Quarterly Report • Aug 25, 2021
Quarterly Report
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| TABLE OF CONTENT |
|
|---|---|
| Management responsibility statement | 3 |
| Key figures | 4 |
| About the first half-year | 5 |
| Abridged financial statements for the period ending June 30, 2021 | 6 |
| Statement of profit or loss | 6 |
| Statement of profit or loss and other comprehensive income for the period | 6 |
| Statement of financial position as at the end of the period | 7 |
| Statement of cash flows for the period | 8 |
| Statement of changes in equity | 9 |
| Basis for the preparation of the half-yearly consolidated financial statements | 9 |
| Note to the half-yearly consolidated financial statements | 10 |
| 1. Operating segments | 10 |
| 2. Revenue | 10 |
| 3. Capitalisation of internally generated intangible assets | 11 |
| 4. Trade goods, raw materials and consumables | 11 |
| 5. Employee expenses | 11 |
| 6. Depreciation, amortisation, write-downs and impairment | 11 |
| 7. Other operating expenses | 12 |
| 8. Financial result | 12 |
| 9. Income taxes expense (-)/income | 12 |
| 10. Other comprehensive income/loss (-) | 12 |
| 11. Property, plant and equipment | 12 |
| 12. Right-of-use assets | 12 |
| 13. Goodwill | 12 |
| 14. Intangible assets | 13 |
| 15. Deferred tax assets | 13 |
| 16. Inventories | 13 |
| 17. Trade and other receivables | 14 |
| 18. Cash and cash equivalents | 14 |
| 19. Total equity | 15 |
| 20. Current and non-current interest-bearing financial liabilities | 15 |
| 21. Current and non-current lease liabilities | 15 |
| 22. Current and non-current trade and other payables | 16 |
| 23. Subsequent events | 16 |
| 24. Seasonality of the interim business activity | 16 |
| 25. Contingent receivables and liabilities and important future assumptions | 16 |
| 26. Risk factors | 16 |
| 27. Shareholders' structure | 17 |
| 28. Related parties | 19 |
| 29. Alternative performance measures (APM's) | 19 |
| Financial calendar | 21 |
| Outlook 2021 | 21 |
| About smartphoto group | 21 |
Mr Stef De corte, Chief Executive Officer, declares, in the name of and on behalf of smartphoto group, that, to the best of his knowledge:
Non-audited figures, prepared in accordance with IFRS.
| (in $\epsilon$ ' 000) | June $2020$ | June 2021 | $\Delta$ in % |
|---|---|---|---|
| Revenue | 21 167 | 21 060 | $-0.5%$ |
| Profit/loss (-) from operating activities (EBIT) | 1 089 | $-720$ | |
| Depreciation, amortisation, write-downs and provisions from operating activities |
1 6 1 1 | 1 685 | 4.6% |
| Profit/loss (-) from operating activities, corrected for depreciation, amortisation, write-downs, and provisions (EBITDA) |
2 699 | 965 | $-64.2%$ |
| Financial result | $-234$ | $-106$ | $-54.7%$ |
| Write-offs and provisions from financial items | 120 | $-47$ | |
| Profit/loss (-) before taxes | 855 | $-826$ | |
| Profit/loss (-) before taxes, corrected for depreciation, amortisation, write-downs and provisions |
2 5 8 6 | 812 | $-68.6%$ |
| Income taxes expense (-)/income | 8 | $-75.0%$ | |
| Deferred taxes | -8 | - 2 | $-75.0%$ |
| Profit/loss (-) for the period | 863 | $-824$ | |
| Profit/loss (-) for the period, corrected for depreciation, amortisation, write-downs, provisions and deferred taxes |
2 5 8 6 | 812 | $-68.6%$ |
| Profit/loss (-) for the period attributable to equity holders of the parent | |||
| company | 863 | $-824$ |
| (in € '000) June 2020 | Dec 2020 | $\Delta$ in % June 2021 June 2021 June 2021 |
$\Delta$ in % June 2020- Dec 2020 - |
||
|---|---|---|---|---|---|
| Total assets | 52 230 | 71 095 | 57 308 | 9.7% | $-19.4%$ |
| $Gross financial debt (-)$ | $-5295$ | $-4717$ | $-4266$ | $-19.4%$ | $-9.6\%$ |
| Net financial debt (-)/Net cash | $-1$ 197 | 13 2 2 9 | 881 | $-93.3%$ | |
| Total equity | 37 359 | 45 477 | 42 209 | 13.0% | $-7.2%$ |
| Solvency ratio | 71.5% | 64.0% | 73.7% | 3.0% | 15.1% |
| Current ratio | 95.1% | 122.7% | 117.2% | 23.2% | $-4.4%$ |
Smartphoto group, the innovative e-commerce group from Wetteren, had a strong first quarter in 2021, following the exceptionally strong year of 2020. For the months of April and May 2021, the easing measures regarding the Covid-19 virus (coronavirus) led to normal sales volumes in books and prints compared to 2020. This decline was compensated by the continuous increase in the 'gifts' category, which once again registered a double-digit growth.
As a result, the revenue for the first 6 months of 2021 remained virtually stable compared to June 30, 2020, and amounts to kEUR 21,060 per June 30, 2021 compared to kEUR 21,167 per June 30, 2020 (-0.5%).
The product range of smartphoto is constantly being expanded. For example, personalisable Belgian chocolate with a photo and/or text, or a chocolate telegram consisting of letters, spaces and icons (to create a personal message), now belong to the products of smartphoto. You can also call on smartphoto for personalisable fluorescent jackets so you can cycle in a fun way safely to school with your children. In addition, many new designs, new models or new materials were added to existing products, and the number of products with fast delivery "Ordered before 4.00 p.m., delivered tomorrow!" is further expanded.
In the second half of 2021, new products will further expand smartphoto's product range.
Revenue in the first half of the year is traditionally low compared to the second half, and amounts to, rounded, only one third of the total revenue on an annual basis. These low volumes over the first 6 months of the year, combined with higher fixed costs due to the opening of the new factory and the expansion of the teams to support the growth, put pressure on profitability, as anticipated. The EBITDA decreased from kEUR 2,699 per June 30, 2020 to kEUR 965 per June 30, 2021 (-64.2%).
The first half of 2021 was also characterised by a temporary shift in the product mix as a result of the Covid-19 measures that applied in these months. In the second half of the year, when it will again be possible to travel and have family gatherings and parties, the demand for photo products and personalised gifts will increase, on top of the traditionally most important half of the year for the activities of smartphoto group.
Taking into account the above, and the known seasonality, the net result amounted to kEUR -824 per June 30, 2021, compared to a net result of kEUR 863 in the first half of 2020.
| (in $\in$ '000) | June 2020 | June 2021 | Δ | $\Delta$ in % | |
|---|---|---|---|---|---|
| Revenue | $\overline{2}$ | 21 167 | 21 060 | $-106$ | $-0.5%$ |
| Other operating income | 614 | 492 | $-121$ | $-19.8%$ | |
| Changes in inventory of finished goods and work in progress | $-16$ | $-16$ | |||
| Capitalisation of internally generated intangible assets | 3 | 245 | 241 | $-4$ | $-1.6%$ |
| Trade goods, raw materials and consumables | 4 | $-7081$ | $-7280$ | $-199$ | 2.8% |
| Employee expenses | 5 | $-5707$ | $-6,306$ | $-599$ | 10.5% |
| Depreciation, amortisation, write-downs and impairment | 6 | $-1620$ | $-1689$ | $-69$ | 4.3% |
| Other operating expenses | 7 | $-6529$ | $-7223$ | $-694$ | 10.6% |
| Profit/loss (-) from operating activities | 1 0 8 9 | $-720$ | $-1809$ | ||
| Financial income | 15 | 80 | 65 | 427.0% | |
| Financial expenses | $-249$ | $-186$ | 63 | $-25.2%$ | |
| Financial result | 8 | $-234$ | $-106$ | 127 | $-54.6%$ |
| Profit/loss (-) before taxes | 855 | $-826$ | $-1681$ | ||
| Income taxes expense (-)/ income | 9 | 8 | $-6$ | $-78.6%$ | |
| Profit/loss (-) for the period Profit/loss (-) for the period attributable to equity holders of the |
863 | $-824$ | $-1688$ | ||
| parent company | 10 | 863 | $-824$ | $-1688$ | |
| (in $\epsilon$ ) | June 2020 | June 2021 | $\Delta$ | $\Delta$ in % | |
| Profit/loss (-) for the period per share in $\epsilon$ | 0.219 | $-0.209$ | $-0.428$ | ||
| Profit/loss (-) for the period attributable to equity holders of the parent company per share in € |
0.223 | $-0.220$ | $-0.443$ |
| (in € '000) | Note | June 2020 June 2021 | ||
|---|---|---|---|---|
| Profit/loss (-) for the period | 863 | $-824$ | ||
| Items which possibly will be reclassified to profit or loss | ||||
| Translation differences | 92 | $-23$ | ||
| Total of items which possibly will be reclassified to profit or loss | 92 | $-23$ | ||
| Other comprehensive income/loss (-), net of taxes | 10 | 92 | $-23$ | |
| Total other comprehensive income/loss (-) | 955 | $-847$ | ||
| equity holders of the parent company | 955 | $-847$ |
| ASSETS | (in € '000) | Note | Dec 2020 | June 2021 |
|---|---|---|---|---|
| Non-current assets | ||||
| Property, plant and equipment | 11 | 16 552 | 15 969 | |
| Right-of-use assets | 12 | 1 3 9 5 | 1 1 8 2 | |
| Goodwill | 13 | 16 15 1 | 16 151 | |
| Intangible assets | 14 | 2 803 | 2 7 8 7 | |
| Trade and other receivables | 74 | 73 | ||
| Deferred tax assets | 15 | 11 057 | 11 048 | |
| Total non-current assets | 48 032 | 47 210 | ||
| Current assets | ||||
| Inventories | 16 | 2 4 8 1 | 2 6 1 2 | |
| Trade and other receivables | 17 | 2 6 1 3 | 2 1 6 6 | |
| Other financial assets | 3 | |||
| Cash and cash equivalents | 18 | 17 946 | 5 1 4 7 | |
| Current tax assets | 20 | 168 | ||
| Total current assets | 23 063 | 10 098 | ||
| TOTAL ASSETS | 71 095 | 57 308 |
| EQUITY AND LIABILITIES | (in € '000) | Note | Dec 2020 | June 2021 |
|---|---|---|---|---|
| Total equity | ||||
| Capital | 41 381 | 41 381 | ||
| Reserves and retained earnings/accumulated loss (-) | $-1765$ | $-4839$ | ||
| Revaluation surplus | 6 9 5 6 | 6 9 5 6 | ||
| Treasury shares (-) | $-3,360$ | $-3532$ | ||
| Currency translation adjustments | 2 2 6 5 | 2 2 4 3 | ||
| Shareholder's equity | 45 477 | 42 209 | ||
| Total equity | 19 | 45 477 | 42 209 | |
| Non-current liabilities | ||||
| Interest-bearing financial liabilities | 20 | 2 8 3 6 | 2 600 | |
| Lease liabilities | 21 | 767 | 691 | |
| Employee benefit liabilities | 1 0 1 5 | 999 | ||
| Deferred tax liabilities | 2 199 | 2 197 | ||
| Total non-current liabilities | 6 8 1 8 | 6 4 8 7 | ||
| Current liabilities | ||||
| Interest-bearing financial liabilities | 20 | 470 | 472 | |
| Lease liabilities | 21 | 643 | 503 | |
| Trade and other payables | 22 | 14 823 | 5 6 3 3 | |
| Employee benefit liabilities | 2 4 1 8 | 1872 | ||
| Tax liabilities | 447 | 132 | ||
| Total current liabilities | 18 800 | 8 6 1 3 | ||
| TOTAL EQUITY AND LIABILITIES | 71 095 | 57 308 |
| (in $\epsilon$ '000) | June 2020 | June 2021 |
|---|---|---|
| Operating activities | ||
| Net result | 863 | $-824$ |
| Depreciation, write-downs, impairment of property, plant and equipment | 634 | 735 |
| Depreciation, write-downs, impairment of right of use assets | 454 | 396 |
| Depreciation, amortisation, write-downs, impairment of goodwill and other | ||
| goodwill | 9 | 9 |
| Depreciation, amortisation, write-offs, impairment of intangible assets | 443 | 499 |
| Write-downs, impairment on current and non-current assets | 79 | 49 |
| Provisions | $-9$ | $-4$ |
| Net interest income (-)/expense | 91 | 82 |
| Loss/gain (-) on sale of property, plant and equipment | $\overline{2}$ | |
| Income tax expenses | -8 | $-2$ |
| Other | $-245$ | $-241$ |
| Operating cash flow before changes in working capital and provisions | 2 3 1 1 | 701 |
| Decrease/increase (-) in trade and other receivables and current income tax | ||
| assets | 1 743 | 167 |
| Decrease/increase (-) in inventories | $-402$ | $-110$ |
| Increase/decrease (-) in trade and other payables | $-7826$ | $-9654$ |
| Increase/decrease (-) in working capital | $-6485$ | $-9.597$ |
| Operating cash flow after changes in working capital and provisions | $-4174$ | $-8896$ |
| Interest paid $(-)$ | $-62$ | $-71$ |
| Interest paid (-) on lease liabilities | $-20$ | $-19$ |
| Income tax paid $(-)$ | $-165$ | $-310$ |
| Cash flow from operating activities | $-4420$ | $-9296$ |
| Investing activities |
| Investing activities | ||
|---|---|---|
| Proceeds from sale of property, plant and equipment | 9 | |
| Acquisition of property, plant and equipment | $-486$ | $-161$ |
| Acquisition of other intangible assets | $-301$ | $-251$ |
| Cash flow from investing activities | $-787$ | $-404$ |
| Financing activities | ||
| Acquisition of treasury shares | $-1923$ | $-172$ |
| Repayment of financial liabilities | $-634$ | $-235$ |
| Repayment of financial lease liabilities | $-453$ | $-400$ |
| Dividends paid | $-2$ 131 | $-2249$ |
| Cash flow from financing activities | $-5141$ | $-3056$ |
| Increase/decrease (-) in cash and cash equivalents | $-10.348$ | $-12,756$ |
| Effect of exchange rate fluctuations | 20 | $-44$ |
| Net increase/decrease (-) in cash and cash equivalents | $-10328$ | $-12800$ |
| Cash and cash equivalents at the beginning of the year | 14 425 | 17 946 |
| Cash and cash equivalents at the end of the period | 4 0 9 7 | 5 1 4 7 |
| Total cash and cash equivalents | 4 0 9 8 | 5147 |
| Capital | Retained earnings |
Revaluation surplus |
Treasury shares $(-)$ |
translation adjustments |
Currency Equity attributable to Equity holder of the parent |
|
|---|---|---|---|---|---|---|
| Balance as at 31.12.2019 | 41381 | $-8031$ | 5640 | $-595$ | 2062 | 40 458 |
| Profit/loss (-) for the period | 863 | 863 | ||||
| Items which possibly will be reclassified to profit or loss | ||||||
| Translation differences | 92 | 92 | ||||
| Total of items which possibly will be reclassified to profit or loss | 92 | 92 | ||||
| Other comprehensive income/loss (-), net of taxes | 92 | 92 | ||||
| Total other comprehensive income/loss (-) | 863 | 92 | 955 | |||
| Total other comprehensive income/loss (-) for the period attributable | ||||||
| to equity holders of the parent company | 863 | 92 | 955 | |||
| Dividend distributed to shareholders | $-2131$ | $-2131$ | ||||
| Transactions relating to treasury shares | $-1923$ | $-1923$ | ||||
| Balance as at 30.06.2020 | 41381 | $-9299$ | 5 6 4 0 | $-2517$ | 2 1 5 4 | 37 359 |
| Capital | Retained | Revaluation | Treasury | Currency Equity attributable | ||
| Balance as at 31.12.2020 | 41381 | $-1765$ | 6956 | $-3360$ | 2 2 6 5 | 45 477 |
| Profit/loss (-) for the period | $-824$ | $-824$ | ||||
| Items which possibly will be reclassified to profit or loss | ||||||
| Translation differences | $-23$ | $-23$ | ||||
| Total of items which possibly will be reclassified to profit or loss | $-23$ | $-23$ | ||||
| Other comprehensive income/loss (-), net of taxes | $-23$ | $-23$ | ||||
| Total other comprehensive income/loss (-) | $-824$ | $-23$ | $-847$ | |||
| Total other comprehensive income/loss (-) for the period attributable | ||||||
| to equity holders of the parent company | $-824$ | $-23$ | $-847$ | |||
| Dividend distributed to shareholders | $-2249$ | $-2249$ | ||||
| Transactions relating to treasury shares | $-172$ | $-172$ | ||||
| Balance as at 30,06,2021 | 41381 | $-4839$ | 6956 | $-3532$ | 2 2 4 3 | 42 209 |
The half-yearly consolidated financial statements as at June 30, 2021 were prepared in accordance with IAS 34 "Interim financial reporting", approved by the European Union. They do not contain all information necessary for the full financial statements and should therefore be read together with the consolidated financial statements for the financial year ended December 31, 2020, as published in the 2020 Annual report.
The half-yearly consolidated financial statements were released for publication by the Board of Directors on August 23, 2021.
The accounting policies and basis of presentation applied for the preparation of the half-yearly consolidated financial statements are identical to those applied for the financial year ended December 31, 2020, as included in the 2020 Annual report, with exception of the new standards and interpretations mentioned below, applicable on or after January 1, 2021:
Amendments to IFRS 4 Insurance Contracts - Deferral of IFRS 9: applicable for annual periods beginning on or after January 1, 2021.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform - phase 2: applicable for annual periods beginning on or after January 1, 2021.
Smartphoto group NV applied all those published new and revised standards and interpretations that are relevant to its activities and which are in force for the accounting period that started on January 1, 2021, as issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB.
The application of those new Standards, Interpretations and Changes has not resulted in any important changes to the group's principles for financial reporting.
The group has not yet proceeded with the early application of the new standards and amendments to existing standards and interpretations that had already been endorsed by the EU on the date of the financial statements' approval, but which were not compulsorily applicable for the period beginning on January 1, 2021:
Amendments to IAS 16: Property, Plant and Equipment: Proceeds before Intended Use: applicable for annual periods beginning on or after January 1, 2022.
Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts - Cost of Fulfilling a Contract: applicable for annual periods beginning on or after January 1, 2022.
Amendments to IFRS 3: Business Combinations: Reference to the Conceptual Framework: applicable for annual periods beginning on or after January 1, 2022.
Annual improvements to IFRS Standards (2018 - 2020 cycle): applicable for annual periods beginning on or after January 1, 2022.
The group did not carry out an early application of the new standards and changes to existing standards and interpretations that were not yet endorsed by the European Union:
IFRS 17: Insurance contracts: applicable for annual periods beginning on or after January 1, 2023.
Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current: applicable for annual periods beginning on or after January 1, 2023.
Amendments to IAS 1: Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies: applicable for annual periods beginning on or after January 1, 2023.
Amendments to IAS 8: Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates: applicable for annual periods beginning on or after January 1, 2023.
Amendments to IAS 12: Income Taxes: Deferred tax related to assets and liabilities arising from a single transaction: applicable for annual periods beginning on or after January 1, 2023.
Amendments to IFRS 16: Leases: Covid-19-Related Rent Concessions beyond June 30, 2021: applicable for annual periods beginning on or after April 1, 2021.
The consolidation scope remained unchanged in the first half of 2021.
Taking into account the requirements of IFRS 8, the group's activities are reported under one operating segment.
For information about products and services regarding revenue from sales to external customers and information about geographic areas, we refer to the 2020 Annual report.
IFRS 8.34 regarding information about major customers is not applicable.
Revenue in the first 6 months of 2021 remained more or less stable compared to June 30, 2020 and amounts to kEUR 21,060 per June 30, 2021 compared to kEUR 21,167 per June 30, 2020.
The capitalisation of internally generated intangible assets in the first half of 2021 amounts to kEUR 241 compared to kEUR 245 in the first half of 2020.
For the first 6 months of 2021, those internally generated intangible assets mainly relate to the expenses of our internal developers to program the editing module within the HTML5 standard to create a module that is as complete as possible for an audience that is as broad as possible, to achieve migration from the website to the cloud, to implement the changes of the website platform and to elaborate the process within the UX-project.
These expenditures meet the recognition criteria for capitalisation pursuant to IAS 38.57.
The costs of trade goods, raw materials and consumables in the first half of 2021 increased by 2.8% compared to the first half of 2020. This slight increase together with a more or less stable turnover, is mainly due to higher transport costs.
The employee expenses in the first 6 months of 2021 are 10.5% higher compared to the first 6 months of 2020. The total number of employees - expressed in full-time equivalents - evolved from 220 as at June 30, 2020 to 248 as at June 30, 2021.
The depreciation, amortisation, write-downs and impairment from operating activities amounted to kEUR 1,689 in the first half of 2021 compared to kEUR 1,620 in 2020. The increase of kEUR 69 is the result of higher investments, mainly in intangible assets, in recent years.
The other operating expenses amount to kEUR 7,223 as at June 30, 2021 compared to kEUR 6,529 as at June 30, 2020 (+10.5%). This increase of kEUR 694 is mainly attributable to higher costs related to marketing expenses.
The financial result improved by kEUR 127 from kEUR -234 as at June 30, 2020 to kEUR -106 as at June 30, 2021. This increase of the financial result is mainly due to the positive impact of the exchange rate gains/losses of kEUR 133, the decrease of the financial expenses from interest-bearing financial liabilities and lease liabilities of kEUR 8, and the negative impact of the other financial expenses of kEUR 14.
The following exchange rates were used in preparing the 2021 half-year results:
| Exchange rates | Closing rate | Average rate | ||
|---|---|---|---|---|
| June 2020 | June 2021 | June 2020 | June 2021 | |
| Swiss franc | 1.06510 | 1.09800 | 1.06370 | 1.09690 |
| Swedish krona | 10.49480 | 10.11100 | 10.67620 | 10.14735 |
The amount of the income taxes expense (-)/income evolved from kEUR 8 for the first 6 months of 2020 to kEUR 2 as at June 30, 2021.
The tax result of kEUR 8 as at June 30, 2020 consists of a reversal of deferred taxes. The tax result of kEUR 2 for the first 6 months of 2021 also concerns a reversal of deferred taxes.
There were no changes in the applicable tax rates compared to the prior reporting period.
As at June 30, 2021, the net loss amounted to kEUR 824, compared to a net profit of kEUR 863 in the first half of 2020.
This decrease in the result of the period of kEUR 1,688 can be explained by:
In the first half of 2021, the comprehensive income/loss (-) after taxes amounted to kEUR -23 compared to kEUR 92 in the first half of 2020.
This comprehensive income/loss (-) relates to the effect of the exchange rate differences arising from the euro conversion of shareholders' equity against the exchange rate at the closing date of the period.
The carrying amount of property, plant and equipment is kEUR 15,969 as at June 30, 2021, and is decreased by kEUR 584 compared to December 31, 2020. This decrease is mainly due to, on the one hand, investments in property, plant and equipment of kEUR 161. These mainly relate to investments in production machines. On the other hand, the depreciation in the first half of 2021 amounted to kEUR 735.
The carrying amount of the right-of-use assets is kEUR 1,182 as at June 30, 2021. Which is a decrease of kEUR 212 compared to the carrying amount of kEUR 1,395 as at December 31, 2020, as a result of, on the one hand, the investments of kEUR 53 and, on the other hand, the depreciation for an amount of kEUR 396 over the first half of 2021. Furthermore, there was an increase in the carrying amount of the right-of-use assets following a renewal of a lease of office space for kEUR 134 and a negative impact from exchange rate fluctuations of kEUR 3.
In accordance with IAS 36.12, the company performed an 'impairment test' as at June 30, 2021 concerning the identified cash-generated unit to examine whether it had suffered any impairment loss. This 'impairment test' demonstrated that the recoverable amount for the unit is higher than the carrying amount.
Consequently, no impairment losses should be recognised.
The recoverable amount is calculated based on the value in use, which is the sum of the discounted free cash flows. The calculations use projections of the future free cash flows for the five coming financial years, combined with a continuing annual growth (terminal growth) of 2%.
As at June 30, 2021, the projections are discounted at 6.88% before tax for the next 5 years. As at December 31, 2020, the discount rate amounted to 6.46%. This discount rate reflects: the normal market remuneration for equity and debt, the current balance between equity and debt for this cash-generating unit and the estimation of additional risks and volatility for the possible evolutions in the market on which this unit operates.
The 'impairment test' was also subject to a sensitivity analysis with a 10% decrease of the annual EBIT or a 1% increase of the discount rate. In both analyses the recoverable amount remains higher than the carrying amount.
More information about the determination of the projections and growth percentages, can be found in the 2020 Annual Report on pages 119 and 120.
The carrying amount of the intangible assets amounts to kEUR 2,787 as at June 30, 2021 and decreased by kEUR 16 compared to December 31, 2020. This decrease is mainly due to investments in intangible assets (kEUR 493) and the depreciation (kEUR -509) over the first 6 months of 2021.
The investments mainly relate to investments in our mobile applications such as the User Experience (UX) project, the further conversion of the editing module of our website to the HTML5 standard, the further migration of the website to the cloud and automations with regard to the implementation of new designs on the website platform. An amount of kEUR 241 of these investments was generated internally. These internally generated intangible assets mainly relate to the expenses of our internal developers to program the
editing module within the HTML5 standard to create a module that is as complete as possible for an audience that is as broad as possible, to achieve migration from the website to the cloud, to implement the changes of the website platform and to elaborate the process within the UX-project. These expenditures meet the recognition criteria for capitalisation pursuant to IAS 38.57.
More information regarding the internally generated intangible assets can be found in the 2020 Annual Report in Note 5 - Capitalisation of internally generated intangible assets and Note 17 - Intangible assets.
The deferred tax assets remained stable in the first half of 2021, and amount to kEUR 11,048 as at June 30, 2021 compared to kEUR 11,057 as at December 2020.
The heading 'Inventories' is slightly increased by kEUR 131 compared to December 31, 2020 and amounts to kEUR 2,612. The inventory levels were temporarily increased in the recent months to ensure security of supply during the corona crisis. As the situation is gradually stabilising, the inventory decreased again with kEUR 233 compared to the first 6 months of last year.
No inventories were provided as security for liabilities.
The non-current trade and other receivables remained stable during the first half of 2021 and amount to kEUR 73. The current part of trade and other receivables decreased by kEUR 447. This decrease of kEUR 2,613 as at December 31, 2020 to kEUR 2,166 as at June 30, 2021 is mainly due to the seasonal character of the activities. Operating income is peaking in the last weeks of the year, in particular the period around Christmas, resulting in a higher amount of unmatured outstanding trade receivables at year-end.
Cash and cash equivalents amount to kEUR 5,147 as at June 30, 2021, which is a decrease of kEUR 12,799 compared to December 31, 2020. Compared to June 30, 2020, the cash and cash equivalents are increased by kEUR 1,049.
Similarly, the Net financial debt (-)/Net cash and cash equivalents showed a positive evolution on an annual basis, from a net financial debt of kEUR -1,197 to a cash surplus of kEUR 881. This positive evolution is the result of, on the one hand, the dividend payment over 2020 (kEUR -2,249), the purchase of treasury shares for the period of July 1, 2020 to June 30, 2021 (kEUR -1,015) and the investments in property, plant and equipment and intangible assets (kEUR -2,104), of which mainly investments in the third quarter of 2020 to make the additional production building operational and, on the other hand, the decrease of the financial liabilities and lease liabilities, and the realised substantial free cash flow from smartphoto's regular activities on an annual basis.
Compared to December 31, 2020 (cash surplus of kEUR 13,229), the net cash and cash equivalents over the first 6 months of 2021 decreased with kEUR 12,348. This decrease over the first 6 months of the year is entirely due to the seasonal effect with sales traditionally peaking in the last quarter of the year.
As of 2019, due to the application of IFRS 16 (*) , the lease liabilities are included in the non-current and current liabilities which has a negative impact on the Net financial debt (-)/Net cash and cash equivalents.
Please also see the Statement of cash flows on page 8 of this report.
(*) As of 2019, IFRS 16 is applicable and lease liabilities are included in the non-current and current liabilities.
Please also see the Statement of changes in equity on page 9 of this report.
Total equity decreased compared to the end of 2020 with kEUR 3,269 from kEUR 45,477 as at December 31, 2020 to kEUR 42,209 as at June 30, 2021.
Please also see Note 27 of this report.
(4) The adjustments to the translation differences are the result of the euro conversion of shareholders' equity against the exchange rate at June 30, 2021. The impact on the other comprehensive income amounts to kEUR -23.
The interest-bearing financial liabilities amount to kEUR 3,072 as at June 30, 2021 compared to kEUR 3,306 as at December 31, 2020.
In the first half of 2021, an amount of kEUR 234 is repaid in respect of the loans as part of the acquisition of Aultmore NV following the purchase of the additional production building.
The interest-bearing financial liabilities will be reimbursed further as mentioned on page 130 of the 2020 Annual Report.
No new interest-bearing financial liabilities were entered into in the first half of 2021.
The lease liabilities amount to kEUR 1,194 as at June 30, 2021 compared to kEUR 1,410 as at December 31, 2020. This net decrease of kEUR 216 is the result, on the one hand, of the repayment of current lease liabilities during the first half of the year, and, on the other hand, the entry into new lease agreements, mainly related to vehicles and a renewal of a lease of office space.
More information regarding lease liabilities can be found in the 2020 Annual Report under Note 27 - Current and non-current lease liabilities.
The decrease in the current and non-current trade and other payables of kEUR 9,189 from kEUR 14,823 as at December 31, 2020 to 5,633 as at June 30, 2021, is mainly attributable to the seasonal character of the activities. As revenue is peaking in the last weeks of the year, in particular the period around Christmas, the purchases of raw materials and consumables are also mainly situated in the last quarter. This results in a higher amount of outstanding trade payables which have not expired.
After June 30, 2021 no significant events occurred that could have an impact on the underlying half-yearly financial statements or that have to be disclosed.
Despite the impact on profitability for the months of April and May 2021, for which the easing measures regarding the Covid-19 virus led to normal sales volumes in books and prints compared to the exceptionally strong sales in the same period of 2020, no negative impact is expected for 2020 on an annual basis.
The activities of the smartphoto group are subject to seasonality. Traditionally, revenue in the first half of the year is low compared to the second half. Revenue realised during the first half of the year amounts to, rounded, only one third of the total revenue on an annual basis.
As a result, the interim figures as at June 30, 2021 are not necessarily indicative of the expectations for the entire financial year 2021.
Compared to December 2020, no changes in contingent receivables and liabilities occurred.
Future assumptions
The assumptions regarding the future, as described in the 2020 Annual Report, are still applicable.
The risks, in particular the credit risk, liquidity risk, exchange rate risk, interest risk and market risk as described in the 2020 Annual Report, are applicable for the remaining period of 2021.
Regarding the risks related to the Covid-19 virus, smartphoto group has taken necessary measures to prevent contamination within the company, to protect the employees and to limit the negative consequences.
The impact of the measures regarding the Covid-19 virus has been re-evaluated. Smartphoto does not expect a negative impact on the outlook for 2021, and confirms growth in both revenue and EBITDA on an annual basis.
The law and smartphoto group NV's Articles of Association require each shareholder, whose voting rights, associated with the securities that grant voting rights, exceed or fall below the thresholds of 3%, 5% or any multiple of 5%, to notify this fact to the Company and the FSMA, the Belgian Financial Services and Markets Authority.
The company issued the following notification in the first half of 2021:
Smartphoto group NV has informed the Financial Services and Markets Authority (FSMA) that the percentage of voting securities or voting rights acquired, has exceeded the legal and statutory threshold of 5% on June 24, 2021, due to the additional acquisition of treasury shares. The total number of treasury shares held, amounts to 197,759 or 5.02%.
Notification by a person that notifies alone.
| Holders of voting rights | Previous notification Number of voting rights |
After the transaction Number of voting rights |
% voting rights |
|---|---|---|---|
| smartphoto group NV | 197,759 | 5.02% | |
| c/o Kwatrechtsteenweg 160, B-9230 Wetteren | |||
| TOTAL | 197,759 | 5.02% |
Total number of voting rights (the denominator) at the time of the acquisition of the voting rights, i.e. on June 24, 2021: 3,941,950.
Chain of controlled undertakings through which the holding is effectively held: smartphoto group NV is not a controlled undertaking.
The Company did not receive notifications in the first half of 2021.
The total number of treasury shares evolved from 193,133 shares as at December 2020 to 198,989 shares as at June 30,2021. This increase with 5,856 treasury shares is the result of the purchase of treasury shares related to the execution of the share purchase programme of treasury shares with start date September 17, 2020, for which a discretionary mandate is granted to KBC Securities, which is authorised to purchase shares of smartphoto group on Euronext Brussels, as well as outside the regulated market, in open periods. Block trades are also possible within this mandate.
The current mandate runs until May 31, 2023 or until an amount of EUR 3 million is reached. To achieve this, an amount of kEUR 2,011 in treasury shares can still be purchased.
Per June 30, 2021, smartphoto group NV holds 198,989 treasury shares, or 5.05% of the total amount of issued shares (3,941,950).
In accordance with IFRS, treasury shares are included as a deduction from shareholders' equity.
Except for transactions between consolidated companies, which are eliminated through the consolidation, and the fees paid to managers with a key position (described in the 2020 Remuneration Report, included in the 2020 Annual Report) the transactions and outstanding balances of other related parties are negligible.
The measures listed below are used systematically in our financial reporting, but are not defined in any law or the generally accepted accounting principles (GAAP). These measures are considered Alternative Performance Measures (APMs), as described by the European Securities and Markets Authority (ESMA) in its guidelines on the use and the explanation of the alternative performance measures.
These APMs are used in addition to the figures prepared in accordance with the International Financial Reporting Standards (IFRS). They provide additional insights in the financial results of the group and offer useful information for investors. The presentation of interrelationships based on comparative figures about the current period and the previous period also provides information about the financial evolution.
Total revenue included in the statement of profit or loss for the period.
EBIT ('Earnings Before Interest and Taxes') is an indicator for the operational result and defined as the profit/loss (-) from operating activities. This performance measure does not take into account the effect of the capital structure, nor the various aspects of corporate taxes.
EBITDA ('Earnings before Interest, Taxes, Depreciation and Amortisation') is an indicator for the operational result and defined as the profit/loss (-) from operating activities adjusted for depreciation, amortisation, write-downs, impairment losses and provisions. This performance measure does not take into account the effect of the capital structure, nor the various aspects of corporate taxes; and, additionally, disregards the non-cash items, being depreciation, amortisation, write-downs, impairment losses and provisions.
EBIT and EBITDA are measures frequently used by stock analysts and investors or other stakeholders to compare companies within the same sector, to determine a company's creditworthiness or to obtain an impression of the company's ability to generate cash.
The part of profit (or reserves) which is distributed to the shareholders.
The balance sheet total equals 'Total assets' or 'Total equity and liabilities'.
Gross financial debt is defined as 'Total current and non-current interest-bearing financial liabilities' increased by 'Total current and non-current lease liabilities'.
| (in $\in$ '000) | June 2020 | June 2021 | $\Delta$ in % |
|---|---|---|---|
| Non-current interest-bearing financial liabilities | $-3072$ | $-2600$ | $-15.4\%$ |
| Non-current lease liabilities | $-984$ | $-691$ | $-29.8%$ |
| Current interest-bearing financial liabilities | $-469$ | $-472$ | 0.5% |
| Current lease liabilities | $-769$ | $-503$ | -34.5% |
| Gross financial debt (-) | $-5295$ | $-4266$ | $-19.4%$ |
Net financial debt (-) is the total of the 'Current and non-current interest-bearing financial liabilities' and the 'Current and non-current lease liabilities' less 'Cash and cash equivalents'. When 'Cash and cash equivalents' exceeds the aforementioned liabilities, this measure is referred to as 'Net cash and cash equivalents' or 'Cash surplus'.
| (in $\in$ '000) | June 2020 | June 2021 | $\Delta$ in % |
|---|---|---|---|
| Cash and cash equivalents | 4 0 9 8 | 5 1 4 7 | 25.6% |
| Non-current interest-bearing financial liabilities | $-3072$ | $-2600$ | $-15.4%$ |
| Non-current lease liabilities | $-984$ | $-691$ | $-29.8%$ |
| Current interest-bearing financial liabilities | $-469$ | $-472$ | 0.5% |
| Current lease liabilities | $-769$ | $-503$ | $-34.5%$ |
| Net Cash and cash equivalents | $-1$ 197 | 881 |
The current ratio is the ratio of the 'Current assets' to the 'Current liabilities'.
This ratio provides insight into the ability of a company to meet its current liabilities and also indicates whether the company has enough own resources to finance its investments.
| (in € '000) | June 2020 | June 2021 | $\Delta$ in % |
|---|---|---|---|
| Current assets | 8 6 9 5 1 | 10 098 | 16.1% |
| Current liabilities | 9 1 3 9 | 8 6 1 3 1 | $-5.8\%$ |
| Current ratio | 95.1% | 117.2% | $23.2\%$ |
The solvency ratio is the ratio of the 'Total equity' to the 'Balance sheet total'.
This ratio provides insight into the ability of a company to meet its non-current liabilities and also indicates its level of dependence on creditors.
| (in $\in$ '000) | June 2020 | 3une 2021 June | $\Delta$ in % |
|---|---|---|---|
| Total equity | 37 359 | 42 209 | $13.0\%$ |
| Total assets | 52 230 | 57 308 | $9.7\%$ |
| Solvency ratio | 71.5% | 73.7% | $3.0\%$ |
March 3, 2022 (2) before trading hours Annual results 2021 August 24, 2022
May 11, 2022 at 2 p.m. Annual General Meeting of Shareholders (2) after trading hours Half-yearly results and half-yearly financial report for 2022
Despite the lower profitability in the first 6 months of 2021, the management and the Board of Directors expect that there will be year-on-year growth in both turnover and EBITDA for 2021.
Not only is the second half of the year traditionally the most important for the activities of smartphoto group, but the return to opportunities such as travelling and having family gatherings and parties, will also lead to an increase in demand for photo products and personalised gifts.
The further expansion of the range of personalised products and gifts, supported by more efficient marketing, will contribute to the expected growth in revenue and profitability. In 2021, superfast delivery for a number of products, 'Ordered before 4 p.m., delivered tomorrow', will also be further expanded.
Smartphoto group, the innovative e-commerce group, operates in 12 European countries and primarily targets consumers. The shares of smartphoto group are traded on Euronext Brussels (ISIN BE0974323553, ticker symbol SMAR).
Smartphoto group is active in B2C e-commerce with affordable, high-quality personalized products such as photo books, personalized gifts, cards, calendars, wall decoration and prints.
Stef De corte, CEO* smartphoto group NV Kwatrechtsteenweg 160 B - 9230 Wetteren Tel. +32.9.365.99.10 E-mail: [email protected] - Internet: www.smartphotogroup.com
*Permanent representative of Acortis BV
(1) This press release contains forward-looking information based on current internal estimates and expectations. The forward-looking statements involve inherent risks and speak only as of the date they are communicated. It cannot be excluded that actual results differ materially from the forward-looking expectations contained in this release.
(2) Indicative dates
This half-yearly financial report is a free English translation of the official Dutch version.
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