European Lingerie Group AB publishes unaudited 12 Months and Fourth Quarter 2020 Report (January 1 – December 31, 2020), including condensed interim consolidated financial statements.
ELG is pleased to publish its 12 months and fourth quarter 2020 report.
“Despite a very challenging year behind us when our business was hit by COVID-19 impact we are pleased to announce that the overall business decreased by 17.8% showing a relatively good resistance towards negative external factors. The business diversification into various markets, our various segments as well as distribution channels proved the business model durability in long term”, commented Indrek Rahumaa, CEO of the Group.
“We are pleased that the textile segment of the Group continued to recover well during the fourth quarter of 2020, which is a result of diversification of our target markets, good performance of CIS markets where lockdown measures were not as strict and an increase in share of classical lingerie collections in the total lingerie demand, which is the main sales segment for the Group’s textile materials. Furthermore, the management was successful to contract additional revenue from textile mask production as well as imported mask trading offsetting the negative impact of sales. We have also initiated in some areas of business and completed to certain extent the restructuring that will allow the Group to increase its profitability once demand for the products revives to pre COVID-19 levels,” added Mr. Rahumaa.
The Group’s sales amounted to EUR 63,724 thousand in 12 months 2020 (Q4 2020: EUR 15,060 thousand), representing a 17.8% decrease as compared to sales of 12 months 2019 (18.6% decrease to Q4 2019). In 12 months 2020, the decrease in sales was mainly a result of COVID-19 outbreak followed by partial deferral of orders by customers as well as significant reduction of orders during the lock-down periods. In addition to that, due to introduction of a smaller Felina swimwear collection in 2020, revenue of swimwear was also lower in 12 months 2020 than in the same period last year. In the reporting quarter, the textiles segment experienced a smaller drop in revenue than the lingerie segment. The drop in the revenue of the lingerie ready garment segment in the reporting quarter is mainly explained by the reinstated lock-downs in majority of the European countries which subsequent closure of stores. In the markets, where the lock-down was softer and the stores were still open, customer turnover in physical stores was still weak as tourism was still limited throughout the whole period and people in general were reluctant to visit public places in order to escape from the risk of being infected. The better performance of the textile segment is explained by softer lockdown measures in the main sales markets for this segment, CIS countries, and as a result faster recovery than in the Western Europe.
Normalised EBITDA in 12 months 2020 amounted to EUR 4,115 thousand (Q4 2020: EUR 1,121 thousand) and decreased by 53.4% compared to 12 months 2019 (7.4% decrease to Q4 2019). Normalised EBITDA margin in 12 months 2020 and 12 months 2019 was 6.5% and 11.4% respectively (Q4 2020 and Q4 2019: 7.4% and 6.5% respectively).
Profitability margins in 12 months 2020 were below previous year which is explained by COVID-19 outbreak and shortfall in revenue which made it difficult to cover part of the fixed costs. The drop in profitability though was partly outweighed by the additional business from protective masks, state subsidies received for the down-time payments to employees and working capital needs, as well as strict cost control during the lock-down periods. Q4 2020 profitability from traditional textile and lingerie product operations was satisfactory for the current level of revenue and that was achieved to the large extent with the help of state supports, strict control of costs and reduced cost base in the production locations of the Group, which was realised earlier this year.
Normalised net profit in 12 months 2020 amounted to a loss of EUR 3,253 thousand (Q4 2020: loss of EUR 492 thousand), compared to normalised net profit of EUR 873 thousand in 12 months 2019 (Q4 2019: a loss of EUR 212 thousand). Decrease in net profit is as well explained by the reasons described above.
As already announced earlier, in July 2020 the Group reached an agreement on a standstill with the Bondholder Committee regarding ELG’s defaults under the Terms and Conditions as well as a cooperation between the ELG and the Bondholder Committee to explore and execute a potential restructuring of the Group and the Bonds. The initial long stop date for the standstill was 30 November 2020, which was later extended to accommodate the investment process deadlines with a requirement to sign binding investment agreement by 28 February 2021 and full closing of transaction by the end of March 2021 at the latest. As of the date of publishing this report, the process for potential investment into the Group as well as bond restructuring is progressing well, however, the investment documentation is still being finalized in cooperation with the Bondholder Committee. Therefore, the Group expects the Standstill Period to be further prolonged to accommodate the time frame required to complete the investment process.
Furthermore, because of the ongoing restructuring process, the Group did not repay its Bonds on 22 February 2021, which is the original maturity date stipulated in the Terms and Conditions. The non-repayment of the bonds on the original maturity date constitutes an Event of Default and any potential de-listing of the Bonds from Nasdaq Stockholm could result in an Event of Default under the Terms and Conditions. The Company restored the listing of the Bonds on Nasdaq Stockholm on 23 February 2021 and intends to uphold it to correspond with the period to close the transaction under the Standstill Letter. The Bondholder Committee has undertaken, during the standstill period, not to instruct the Agent to accelerate the Bonds due to any such Event of Defaults. The maturity date of the Bonds has been extended in the system kept by the central depository and registrar, Euroclear Sweden AB, to 31 March 2021 to correspond with the anticipated period to close the transaction under the Standstill Letter. In case further extension of the closing of the transaction will be provided the maturity date will accordingly be amended. The group will continue to provide further information on the investment process through its public announcements.
European Lingerie Group AB 12 months and Fourth quarter Report of 2020 is available for viewing and download here.
This information is information that European Lingerie Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 15:45 CET on 28 February 2021.
For more information, please contact:
Head of Strategy, M&A and IR
European Lingerie Group AB