Wolford AG: Earnings for the Past Financial Year in Line with Expectations

• Revenue down 5%

• Earnings after tax of € -17.88 million in line with the last adjusted forecast

• Prior-year earnings adjusted following routine review by the Austrian Financial Reporting Enforcement Panel

• Medium-term forecast confirmed

Wolford AG announces the most important business results for the 2016/17 financial year (May 2016 to April 2017) before publishing its complete consolidated annual financial statements. Earnings are in line with expectations. Revenue in the past financial year fell by 5% year-on-year to € 154.28 million (-4.1% adjusted for currency effects). Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to  € – 3.39 million compared to € 8.38 million (adjusted 2015/16 EBITDA). As a consequence of various one-off effects, EBIT totaled € -15.72 million (adjusted 2015/16 EBIT: € -2.92 million).

Excluding these effects (e.g. unscheduled depreciations due to impairments, restructuring expenses and one-off effects in other operating expenses), EBITDA in the 2016/17 financial year was about € 4.17 million. Depreciation and amortization totaled € 12.33 million (2015/16 adjusted: € 11.30 million). Earnings after tax equaled € – 17.88 million (2015/16 adjusted: € – 10.66 million) and thus corresponds to the forecast. Earnings per share were € – 3.64 (2015/16 adjusted: € – 2.17).

All relevant details on business results for the past financial year will be presented within the context of the publication of Wolford’s consolidated annual financial statements on August 24, 2017.

Adjusted prior-year figures
Within the context of a random sampling carried out by the Austrian Financial Reporting Enforcement Panel (AFREP), the consolidated financial statements as at April 30, 2016 as well as the half-year reports as at October 31, 2015 and October 31, 2016 of the Wolford Group were selected and subject to a review pursuant to Section 2 Para. 1 (2) Austrian Financial Reporting Enforcement Act (audit without particular cause). The conclusion was that the consolidated financial statements as at April 30, 2016 contained flawed assumptions underlying cash flow forecasts for determining the value in use of impairment tests implemented in accordance with IAS 36. In addition, the review by AFREP also uncovered misrepresentations in several detailed items (e.g. netting) in the cash flow statement for the period May 1, 2015 to April 30, 2016. Errors made in earlier periods were retroactively adjusted. These retroactive adjustments did not have any impact on information contained in the balance sheet at the beginning of the prior-year period on May 1, 2015. The effects of these retroactive adjustments on individual items are presented in the notes to the consolidated financial statements in section II. Adjustments pursuant to IAS 8.

 

Outlook confirmed
In the first three months of the current financial year (May to July 2017), Wolford succeeded in raising revenue by about 3% adjusted for currency effects. However, management only plans to generate slight revenue growth in the current 2017/18 financial year compared to the previous year. A time frame of two years has been designated for implementing the planned restructuring measures. These measures will first take full effect starting in the 2018/19 financial year. Against this backdrop, Wolford still expects negative operating earnings in the current 2017/18 financial year, as it already communicated on April 12, 2017. The company anticipates positive operating earnings again starting in the 2018/19 financial year.

 

Income statement (condensed)
in € million
2016/17 2015/16* change in %
Revenue 154.28 162.40 -5
Other operating income 0.95 2.30 ‑59
Changes in inventories of finished goods and work in process 1.58 4.40 -64
Own work capitalized 0.14 0.09 +56
Operating output 156.95 169.19 -7
Cost of materials and purchased services ‑27.63 ‑27.38 +1
Personnel expenses ‑75.22 ‑73.86 +2
Other operating income ‑57.49 ‑59.57 -3
Depreciation and amortization ‑12.33 ‑11.30 +9
EBIT -15.72 -2.92 >100
Financial result -0.86 ‑0.93 +8
Earnings before tax -16.57 -3.85 >100
Income tax -1.31 ‑6.81 -81
Earnings after tax ‑17.88 -10.66 +68

 

*adjusted

 

Results in TEUR 30.04.2017 30.04.2016*
     
Property, plant and equipment 45,553 50,240
Goodwill 188 686
Other intangible assets 10,681 11,570
Financial assets 1,283 1,305
Non-current receivables and assets 1,891 1,931
Deferred tax assets 1,891 2,898
Non-current assets 61,487 68,630
Inventories 49,392 47,836
Trade receivables 11,190 8,758
Other receivables and assets 3,261 5,111
Prepaid expenses 2,744 3,262
Cash and cash equivalents 10,312 3,870
Current assets 76,899 68,837
Total assets 138,386 137,467
     
Share capital 36,350 36,350
Capital reserves 1,817 1,817
Other reserves 7,375 26,321
Currency translation differences -660 -674
Equity 44,882 63,814
Financial liabilities 214 974
Other liabilities 924 972
Provisions for long-term employee benefits 17,546 17,896
Other non-current provisions 2,347 2,018
Deferred tax liabilities 53 60
Non-current liabilities 21,084 21,920
Financial liabilities 42,645 25,060
Trade payables 5,035 5,086
Other liabilities 13,076 13,476
Income tax liabilities 520 1,464
Other provisions 11,144 6,647
Current liabilities 72,420 51,733
Total equity and liabilities 138,386 137,467

 

*adjusted

 

Cash flow in TEUR 2016/17 2015/16*
Earnings before tax -16,574 -3,851
Depreciation and amortization 12,331 11,303
Gains/losses from disposal of property, plant and equipment 331 -1,011
Other non-cash expenses and income 375 833
Changes in inventories -1,557 -5,370
Changes in trade receivables -2,431 1,455
Changes in other receivables and assets 1,850 1,628
Changes in trade payables -52 432
Changes in other provisions and personnel obligations 4,478 37
Changes in other liabilities -446 -957
Gross cash flow -1,695 4,499
Net interest received 43 26
Net interest paid -575 -601
Net of income taxes paid and received -711 -968
Net cash flow from operating activities -2,938 2,956
Investments in property, plant and equipment and other intangible assets -6,658 -7,667
Proceeds from the disposal of property, plant and equipment and other intangible assets 153 1,472
Changes in securities and other financial assets 0 258
Cash flow from investing activities -6,505 -5,937
Proceeds from current and non-current financial liabilities 23,522 5,673
Repayment of current and non-current financial liabilities -6,697 -3,150
Dividends paid -982 -980
Changes in treasury shares 0 250
Cash flow from financing activities 15,843 1,793
Change in cash and cash equivalents 6,400 -1,188
Cash and cash equivalents at the beginning of the period 3,870 4,785
Currency-related change in cash and cash equivalents 42 273
Cash and cash equivalents at the end of the period 10,312 3,870

 

*adjusted

 

 

About Wolford AG

Wolford AG, which has its headquarters in Bregenz on Lake Constance (Austria), has 16 subsidiaries and markets its products in more than 60 countries via 267 mono-brand points of sales (company-owned and partner-operated), around 3,000 distribution partners, and online. Listed on the Vienna Stock Exchange since 1995, in the 2016/17 financial year (May 1, 2016 – April 30, 2017) the company had around 1,544 employees and generated revenues of € 154.28 million. Founded in 1950, Wolford has since grown to become the leading global brand for luxurious legwear, exclusive lingerie, and high-quality bodywear.