DGAP-News: Ludwig Beck am Rathauseck-Textilhaus Feldmeier AG
/ Key word(s): 9 Month figures/9 Month figures
CONSOLIDATED QUARTERLY REPORT
Economic framework conditions and retail trade development
Even in the absence of robust data, economic researchers agree that the decline of the German economy of spring and summer has continued well into autumn. Due to its export dependency, the German economy had to put up with the flagging world economy. According to the Federal Office for Statistics, the gross domestic product (GDP) went down by 0.1% in the second quarter of 2019 compared to the previous quarter thus unhinging the rather positive expectations from the beginning of the year. The Kiel-based Institute for World Economics (IfW) refers to a "downward pull", but sees the current development as a transition phase after a prolonged economic boom. Even though the general business climate has recovered slightly in September according to the surveys of the ifo Institute, the sentiment in the trade sector has deteriorated once again. The consumer mood also showed a mixed picture recently as the analyses of the Association for Consumption research (GfK) indicate.
With effect as of April 30, 2019, the Group sold its shares in the WORMLAND business segment ("discontinued business operations"). The following report basically deals with the continued business operations. Regarding WORMLAND, the interim report of June 30, 2019 is hereby referred to.
LUDWIG BECK has been applying the IFRS 16 "Leases" standard since January 1, 2019 for the first time. LUDWIG BECK opted for the application of a modified retrospective approach during the transition period. Accordingly, no adjustments to comparative information had to be performed. In the context of the initial application of IFRS 16, usage rights and leasing liabilities were carried at equal amounts. LUDWIG BECK generally concludes leasing contracts in the form of operating leases. The application of IFRS 16 influences the nature of expenses for operating leases, as the amortization of usage rights and the non-linear interest costs of liabilities take the place of previous expenses.
The effects of the IFRS 16 application on the key figures of the group as well as the balance sheet structure relating to continued operations of LUDWIG BECK are presented in the following chart:
Development of sales
Personnel expenses came to EUR 13.2m (previous year: EUR 13.0m). As a result of the already mentioned application of IFRS 16, amortization significantly increased in the first nine months on account of recognized usage rights, and went up from EUR 2.0m to EUR 4.6m. On the other hand, other operational expenses dropped considerably from EUR 10.5m to EUR 9.0m which was due to the respective accounting treatment leading to lapsed rental expenses in the amount of EUR 3.0m. As counteracting factors, the non-recurring consultation fee in connection with the sale of the WORMLAND shares had an effect of EUR 0.5m, while other restructuring cost accounted for EUR 1.0m.
Accordingly, earnings before interest and taxes (EBIT) (EBIT) amounted to EUR 1.1m (previous year: EUR 2.3m).
With EUR -1.8m, the financial result clearly dropped below last year's level of EUR -0.5m. The accounting treatment of rental rights, stated at net value, led to interest costs of EUR -1.1m.
Earnings before taxes (EBT) came to EUR -0.6m (previous year: EUR 1.7m). This was basically due to the aforementioned non-recurring expenditure of EUR 1.5m and the EUR -0.4m effect of the IFRS 16 application.
Earnings after taxes from continued business operations amounted to EUR -0.2m (previous year: EUR 1.4m).
Balance sheet structure
As in the past, the real estate at Marienplatz in Munich has been a major item of tangible fixed assets alongside usage rights of EUR 65.6m to be recognized. The real estate is carried at more than EUR 70m. All in all, long-term assets amounted to EUR 162.0m (previous year: EUR 100.7m).
Short-term assets went down from EUR 25.8m (December 31, 2018) to EUR 22.5m.
Balance sheet structure
As per the reporting date September 30, 2019, the equity base of the LUDWIG BECK Group stood at EUR 58.4m (December 31, 2018: EUR 75.8m). On account of the clearly extended balance due to the application of IFRS 16, this corresponds to an equity ratio of 31.6% (December 31, 2018: 59.9%).
Liabilities went up from EUR 50.7m (December 31, 2018) to EUR 126.2m in aggregate. This rise was basically due to the recognition of lease liabilities in the amount of EUR 66.0m according to IFRS 16. The derecognition of the liabilities of the WORMLAND subgroup of EUR 7.7m had a counteracting effect. The additional vendor contribution of EUR 11.5m as well as seasonal effects of EUR 5.7m also made a difference.
The cash flow from current business activities came to EUR 1.7m after the first nine months of the year 2019 (previous year: EUR -9.5m). The cash flow from investment activities amounted to
The Association for Consumption Research (GfK) identified a recent improvement of the consumer climate, with the propensity to save on a downward trend.
The ifo Institute, however, sees a renewed yielding of the business climate in the trade sector as retailers seem to expect a further deterioration towards the end of the year. According to the Fashionunited portal, the textile retail sector is still experiencing the dynamics of E-commerce offers. According to estimates, 28.5% of fashion deals in Western Europe will be processed online by 2023. This corresponds to a growth rate of 87%. Stationary fashion retailers will have to face this challenge which will lead to a total rearrangement of the section also in the future. This is where prime locations like the site of LUDWIG BECK's Store of the Senses gain more and more importance in an environment of fierce competition.
"It is our goal to permanently establish LUDWIG BECK in the premier division of European fashion stores. By restructuring our Group, we have created the prerequisites for a profitable, sustained and self-confident course of action in a market under pressure. In this eventful year, we are now looking forward to the coming Christmas business - one of our traditional revenue guarantors", the Executive Boards stated.
The Executive Board holds to its adjusted forecast in the Quarterly Report I/19 and, in line with the reporting requirements of IFRS 5 and the related adjustment of the consolidated statement of comprehensive income, expects consolidated sales relating to continued business operations to range between EUR 94m and EUR 98m and earnings before taxes on income (EBT) to reach EUR 4m to 5m. The result from discontinued operations will amount to EUR -17m.
24.10.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|Company:||Ludwig Beck am Rathauseck-Textilhaus Feldmeier AG|
|Phone:||+49 (0)89 2 36 91-0|
|Fax:||+49 (0)89 2 36 91-600|
|Listed:||Regulated Market in Frankfurt (Prime Standard), Munich; Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Stuttgart, Tradegate Exchange|
|EQS News ID:||892859|
|End of News||DGAP News Service|