | (119,706) | |||
Total Equity | (146,143) | (105,662) | |||
Interim condensed consolidated statement of changes in equity
For the half year ended 30 June 2020
Trans- | |||||||||||||||
Share | Share | lation | Other | Retained | Total | ||||||||||
Notes | capital | premium | reserve | reserves | earnings | equity | |||||||||
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | ||||||||||
Balance at | |||||||||||||||
1 January 2019 | 1,000 | - | 2,290 | (8,255) | (30,665) | (35,630) | |||||||||
. | . | . | |||||||||||||
Comprehensive income | |||||||||||||||
Profit/(loss) for the period | - | - | - | - | (89,041) | (89,041) | |||||||||
Other comprehensive income | - | - | (2,479) | (304) | (2,783) | ||||||||||
Total comprehensive income | - | - | (2,479) | (304) | (89,041) | (91,824) | |||||||||
Issued shares | |||||||||||||||
Issue of share capital | 51 | 22,816 | - | - | - | - | |||||||||
Transaction cost | - | (1,075) | - | - | - | - | |||||||||
Total issued shares | 51 | 21,741 | 21,792 | ||||||||||||
Balance at | |||||||||||||||
31 December 2019 | 1,051 | 21,741 | (189) | (8,559) | (119,706) | (105,662) | |||||||||
Comprehensive income | |||||||||||||||
Profit/(loss) for the period | - | - | - | - | (41,300) | (41,300) | |||||||||
Other comprehensive income | - | - | 819 | - | - | 819 | |||||||||
Total comprehensive income | - | - | 819 | - | (41,300) | (40,481) | |||||||||
Balance at | |||||||||||||||
30 June 2020 | 1,051 | 21,741 | 630 | (8,559) | (161,006) | (146,143) |
Interim condensed consolidated cash flow statement
For the half year ended 30 June 2020
Restated | ||||||||||
HY 2020 | HY 2019 | |||||||||
€ 000 | € 000 | |||||||||
Cash and cash equivalent at the beginning of the year | 11,433 | 32,485 | ||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) of the year | (41,300) | (44,482) | ||||||||
Depreciation and Amortisation | 9,966 | 13,599 | ||||||||
Impairment tangible assets | 105 | 348 | ||||||||
Impairment right of use assets | - | - | ||||||||
Impairment intangible assets | - | - | ||||||||
(Increase)/Decrease in inventories | 1,797 | 9,065 | ||||||||
(Increase)/Decrease in receivables | 1,060 | 88 | ||||||||
Increase/(Decrease) in payables | 9,188 | (5,121) | ||||||||
Increase/(Decrease) in provision | (875) | (894) | ||||||||
Other working capital variation | 515 | 1,499 | ||||||||
Net cash generated from operating activities | (19,544) | (25,898) | ||||||||
Cash flow from investing activities | ||||||||||
Investment in property, plant and equipment | (1,185) | (459) | ||||||||
Investment in right of use assets | (1,550) | (1,878) | ||||||||
Investment in intangible assets | (4,755) | (203) | ||||||||
Repayment on financial fixed assets | - | 675 | ||||||||
(Increase)/Decrease in security deposits | 242 | 1,173 | ||||||||
Net cash used in investing activities | (7,248) | (692) | ||||||||
Cash flow from financing activities | ||||||||||
Short term borrowing | - | - | ||||||||
Long term borrowing | 29,001 | 13,395 | ||||||||
Lease liabilities | (8,788) | (12,898) | ||||||||
Proceeds from issuance of shares | - | 11,500 | ||||||||
Net cash generated from financing activities | 20,213 | 11,997 | ||||||||
Effect of forex on cash | 997 | 657 | ||||||||
Cash and cash equivalent at the end of the period | 5,851 | 18,549 | ||||||||
Analysis of Net Cash | ||||||||||
30 June | 30 June | |||||||||
2020 | 2019 | |||||||||
Cash and cash equivalents as per Balance Sheet | 5,862 | 18,549 | ||||||||
Bank overdrafts | (11) | - | ||||||||
Net Cash | 5,851 | 18,549 |
Notes to the interim condensed consolidated financial statements
1. Corporate and group information including business, operations and management
1.1 Corporate information
The interim condensed consolidated financial statements of La Perla Fashion Holding N.V. and its subsidiaries (the "Group") for the six months ended 30 June 2020 were authorised for issue in accordance with a resolution of the directors on 29 October 2020.
1.2 Activities
La Perla Fashion Holding N.V. ("the Company", "Group" or "La Perla") is a public limited company incorporated in Amsterdam, The Netherlands and has its place of business at Schiphol, The Netherlands. The company is registered at the Chamber of Commerce at 66809681.
The Group operates in the markets of luxury women's and men's underwear and swimwear (hereinafter the "Business"). The activities of design, production and sale (through retail and wholesale channels) are performed by the Group through its network of subsidiaries. The direct subsidiary La Perla Global Management (UK) is the Principal in all intercompany transactions, purchasing goods from the manufacturing entity of the Group and reselling those to the distributors and the commercial subsidiaries.
Per date of authorization of the financial statements of 2019, 12 July 2019, the ultimate parent company is Tennor Holding B.V. which controlled 74% of the Company through La Perla Fashion Finance B.V.
1.3 Group structure
In the first half of 2020, there were no company acquisitions or other changes. In the first half year 2019, there were no changes in investments in associated companies and joint ventures.
2. Basis of preparation
2.1 Basis of preparation
The interim condensed consolidated financial statements for the six months ended 30 June 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements as at 31 December 2019.
The interim condensed consolidated financial statements are presented in euros and all values are rounded to the nearest thousand (€000), except when otherwise indicated.
2.2 Going Concern
For the period ended 30 June 2020, the Group reported a total comprehensive loss of €40.5 million (six months 2019: loss of €45.2 million) and shareholders' deficiency of €146.1 million (2019: deficiency of €105.7m) and accumulated losses of €161.0 million (2019: €119.7 million).
The directors have considered the prospects of the Group and are undertaking an assessment of the Group's funding needs and strategic options in the context of the current challenging trading environment. The directors are in constructive discussions with the ultimate parent company, Tennor Holding B.V., regarding the Group's funding requirements, as well as reorganisation and other strategic options.
The directors have also considered the following matters:
- During 2019 and 2020, the Company received a letter of financial support from the ultimate parent company, Tennor Holding B.V., stating that it will provide financial support to enable the Group to meet its financial obligations as they fall due. On 13 July 2018, Tennor Holding B.V. secured a new debt facility up to €250 million. By the end of June 2020, €161.2 million of funding had been provided Whilst the Directors do not have visibility over Tennor Holding B.V.'s financial position, Tennor Holding B.V. has been able to provide financial support when required to date.
- The consolidated entity reported a net operating cash outflow for the period ended 30 June 2020 of €19.5 million (six months 2019: €39.6 million). Management expect operating costs will continue to decrease in the subsequent period as a result of restructuring its operations, which will reduce the negative operating cash flows.
Although the restructuring and the related discussions with Tennor Holding B.V regarding the Group's funding requirements is still ongoing and therefore includes uncertainties surrounding its implementation, the directors believe that the continuing reorganisation process will provide positive results.
Having considered the above factors, the directors have concluded that it is appropriate to adopt the going concern basis of accounting in preparing the interim financial statements.
3. Revenues
Revenues of the period amount to €27.5 million (six months 2019: €40.3 million) and include sales as follow:
HY 2020 | HY 2019 | ||||||||
€ 000 | % | € 000 | % | ||||||
Net sales | 27,305 | 99% | 39,607 | 98% | |||||
Royalties and other income | 226 | 1% | 707 | 2% | |||||
27,531 | 100% | 40,314 | 100% |
4. Cost of sales
Cost of inventories included in cost of sales amounts to €12.5 million (six months 2019: €15.2 million) and reversal of write-downs of inventories, which were mainly the result of inventory sales of old products in 2020, amounts to €3.5 million (six months 2019: €1.6 million of write down).
5. Loss for the year
Net loss for the period of €41.3 million (six months 2019: loss of €44.4 million) has been arrived after (charging)/crediting:
Restated | |||
HY 2020 | HY 2019 | ||
€ 000 | € 000 | ||
Net foreign exchange gains | (1,404) | 658 | |
Depreciation of property, plant and equipment | (1,416) | (1,709) | |
Impairment of property, plant and equipment | (105) | (348) | |
Amortisation of right-of-use assets | (7,569) | (10,809) | |
Amortisation of intangible assets | (981) | (1,081) | |
Cost of inventories recognised as expense | (12,496) | (15,180) | |
Reversal of write downs of inventories recognised in the period | 3,516 | - | |
Write downs of inventories recognized as an expense | - | (1,642) | |
Impairment (loss) / release recognised on trade receivables | 193 | (34) | |
Operating lease rentals | 470 | (2,333) |
6. Impact of Covid - 19 on condensed consolidated interim financial statements
The impacts arising from the Covid-19 pandemic have been recognized in the income statement for six months 2020 and essentially affect recurring operating income. In particular, the costs related to health measures put in place (purchases of hand sanitizer and face masks, exceptional measures for regularly disinfecting premises, etc.) have been accounted for as recurring expenses.
The rent concessions negotiated with lessors due to the consequences of the Covid-19 pandemic were immediately recognized in the income statement as negative variable lease payments rather than as an amendment to the associated leases. This accounting method complies with the simplification measure provided for in the Amendment to IFRS 16 - Leases, issued by the IASB on May 28, 2020, although this amendment had not been formally endorsed by the European Union at the date the condensed consolidated interim financial statements were prepared.
7. Information regarding directors and employees
Executive
Manager & Employees
Factory workers
Wages and salaries
Social security costs
Other personnel costs
HY 2020
n°.
35
722
451
1,208
HY 2020
€ 000
17,238
3,254
1,969
22,461
HY 2019
n°.
26
851
433
1,307
HY 2019
€ 000
21,036
4,835
4,046
29,917
8. Financial income/(expenses)
Restated | ||||
HY 2020 | HY 2019 | |||
€ 000 | € 000 | |||
Interest expense on bank facilities and loans | (2) | (1) | ||
Interest expense on loan from related parties and others | (5,991) | (4,895) | ||
Interest on financial lease liabilities | (3,103) | (4,285) | ||
Other charges | (134) | (658) | ||
Interest income from other non-current assets | - | - | ||
Financial income as result of bargain purchase | 6 | - | ||
Gain (loss) foreign exchange transaction | (1,404) | 658 | ||
Other financial income | 4 | |||
(10,628) | (9,177) |
Interest on loans from related parties and others comprised interest and fees on the shareholder loans in accordance with the Financing Agreement in place with Tennor Holding B.V.
9. Other income and expenses
Other income and expenses relate to miscellaneous income of €448 thousand (six months 2019: €466 thousand).
10. Taxation
HY 2020 | HY 2019 | ||
€ 000 | € 000 | ||
Corporation Tax | |||
Current year | 23 | (22) | |
Adjustments in respect of prior years | - | (86) |
23 | (108) | ||
Deferred tax | - | - | |
23 | (108) |
11. Intangible assets
Industrial | Concessions, | |||||||||||||
patens & | licences & | Other | Asset under | |||||||||||
software | trademarks | Key money | intangibles | contrution | Total | |||||||||
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | |||||||||
Cost | ||||||||||||||
At 1 January 2019 | 5,470 | 35,709 | 11,679 | 2,783 | 1,390 | 57,031 | ||||||||
Additions | 284 | - | - | 195 | - | 479 | ||||||||
Disposals | - | - | (222) | - | (3) | (225) | ||||||||
Currency translation | 17 | - | 146 | 178 | - | 341 | ||||||||
Impairment | (898) | - | - | - | (1,387) | (2,285) | ||||||||
At 31 December 2019 | 4,873 | 35,709 | 11,603 | 3,156 | - | 55,341 | ||||||||
Depreciation | ||||||||||||||
At 1 January 2019 | (3,367) | (7,147) | (11,679) | (2,777) | - | (24,970) | ||||||||
Charge for the year | (778) | (1,428) | - | (29) | - | (2,235) | ||||||||
Disposals | - | - | 222 | - | - | 222 | ||||||||
Currency translation | (17) | - | (146) | (178) | - | (341) | ||||||||
Impairment | 232 | - | - | - | - | 232 | ||||||||
At 31 December 2019 | (3,930) | (8,575) | (11,603) | (2,984) | - | (27,092) | ||||||||
Net book value | ||||||||||||||
31 December 2019 | 943 | 27,134 | - | 172 | - | 28,249 | ||||||||
Cost | ||||||||||||||
At 1 January 2020 | 4,873 | 35,709 | 11,603 | 3,156 | - | 55,341 | ||||||||
Additions | 194 | - | - | 254 | 4,307 | 4,755 | ||||||||
Currency translation | (10) | - | 63 | (18) | - | 35 | ||||||||
Impairment | (12) | - | - | - | - | (12) | ||||||||
At 30 June 2020 | 5,045 | 35,709 | 11,666 | 3,392 | 4,307 | 60,119 | ||||||||
Depreciation | ||||||||||||||
At 1 January 2020 | (3,930) | (8,575) | (11,603) | (2,984) | - | (27,092) | ||||||||
Charge for the year | (230) | (714) | - | (37) | - | (981) | ||||||||
Currency translation | 10 | - | (63) | 16 | - | (37) | ||||||||
Impairment | 12 | - | - | - | - | 12 | ||||||||
At 30 June 2020 | (4,138) | (9,289) | (11,666) | (3,005) | - | (28,098) | ||||||||
Net book value | ||||||||||||||
30 June 2020 | 907 | 26,420 | - | 387 | 4,307 | 32,021 |
12. Right-of-use of assets
Right-of-use assets | ||
€ 000 | ||
Cost | ||
At 1 January 2019 | 85,298 | |
Disposals | (3,794) | |
Impairment | (2,687) | |
Currency translation | 990 | |
At 31 December 2019 | 79,807 | |
Amortisation | ||
At 1 January 2019 | - | |
Charge for the year | (19,274) | |
Impairment | 1,768 | |
Currency translation | (83) | |
At 31 December 2019 | (17,589) | |
Net book value at 31 December 2019 | 62,218 | |
Cost | ||
At 1 January 2019 | 79,807 | |
Disposals | 1,550 | |
Impairment | (996) | |
Currency translation | (708) | |
At 30 June 2020 | 79,653 | |
Amortisation | ||
At 1 January 2019 | (17,589) | |
Charge for the year | (7,569) | |
Impairment | 996 | |
Currency translation | 271 | |
At 30 June 2020 | (23,891) | |
Net book value at 30 June 2020 | 55,762 |
13. Property, plant and equipment
Retail | Lease- | Contruc- | ||||||||||||
Machinery | fixtures | holds | ||||||||||||
Land and | and | Fixtures | and | improve- | tion in | |||||||||
buildings | equipment | and tools | fittings | ments | progress | Total | ||||||||
€ 000 | € 000 | € 000 | € 000 | € 000 | € 000 | € 000 | ||||||||
Cost | ||||||||||||||
At 1 January 2019 | 3,215 | 3,058 | 10,609 | 9,859 | 17,443 | 122 | 44,306 | |||||||
Additions | 5 | 311 | 334 | 213 | 166 | (21) | 1,008 | |||||||
Disposals | (59) | (1) | - | (30) | (3) | - | (93) | |||||||
Impairment losses | - | (36) | (1,432) | (947) | (4,197) | (82) | (6,694) | |||||||
Currency translation | - | 2 | 213 | 164 | 353 | - | 732 | |||||||
Reclasses | - | - | - | (1,808) | - | - | (1,808) | |||||||
At 31 December 2019 | 3,161 | 3,334 | 9,724 | 7,451 | 13,762 | 19 | 37,451 | |||||||
Depreciation | ||||||||||||||
At 1 January 2019 | (347) | (1,497) | (9,972) | (7,000) | (10,223) | - | (29,039) | |||||||
Charge for the year | (145) | (322) | (358) | (836) | (2,246) | - | (3,907) | |||||||
Disposals and write-off | - | 34 | 1,417 | 974 | 4,188 | - | 6,613 | |||||||
Currency translation | - | (2) | (193) | (147) | (306) | - | (648) | |||||||
Reclasses | - | - | - | 1,808 | - | - | 1,808 | |||||||
At 31 December 2019 | (492) | (1,787) | (9,106) | (5,201) | (8,587) | - | (25,173) | |||||||
Net book value | ||||||||||||||
31 December 2019 | 2,669 | 1,547 | 618 | 2,250 | 5,175 | 19 | 12,278 | |||||||
Cost | ||||||||||||||
At 1 January 2020 | 3,161 | 3,334 | 9,724 | 7,451 | 13,762 | 19 | 37,451 | |||||||
Additions | 1 | 13 | 52 | 301 | 418 | 400 | 1,185 | |||||||
Impairment losses | - | (4) | - | (130) | (1,424) | - | (1,558) | |||||||
Currency translation | - | - | (169) | (98) | 12 | - | (255) | |||||||
Reclasses | - | - | 233 | (167) | (66) | - | - | |||||||
At 30 June 2020 | 3,162 | 3,343 | 9,840 | 7,357 | 12,702 | 419 | 36,823 | |||||||
Depreciation | ||||||||||||||
At 1 January 2020 | (492) | (1,787) | (9,106) | (5,201) | (8,587) | - | (25,173) | |||||||
Charge for the year | (73) | (163) | (152) | (343) | (685) | - | (1,416) | |||||||
Disposals and write-off | - | 3 | - | 116 | 1,334 | - | 1,453 | |||||||
Currency translation | - | - | 145 | 77 | (48) | - | 174 | |||||||
At 30 June 2020 | (565) | (1,947) | (9,113) | (5,351) | (7,986) | - | (24,962) | |||||||
Net book value | ||||||||||||||
30 June 2020 | 2,597 | 1,396 | 727 | 2,006 | 4,716 | 419 | 11,861 |
14. Other non-current assets
Other non-current assets, amounting to €9.3 million (2019: €9.5 million) mainly includes guarantee deposits for store rents in various countries and for utilities.
15. Inventories and work-in-progress
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Raw materials and consumables | 1,878 | 2,456 | ||
Work in process and semi-finished goods | 1,479 | 1,325 | ||
Finished goods | 28,291 | 29,643 | ||
Advances | 121 | 142 | ||
31,769 | 33,566 |
There is no material difference between the balance sheet value of stocks and their replacement cost. The amount of inventory at 30 June 2020 includes a reserve for obsolescence risk amounting to €29.2 million made up of €13.4 million for raw materials and €15.8 million for finished goods (2019: €32.7 million made up of €14.3 million for raw materials and €18.4 million for finished goods). At 30 June 2020 finished goods available for sale amount to €28.3 million or 89% of the total inventory value (2019: €29.6 million or 88% of the total inventory amount). Raw materials, work in progress and advances to suppliers relate to lines that will be available for sale in the second half of 2020.
As at 30 June 2020 total net inventory is €31.8 million (2019: €33.6 million).
16. Trade receivables
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Trade receivables at nominal amount | 4,978 | 6,013 | ||
4,978 | 6,013 |
The carrying value of trade receivables approximates their fair value after an accrual for bad debt provision amounting to €1.5 million (2019: €2.3 million). Before accepting any new customer, the Group uses an external resource to assess the potential customer's credit quality and financial reliability.
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the fact that the customer base is large and unrelated.
Movement in bad debt provision:
HY 2020 | 2019 | |||
€ 000 | € 000 | |||
At 1 January | 2,252 | 1,725 | ||
Uncollectible amounts written off | (483) | (432) | ||
Increase in allowance recognised in the income statement | (193) | 959 | ||
At 30 June/ 31 December | 1,576 | 2,252 |
The bad debt provision is sufficient to cover any expected credit losses. During the period, the Group released €193 thousand of provision mainly due to a credit position cashed in.
17. Other current assets
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Other current assets | 3,700 | 2,965 | ||
Accrued income and prepaid expenses | 1,206 | 758 | ||
VAT receivable | 3,784 | 4,050 | ||
8,690 | 7,773 |
18. Cash and cash equivalents
The carrying amount of cash and cash equivalents is deemed to reflect its fair value.
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Bank and postal account | 5,841 | 11,347 | ||
Cash on hand | 21 | 96 | ||
5,862 | 11,443 | |||
19. Borrowings | ||||
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Unsecured at amortised cost | ||||
Loans from related parties | 161,229 | 132,650 | ||
Bank and financial institutions | 422 | - | ||
Bank overdraft | 11 | 11 | ||
Total Borrowings | 161,662 | 132,661 | ||
Non-current | 161,651 | 132,650 | ||
Current | 11 | 11 | ||
Total Borrowings | 161,662 | 132,661 |
As at 30 June 2020, the Group's total financial indebtedness amounted to €161.7 million (2019: €132.7 million).
Current borrowings amounted to €11 thousand (2019: €11 thousand) while the non-current borrowing position
amounted to €161.7 million (2019: €132.7 million). The detail of the borrowings is provided below.
The loan from related parties refers to the facilities received from La Perla Fashion Finance B.V. amounting to €161.2 million (2019: €132.7 million including the loan transferred from Tennor Holding B.V. in 2020).
Loan from bank was received by the Swiss subsidiary as a measure of financial support to facilitate the cash management of the subsidiary during the pandemic situation caused by Covid-19. The loan is guaranteed by the Swiss Confederation.
Changes in loan amounts incurred in six months 2020 and 2019 are the followings:
HY 2020 | 2019 | ||
€ 000 | € 000 | ||
At 1 January | 132,650 | 103,098 | |
Loans advanced from related parties | 22,590 | 19,500 | |
Loan advanced from banks | 422 | - | |
Financial costs incurred | 5,989 | 10,052 | |
At period end | 161,651 | 132,650 |
20. Provisions
The Group as at 30 June 2020 has provisions of €11.2 million (2019: €11.6 million), of which €3.5 million are
current (2019: €3.5 million) and €7.7 million are non-current (2019: €8.1 million). During the six months 2020 the Group utilised €415 thousand of the provision. The nature of the provisions is detailed below:
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Provisions | ||||
Allowance for sales return | 800 | 800 | ||
Layoff, restructuring and other charges | 1,825 | 1,703 | ||
Provision for restoration | 5,268 | 5,756 | ||
Restructuring | 2,277 | 2,277 | ||
Litigation (agents) | 460 | 460 | ||
Litigation (employee) | 386 | 435 | ||
Litigation (clients) | 200 | 200 | ||
11,216 | 11,631 | |||
Non-current | 7,753 | 8,119 | ||
Current | 3,463 | 3,512 | ||
11,216 | 11,631 |
The amounts relating to layoff and other charges amounting to €1.8 million (2019: €1.7 million) relate mainly to potential charges of the Chinese subsidiaries.
The provision for restoration costs amounting to €5.3 million (2019: €5.8 million) includes the estimated cost of restoring the leased assets where required by the terms and conditions of the lease agreements.
The provision for restructuring amounting to €2.3 million (2019: €2.3 million) includes the costs to be incurred for the reorganisation plan of the Italian subsidiaries.
The provision for sales returns €0.8 million (2019: €0.8 million) refers to the expected amount of returns from clients related to goods supplied by the Group in May and June 2020. This amount has been evaluated based on historical data.
Provisions for litigation costs relate to the costs expected to be incurred in closing litigation claims existing at the period end.
21. Deferred tax liabilities
Deferred tax liabilities at 30 June 2020 amount to €102 thousand (2019: €100 thousand) and relates mainly to the value of unrealised exchange gains.
22. Trade payables
Trade accounts payable of the Group amounted to €25.7 million as at 30 June 2020 (2019: €17.0 million).
The average credit period on purchases of goods and services for the Group is between 60 and 90 days. The higher amount of accounts payable at 30 June 2020 is mainly due to the capital expenditures payables at period end.
23. Other current liabilities
Below are the details of other current liabilities as at 30 June 2020:
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Other payables | 6,866 | 6,525 | ||
Payables for social security | 2,689 | 1,707 | ||
Accrued expenses and deferred income | 1,628 | 920 | ||
Prepayment | 4 | 16 | ||
VAT payable | 2,221 | 2,353 | ||
13,408 | 11,521 |
Other payables represent, mainly, wages and salaries payable.
24. Analysis and reconciliation of net debt
Group net debt at 30 June 2020 is €155.8 million (2019: €121.2 million). Group borrowings almost entirely relates to La Perla Fashion Finance B.V., the finance group company.
30 June 2020 | 31 December 2019 | |||
€ 000 | € 000 | |||
Long term borrowings | 161,651 | 132,650 | ||
Short term borrowings | 11 | 11 | ||
Cash and cash equivalents | (5,862) | (11,443) | ||
Net debt | 155,800 | 121,218 |
For further details on borrowings please refer to Note 19 of the condensed consolidated interim financial statements.
25. Financial commitments
The Group provided bank guarantees of €2,295 thousand as at 30 June 2020 (2019: €2,295 thousand).
26. Subsequent events
There are no other significant new events of which the Company is aware of that would affect these 30 June 2020 half year financial statements.
27. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
Trading transactions
During the six months 2020, group entities did not enter into trading transactions with related parties that are not members of the Group.
Loans to/from related parties
The Group has not provided any loans to related parties or to its key management personnel, while it has received loans from related parties. Below are the details of financial amounts outstanding as at 30 June 2020.
Non-Current | |||||
Current borrowings | borrowings | Total | |||
€ 000 | € 000 | € 000 | |||
Related company | |||||
Tennor holding B.V. | - | 81,645 | 81,645 | ||
La Perla Fashion Finance B.V. | - | 51,005 | 51,005 | ||
Total as of 31 December 2019 | - | 132,650 | 132,650 | ||
Related company | |||||
La Perla Fashion Finance B.V. | - | 161,229 | 161,229 | ||
Total as of 30 June 2020 | - | 161,229 | 161,229 |
The outstanding amounts as of 30 June 2020 relate to La Perla Fashion Finance B.V. includes accrued interest of €16.4 million (2019: €10.8 million) and accrued fees of €5.7 million (2019: €4.5 million).
For further details on borrowing conditions please refer to Note 19 to the condensed consolidated interim financial statements.
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La Perla Fashion Holding NV published this content on 29 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 October 2020 19:54:07 UTC