Annual Report - Alfaparf Group

Annual Report
2014
The profile
35 years of growth
Business sectors and brands
Business model and principles
Research and innovation
Production
Distribution
Training of professionals
Environmental sustainability, quality, safety
The Alfaparf
Group
Shareholders and governance
Corporate structure
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ALFAPARF is the n° 1 Italian multinational company in the world of
the professional cosmetics industry
working in haircare, facial care, and
bodycare; integrating research, production and distribution.
Its mission is to raise the quality of
the service offered to professional
workers (hair-stylists and beauticians) through products and services which express Italian taste and
creativity and modern international
trends.
The Group is the owner of the brands
ALFAPARF Milano, DIBI Milano, Olos,
Becos, TeN, il Salone Milano, Yellow
and Decoderm.
The Group numbers six production
plants (Italy, Brazil, Mexico, Venezuela and Argentina) and over 1,300
employees, of which 400 are based
in Italy. Products and services are distributed in approximately 100 countries through a network of 20 branches and over 100 distributors.
35 years
of growth
ALFAPARF Milano is the most widespread made in Italy brand in the
world in the professional hair-stylist
channel and Alfaparf Group is the undisputed leader in Italy in the professional beauty channel.
1980. The year the company was set
up. Headquarters: Vaprio d’Adda, in
the province of Milan. Employees: just
over ten. Roberto Franchina, founder,
begins to develop the business in
north Italy with products for the hairstylist channel.
The Group’s founder is Roberto
Franchina, the President is Attilio
Brambilla and the Chief Executive Officer is Davide Cortinovis.
1989. Launch of the Semi di Lino line.
1990. Evolution of the Color is created, permanent dye.
Products and services are the result
of research, collaboration with international level professionals, technological know-how, direct knowledge
of professional workers and their requirements.
1995. The first exports to Spain. Followed by arrival in Latin America and
the establishment of the first branches in Brazil, Mexico and Argentina.
The profile
1997-98. The first production plants
are built in Brazil and Mexico.
2000. The Italian production moves
to Osio Sotto (Bergamo).
2002. A group of companies leads to
the formation of ALFAPARF Group
multi-national Italian cosmetics company with a business volume of approximately 60 million Euros: more than
90% of which is generated abroad.
2003. The start of business in China.
2004. Launch of the TeN (skincare)
brand for the beauty channel.
2008. Work starts on expanding the
plants in Italy, Mexico and Brazil.
The start of the Private Label project : aimed at developing production through sub-contractors taking
advantage of the Group’s in-depth
know-how, above all regarding hair
dye products.
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Alfaparf Group
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Alfaparf Group
2009. ALFAPARF acquires GTS Group,
set up at the end of the 70s, which
produces and distributes professional cosmetics and equipment for
beauticians for beauty institutes.
2010. ALFAPARF integrates the operational business of GTS: production
is moved to the ALFAPARF plant. The
ALFAPARF Group becomes the n°1 Italian company in the world in the professional sector and one of the leading
groups funded entirely by Italian capital in the beauty sector.
2011. ALFAPARF makes its début in
the consumer channel in Brazil with
the brand Altamoda è… (haircare),
distributed in shops specialized in
haircare products, drug stores, perfume shops.
2012. Relaunch of business in China
with a new distribution network.
Intensification of export to Russia.
Start of business in India, Morocco,
Baltic and Balkan Countries, Azerbaijan. The new plant in Venezuela
becomes operative, the project for a
plant in Argentina starts.
2014. ALFAPARF Group revises its
organization, in view of the international dimension of its revenues.
Under the management of the president and CEO two regional entities
(Americas and Eurasia/Africa/Australasia) are created with the aim of
further accelerating global growth.
In 2014, the Italian branch (B&B), in
a stagnant market, records a growth
of 10%, winning market shares both
in the beauty channel (strengthening the leadership), and in the hairstylist channel, joining the circle of
top market players.
Business
Sectors
ALFAPARF Group has based its growth
on haircare. Solid basic skills, research
and collaboration con international
level hair stylists have allowed the ALFAPARF Milano brand to be affirmed
in Italy and abroad, and more recently
Yellow, a simpler and more affordable
brand for emerging markets has also
been affirmed.
The business in the professional beauty sector (skin & bodycare), which
started in 2004 with the launch of the
brand TeN, received a strong boost
in 2009 with the acquisition of GTS
Group, owner of brands with a consolidated market position. Today ALFAPARF is among the leading players
in the Italian professional beauty sector and has a five year plan for strong
expansion in the main foreign markets, as well.
The strategy of diversification has led
to building a range of solutions which
cover all professional requirements
in haircare, facial care and bodycare,
satisfying the needs of the different
market sectors.
Eleven brands: some are by now long
established benchmarks for haircare
and professional beauty professionals; others are the answer to new
visions of wellness and beauty. All
of them express the pursuit of excellence and contribute to creating a
portfolio of products which has few
equals.
The brands:
focus on haircare
Alfaparf Milano. It is the Group’s
main brand (50% of the turnover),
supported by a strong character of
innovation and oriented towards foreign markets. The product portfolio,
which covers all professional requirements (color, shape, care, styling), is
composed of twenty lines for a total
of over 300 references. Semi di Lino
and Evolution of the Color are the
flagship products of the brand.
Yellow. Born in Brazil to meet the
requirements of the national population (hair straightening products).
Today it is commercialized all over
the world and is aimed at a young
target with seven lines, 150 references and a competitive value for
money ratio, also suitable for consumers in emerging Countries with
lower spending power.
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Altamoda è... Launched in Brazil.
A new target audience: for the first
time an ALFAPARF Group product
line is aimed at retail. (haircare, haircolor e nails).
Il Salone Milano. A new ALFAPARF
Group professional line of haircare
products, for specialized retail or to
be offered, with an excellent value
for money ratio, to the end user in
the salons.
DIBI Milano. With a 40 year history in
professional beauty and distributed
in over thirty Countries, the brand is
by now synonymous with beauty institutes. Attention to technology applied to beauty is the distinctive quality of this offer, made possible through
collaboration with prestigious universities. The DIBI Milano beauty centres
provide a diagnostic system and top
quality lines of cosmetics with guaranteed and certified results.
Becos. Identifies a complete range
of products, equipment and services
for beauty professionals. The Becos
Club are oriented to a young target
audience.
Olos, La Bellezza è Natura. It’s the
cutting edge brand in research and
natural beauty treatments.
APG Tech. With 40 years of experience in the professional beauty
channel, ALFAPARF Group develops and markets state-of-the-art
technologies and equipment for
all the requirements of a modern
beauty centre.
Design, development and final assembly: all rigorously made in Italy
to ensure our business partners
the best certification and quality
guarantees.
The business model
and principles
ALFAPARF Group works according to
a model which integrates research,
production and distribution, guaranteeing direct control of the whole
value chain.
The operating activities are organized by business and geographical
areas according to a matrix defined
model typical of multinational
groups, which implies close functional collaboration among the operating areas (haircare, skin & bodycare, sub-contractor production) and
organization by macro-region. The
model enables the Group, amongst
other things, to effectively satisfy
the evolution of requirements in the
various markets in which the Group
operates.
Solarium. It’s synonymous with
tanning: a line of sun care products
for face, body and hair produced
with advanced photo protective
technology.
The principles:
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Assisting professionals according to
their respective characteristics.
2. Continuous research for products
and services able to improve the services provided by professionals.
3.
Ensuring the ability to satisfy the evolution of market needs at all times.
4.
Trend towards continual improvement.
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Decoderm Make Up I Care. Make
Up I Care. Make Up Care line, paraben
free and perfume free, it knows your
skin, takes care of it and brings out
the beauty of every woman.
Circulating ideas and knowledge acquired from operating all over the
world.
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Basing products and services on direct knowledge of professionals and
on the verification of their requirements.
TeN. The acronym stands for Technology and (e) Nature, but also for
“10” meaning the quality of the performance. It identifies a wide range
of products for advanced professional cosmetics.
The brands:
focus on skincare
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The production structure meets the
needs of global distribution with
five plants in Italy, Brazil, Mexico,
Venezuela and Argentina. The production surface area has almost
doubled in the last five years, reaching 100,000 square meters: 35,000
in Brazil, 35,000 in Mexico, 15,000 in
Italy, 3,500 in Venezuela, 10,000 in
Argentina.
Production
The expansion of the plants took
place, since the early years of 2000,
alongside the adoption of a management system which has enabled the
company to reach high standards of
quality. The Italian plant received
ISO 9001 certification and will soon
be operating according to the Good
Manufacturing Practice (GMP) which
sets out methods, equipment, means
and regulations for production management to ensure appropriate quality standards.
Research
and innovation
Promoting research and innovation
has always been one of ALFAPARF
Group’s core strategies, translated
into numerous products which have
made a name for themselves in Italy
and abroad. A strong impulse towards innovation derives from the
collaboration with the best beauty
professionals and from the international distribution network which
picks up on market trends and gears
research towards satisfying them.
In recent years the commitment to
research has been intensified: the
activity has been expanded into new
sectors and developed abroad, as
well; the research team has reached
more than fifty employees; it has
been enhanced by staff training.
In the haircare sector the biggest efforts have been made, as well as hair
color, in technical products like decolorants and straighteners; the latter
to reduce the volume of frizzy and
wavy hair.
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Alfaparf Group
The plants in Mexico, Brazil and Venezuela already operate according to
GMP. The compliance with quality
standards for Italy and abroad is the
responsibility of a function of the
group (Total Quality Management).
Every plant has a quality control laboratory for individual components,
semi-worked, raw materials, packaging and finished products.
In the skin & bodycare sector the
research work has been focused
on moisturizing products, anti-age,
anti-cellulite and on matching particular products to equipment for
beauty treatments given that their
effectiveness is closely connected to
the method of application.
The Group’s research activity is mainly carried out in the central Italian
laboratory integrated with a Technical Centre and a Pilot Centre where
products for haircare and beauty are
tested on volunteers.
Know-how, presence in strategic
geographical areas and operating
flexibility have made ALFAPARF an
interesting industrial partner for
multinational cosmetics companies
and those operating in great distribution. Therefore, production as a subcontractor has been added to production of the Group’s own brands.
The first agreement, signed with one
of the main global distributors of cosmetics for professional use, was followed by important agreements with
other multinationals.
The Italian plant (Osio Sotto), together with the plant in Mexico,
represents the main one in terms of
production. As well as supplying the
Europe and Asia business divisions,
production of the most sophisticated products for the worldwide
framework is concentrated there.
approximately
100,000
100
In Osio Sotto raw materials are evaluated and selected (used also in foreign production and rigorously tested), product formulas are studied,
some effectiveness tests are carried
out. Safety and clinical effectiveness
of the products are certified by independent bodies.
m2
of production surface area
more than
Other research laboratories are situated in Brazil and Mexico.
million pieces produced
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Alfaparf Group
Distribution
The solid international distribution network is one of the Group’s
strengths, supplying 300,000 customers in approximately 100 Countries.
The sales activity has been developed
according to two operating models:
branches (present in 20 countries
other than Italy) and distributors
(with an exclusive agreement with
ALFAPARF). The preference for one
model or the other varies based
on the market (characteristics of
requirements, positioning of ALFAPARF, objectives for growth).
The branches, run by the ALFAPARF
management can count on over 500
agents who liaise with more than
50,000 professionals, increasing the
wealth of knowledge and experience
which is vital for picking up on new
needs and promoting innovation.
The activity of distributors (over 100
around the world) is supported by
marketing services, training and sales
assistance.
300,000
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Alfaparf Group
Training
for professionals
As well as its capillary geographical
nature, ALFAPARF has geared the
sales network towards the quality
of the relationship with professionals. The target : to integrate the
sale of products with services which
enable hair stylists and beauty professionals to manage their business
activities in the best possible way
and provide prompt responses to
new trends and requirements coming from the market. The ability to
pass from product supply to offering
a broad range of services has, after
all, acquired strategic importance in
professional cosmetics: speed of response and quality of solutions are
crucial weapons for competing.
customers in the world
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Alfaparf Group
Starting from this vision, the Group
has built a wide ranging offer of
training on technical professional aspects and on management. Hair stylists and beauticians, based on their
own level of experience and skill,
can today find the most suitable solution for their own needs regarding
professional and entrepreneurial
growth in the courses organized by
the Group.
The management of the business
in a way coherent with the values
of environmental sustainability represents not only an ethical commitment, but also a strategic factor for
competitiveness.
Particular attention has been paid to
quality, meaning not only the product’s performance or the compatibility of the industrial processes,
but also regarding a policy of development and protection of human
resources.
Spreading and consolidating the culture of safety is an objective which
is translated in action beyond mere
compliance with norms. Much attention is systematically paid to informing and training staff and managers
as regards systems of prevention
and intervention, to providing workers with individual protection devices and training them to use these
correctly, and to constant monitoring of compliance with safety norms.
Over the years the Group has built
an effective system of organizational
procedures, analyses and data collection in order to comply with current
norms as far as health and safety in
the workplace is concerned.
Environmental
sustainability,
quality, safety
The shareholders
and governance
The businesses of the Alfaparf Group
are administered by Beauty & Business Spa and Alfa Parf Group Spa,
held by Beauty Business Holding Spa,
company with a subscribed and paid
up share capital of 71 million Euros.
The shareholders of Beauty Business
Holding Spa are:
- Roberto Franchina (60.96%), founder of the company, President of the
board of directors;
-
L a Compagnia Immobiliare S.r.l.
(23.80%);
- Attilio Brambilla (15,24%), Vice President of the board of directors.
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Alfaparf Group
The Board of directors is composed
of Roberto Franchina and Attilio
Brambilla.
The board of statutory auditors is
composed of:
-A
ndrea Casarotti, President;
-A
lessandro Ricci;
-G
iuseppe Caldesi Valeri.
The auditing company is Grant Thorton.
Corporate structure
La Compagnia
Immobiliare srl
(Italy)
Calan Cosmetics Co. Ltd
(China)
Prod.
23.80%
100%
Alfaparf American
Division Distribution
Delly
Kosmetic Ltda
Delly
Distribuidora Ltda
Industria Veprocosm
C.A.
S.A.
(Uruguay)
(Brazil)
Prod.
(Brazil)
Comm.
(Venezuela)
Prod.
99%
99.88%
98.30%
99.55%
B.I.P. Inc.
(U.S.A.)
Costa Rica Cosmeticos
CostDist SRL
Industrial Chemical
Cosmetics Holding Ltd
E.Cos S.A.
(Ecuador)
Prodob de Mexico
S.A. de C.V.
Comm.
(Costa Rica)
Comm.
(Malta)
Comm.
(Mexico)
Prod./Comm.
100%
100%
99.99%
99%
99.80%
Sabama Ltda
(Colombia)
Alfa Parf Shangai
Trading CO. Ltd
Prodicos S.A.
(Argentine)
Percosm
S.A.C.
Alfa Parf
Russia S.r.l.
Comm.
(China)
Comm.
Prod./Comm.
(Peru)
Comm.
(Russia)
Comm.
99.85%
100%
94.75%
99.4%
100%
Hel Cosm
S.P.L.C.
Maresana
Lda
Porta Nuova S.A.
(S.Domingo)
Guatemala
Cosmeticos S.A.
DIS. MAR.
Cosmetics C.A.
(Greece)
Comm.
(Portugal)
Comm.
Comm.
(Guatemala)
Comm.
(Venezuela)
Comm.
100%
100%
99.90%
80%
99.99%
Dobos
S.A. de C.V.
(Mexico)
Prod./Comm.
Pol.Cosm
Sp. Z.o.o.
(Poland)
Comm.
Alfhair Ltd
(Australia)
Comm.
Clio Cosmeticos
S.A. de C.V.
(El Salvador)
Comm.
Cosmetica
Chi.Cosm. Ltd
(Chile)
Comm.
99.99%
100%
100%
99%
99.99%
DIS. MAR.
Cosmetics C.A.
(Venezuela)
Comm.
Prodob de Mexico
S.A. de C.V.
(Mexico)
Prod./Comm.
Cosmetica
Chi.Cosm. Ltd
(Chile)
Comm.
Sampacosm Ltda
(Brazil)
Comm.
0.01%
0.20%
0.01%
99.99%
P.T. ENIMLAD
Delly
Porta Nuova S.A.
Clio Cosmetics
(Indonesia)
Comm.
Kosmetic Ltda
(Brazil)
Prod.
(S. Domingo)
Comm.
S.A. de C.V.
(El Salvador)
Comm.
99%
0.12%
0.1%
1%
Delly
Distribuidora Ltda
Industrial Chemical
Cosmetics Holding
Sabama Ltda
(Colombia)
Guatemala
Cosmetics S.A.
Prod./Comm.
(Brazil)
Comm.
(Malta)
Comm.
(Guatemala)
Comm.
100%
1.07%
0.01%
0.15%
20%
Alfa Parf Espana
(Spain)
Dobos
S.A. de C.V.
Cosmeticos E. Cos
S.A.
Alfaparf American
Division Distribution
Comm.
(Mexico)
Prod./Comm.
(Ecuador)
Comm.
S.A.
(Uruguay)
100%
0.01%
1%
1%
P.T. ENIMLAD
(Indonesia)
Comm.
Beauty Business Holding
S.p.A.
(Italy)
Holding company
1%
Alfa Parf Group S.p.A.
(Italy)
Sub-holding Operativa
100%
Roberto
Franchina
60.96%
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Percosm S.A.C.
(Peru)
Comm.
0.58%
Attilio
Brambilla
Prodicos S.A.
(Argentine)
Prod./Comm.
15.24%
5.25%
Alfaparf Group
0.45%
Beauty & Business S.p.A.
(Italy)
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Alfaparf Group
Financial
year 2014
Letter from the President
Management report
Main business drivers
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Letter from
the President
Dear Partners,
in the financial year 2014 ALFAPARF
Group returned to achieving brilliant
budgetary outcomes showing the
quality of the strategic and managerial choices made in recent years. Despite the market stagnation in some
of the most important countries
where we operate (Brazil in particular), and the continuing unfavorable
currency trends in some countries
relevant to the income statement
(Venezuela in particular), the year’s
result has been a very positive one
overall and this has strengthened the
Group’s financial position.
Three factors contributed positively
to the budgetary outcome. First of
all, the strengthening of the internationalization strategy. It is well
known that our history, which began
in 1980, although strongly rooted in
Italy, has also been a great international venture composed of exports,
branches and even production
abroad. Now we are determinedly
heading beyond our usual reference
markets (Latin America).
2014 was an important year for the
development of our presence in Asia,
having already begun operations
there several years ago. In China for
example, where, also thanks to the
reorganization of our distribution activity, revenues doubled in 2014 compared to the previous year.
Equally, over the last year, the presence of ALFAPARF Group in eastern
Europe has grown, having already
laid down an important basis there
over the last few years, for example
through the establishment of a branch
in Russia. Furthermore, distribution of
our professional beauty brands began
in our branches in Poland and Australia where, up until 2013, the focus had
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Alfaparf Group
been exclusively on the professional
market of hair salons.
2014 also saw us strengthening trade
relations with exclusive distributors
in several African countries (Tunisia, Morocco, Senegal, Mozambique,
South Africa, Nigeria), where new
lifestyles and consumption habits
combined with positive dynamics
in individual incomes have by now
created the conditions for a widespread penetration of cosmetics. We
worked towards rapid development
in the Middle-Eastern area.
All of the above without neglecting
Latin America, of course, where in
2014 the Argentinian plant being up
and running enabled us to strengthen
capacity to respond to demand and
consolidate our leading role as producers on behalf of third parties, as well.
The streamlining of the commercial
organization was the second key factor of the year. The globalization
process is taking place, selecting distributors able to guarantee strong
penetration into the professional
sector, which remains our primary distribution channel. We are convinced
that the combination of selection of
importers and quality of our products (competitive with that of the big
international brands) will enable us
to create a solid basis upon which, in
some countries, our branch and sales
network structure can be built.
In 2014 the focus on selecting and
liaising with distributors also concerned some countries where we
have traditionally been present,
with the aim of increasing our market penetration.
Orientation towards globalization
and the evolution of the commercial
organization have translated into
a growth in exported volumes, increased in all geographical areas.
of results well beyond the average
for the sector, with a growth of revenue which enabled us to gain market
shares both in professional beauty
(where our brands consolidated their
leadership), and in the hair stylist
channel, where we joined the group
of top market players. To be, as ALFAPARF Group wants to be, a player
on the global cosmetics market, our
Italian origins and deep roots in the
country may be a key factor.
The greater diversification of the origin of revenues has also induced us
to change the organization according
to a model which we consider able to
accelerate international growth. In
particular, two distinct Regional Managements have been set up (Americas and Eurasia/Africa/Australasia);
operationally independent, they report to the president and CEO.
The third factor which made a significant contribution to the good outcomes of 2014 was the general attention paid to efficiency which already
characterized the last two financial
years. During the year, in addition to
interventions on cost structures, the
rationalization of the product lines
went ahead, with a growing focus on
the lines with the highest margins.
The final point is undoubtedly reserved for the national market.
Before being a multi-national, ALFAPARF Group is an Italian company:
our country is home to the Management, research laboratories and one
of the five plants, in Osio Sotto (Bergamo), where the most sophisticated
products and those destined for European and Asian markets are made.
We have continued investing in Italy
over the years despite the difficult
conditions of the economy. In 2014
this commitment reaped the reward
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Alfaparf Group
Roberto Franchina
Chairman ALFAPARF Group
After a 2013 characterized by an unfavorable economic scenario and
by exceptional circumstances which
weighed on the Group’s accounts,
the financial statement for the year
ended 31 December 2014 recorded
an excellent improvement in income,
despite the presence of financial/
exchange situations which were not
particularly favorable.
association of cosmetic industries,
in 2014 the companies in the sector
recorded a positive change in production (+1%), for an overall revenue
of 9,370 million Euros. The revenues
were driven by the foreign component of demand: Italian exports recorded a growth of 5.5% in 2014.
The first-half report 2015
Management
report
The revenues generated by the core
business decreased, being recorded
at 209.2 million Euros, compared to
the 217.2 of the previous year.
The reason for this shrinkage is
merely of an accounting nature. In
fact, for the Venezuelan branch, the
Group decided to apply a Bolivares/
Euros exchange rate determined on
the basis of the Sicad II mechanism,
decidedly negative compared to the
one indicated by the Italian Foreign
Exchange Office as of 31 December
2014 (so-called Cadivi).
This choice led to a significant devaluation of the turnover of the Latin
American branch, estimable at about
23 million Euros.
In terms of volumes, on the other
hand, 2014 was a positive year in almost all the countries where the
Group operates. Asian and African
countries have been added to European countries, the American continent
and Australasia, in addition to which
an almost “unforeseen” growth occurred on the Italian market.
The growth in revenues was generalized across the board and regarded
all four divisions: skincare, hair, retail/
mass market and private label.
As already stressed, the effects of
this expansion on the financial statement was partially reduced by the
negative currency performance in
some Latin American countries.
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Alfaparf Group
In the first six months of 2015, Alfaparf Group has continued the positive growth trend which characterized
the same period in 2014, even managing to improve its performance.
The main figures of the financial statement, despite being conditioned by
unfavorable exchange rates, have
highlighted values which, if confirmed
in the second-half, could make the financial year 2015 one of the best in
the history of the Group.
A more detailed breakdown shows
revenues from core business originated from:
- haircare (approximately 114 million
Euros, 54.5% of the total);
- skincare (approximately 32 million
Euros, 15.3% of the total);
-
private label, sub-contractor production (approximately 35.5 million
Euros, 17% of the total);
-
retail/mass market distribution
(approximately 27.7 million Euros,
13.2% of the total).
The consolidated financial statement
(for the first-half ended 30 June
2015), of Beauty Business Holding recorded net earnings of 118.8 million,
an increase of 10.5% compared to the
107.5 of 2014. Specifically, the American continent generated a turnover
of 73.1 million Euros; Europe, Asia,
Australia and Africa generated an
overall figure of 45.7 million Euros.
Analyzing the revenue breakdown by
geographical area records an increase
in Europe (64.3 million Euros, +5.9%),
a relatively stable performance in
North and Central America, a slight
decrease in Latin America due to the
effect of the negative exchange rate
mentioned above, and a marked improvement in Asia/Australia (6.3 million Euros, +36.9%).
The efficient running of the business
together with the continuation of
the cost optimization policy (which
the Group has now been constantly
following for several years) produced
an excellent management result with
the EBITDA going from the 19.6 million Euros of 2013 to the 32.7 of 2014.
The results achieved by the Group
were above the average for the sector. According to Unipro, the national
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Alfaparf Group
In terms of business units, haircare
achieved earnings of 63.4 million
Euros, skincare reached 18.6 million, Private label 25.3 million, and
retail/mass market approximately
11.5 million.
The EBITDA increased by almost
50%, going from the 19.2 million Euros of June 2014 to the 26.8 of June
2015, confirming in an increasingly
market manner how the Group has
definitively and resolutely embarked
on the road of income performance
in addition to business performance.
The period in question was characterized by important launches in terms
of new products and new lines, both
in the hair and skin divisions.
On a commercial level work is going
ahead with the consolidation of the
areas where the Group has long been
present and rooted, while those
markets both on the Asian and African continent (in particular, North
and South Africa, Nigeria, Senegal
and Mozambique) which can give a
new boost to business growth are
being developed.
The main
business drivers
Products and innovation
In 2014 the Group completed, in all
its production and commercial units,
a catalog rationalization plan which
began at the end of 2013 and has
regarded over one thousand Stock
Keeping Units (finished product identification codes, SKU), in haircare and
skin & bodycare. Aim: to simplify and
increase the efficiency of industrial
processes, reduce stock (both of finished products and of production
components), improve the cost of
sales for the faster-moving products
and those which have the greatest impact on turnover.
The completion of the plan translated
into a reduction of SKU by 15% (in particular, lower end-of-life references
and therefore low impact on earnings
and margins), and a reduction of 10%
in overall stock compared to 2013.
Moreover, he rationalization has allowed for a reduction in industrial
costs resulting in an improvement in
the gross margin, one of the factors
which contributed to the marked improvement in the EBITDA compared
to the previous financial year.
From an innovation point of view 2014
was a year of transition for the haircare division, which focused on the
optimization of the ALFAPARF Milano
and Yellow brands, primarily on hair
coloring products. In this segment
the Group has highly competitive formulations at its disposal: ALFAPARF
Milano is the leading Italian brand at
global level in the marketing of hair
colorant destined for the professional
market. For the ALFAPARF Milano
there are two innovations to report:
the extension of the Liss Design line
(specific professional line for straight-
22
Alfaparf Group
We also note the positive performance of the private label (sub-contractor production) both for the part
managed by the Italian branch, and
for that produced by the Mexican
plant which targets North American
customers. In Asia, the tenth year of
the Chinese (Shanghai) branch coincided with a marked acceleration in
revenues (increasing by 50% compared to 2013) and the prospects of
similar expansion are there for the
next 5 years.
ening curly or wavy hair), with the new
flexible, progressive action module;
the launch for ALFAPARF Milano Semi
di Lino, of the new haircare range specifically dedicated to scalp and hair
loss problems (Semi di Lino Scalp).
For the Yellow brand, destined for
emerging countries and characterized by a more affordable cost, we can
report the relaunch of the Care line,
complementary to the Haircolor line,
which took place in the second half of
2014. Despite it being a relatively transitional year in the haircare area this
has not, of course, interrupted the research work fundamental for driving
the innovation plan foreseen for the
next three years.
Production, distribution, communication
2014 recorded the return to growth
for the Italian branch of Beauty &
Business (the main one in the Group
with 30% of total revenues), and an
increase originating from the domestic market in Italy, both in the haircare
and the skin & bodycare divisions. In
particular, skin & bodycare recorded
a growth of 15% in Italy, further
strengthening its position as leader.
The increase in sales was driven both
by products and by equipment for
beauty centres.
In the skin & bodycare division product innovation is important seasonally, too, in support of gaining additional market share. Due to a thorough
simplification of the catalogue which
led to the suppression of references
with a low contribution to earnings
and margin, the innovative intensity
remained high. Compared to the previous year, the total number of references was reduced, but average sales
for the existing SKUs grew by a significant amount.
In the haircare division, which represents more than 50% of revenues,
2014 recorded a growth in the majority of countries where the Group is
present. 90% of this turnover is generated outside the national territory.
The growth in 2014 was recorded
both where command of the market
is assured by the presence of a commercial branch, and where the Group
operates through exclusive distributors. As far as the retail division is
concerned, Brazil was the country
chosen for the launch of a Nails line
to complement the Alta Moda brand,
with which the Group is present in
retail distribution with a complete
range of haircolor, haircare and hair
straightening products.
Thanks to Epildream, the laser hair removal equipment, the skin & bodycare
equipment segment recorded great
success. In September the revolutionary Lift Creator – destined to change
the rules of cosmetic facelifts – was
launched for the Dibi brand. Becos,
with a unique image and dedicated
products project, celebrated 30 years
of success in professional beauty. It
was a year of celebration for the TeN
line, too, as it celebrated its first ten
years of life with a series of activities
for customers.
23
Alfaparf Group
For the skin & bodycare division, as
well as the excellent increase in revenues in Italy, it is worth noting the consolidation of the Russian branch (Moscow), created in 2013. Despite being
in a difficult economic scenario, the
results are encouraging: by the end
of 2015 the branch should reach the
break-even point. In the Polish branch
(Warsaw), which until 2013 was exclusively dedicated to the haircare business, a division for the development
of the professional skin & bodycare
brands has been established. The extension of the activity in Poland is part
of a strategy of progressive internationalization of the skin & bodycare
division (which still generates 85% of
revenues in Italy), in line with the DNA
of the Alfaparf Group.
Financial
Statements
Consolidated
Financial
Statement
for the year ended
31 December
2014
Balance Sheet
Assets
A) Subscribed capital unpaid
Balance Sheet
31 december 2014
31 december 2013
0
0
B) Fixed assets
Assets
31 december 2014
31 december 2013
- due within one year
64,120,858
66,677,484
- due beyond one year
2,627,722
1,497,569
II) Receivables:
1) From customers:
I) Intangible fixed assets:
1) Start-up and expansion costs
2) Research, development and advertising costs
3) Patents and know-how
4) Franchise, licenses, trademarks and similar rights
5) Work in progress and prepayments on account
76,730
102,307
449,570
697,122
88,111
7,442,439
76,733
8,058,820
3) From associates:
- due within one year
0
0
- due beyond one year
0
0
6,463,294
8,619,415
0
0
- due within one year
15,140,237
14,183,067
- due beyond one year
1,868,793
333,663
8,746,502
6,774,878
275,954
316,214
4,440,475
4,439,494
- due within one year
8) Consolidation difference
14,020,021
16,876,878
- due beyond one year
Total intangible fixed assets
26,793,300
30,567,568
4ter) Deferred tax assets:
7) Other intangible fixed assets
II) Tangible fixed assets:
1) Land and buildings
2) Plant and equipment
3) Fixtures and fittings, tools and other equipment
4) Other assets
5) Work in progress and prepayments on account
Total tangible fixed assets
8,651,778
8,960,210
14,038,617
15,243,782
934,092
923,826
1,243,436
1,515,107
172,891
824,868
25,040,814
27,467,793
4bis) Tax credits:
5) From others:
- due within one year
- due beyond one year
Total receivables
3) Other equity investments
6) Other securities
1) Equity investments in:
Total short-term investments
b) Associates
0
0
102,000
102,000
1) Bank and postal deposits
d) Others:
2) Cheques
- due beyond one year
3) Other securities
Total long-term investments
Total fixed assets (B)
0
0
1,427,343
1,640,167
0
0
1,529,343
1,742,167
53,363,457
59,777,528
3,467
3,467
0
0
3,467
3,467
14,261,415
10,410,977
IV) Cash and cash equivalents:
2) Due from:
- due within one year
1,143,924
99,230,000
III) Short-term investments:
III) Long-term investments:
a) Subsidiaries
2,292,277
101,259,683
3) Money and cash securities
Total cash and cash equivalents
TOTAL WORKING CAPITAL (C)
D) Accrued income and prepayments
0
0
181,351
76,732
14,442,766
10,487,709
144,022,419
143,542,098
2,405,632
2,034,755
199,791,508
205,354,381
C) Working Capital
TOTAL ASSETS (A+B+C+D)
I) Inventories:
1) Raw materials and consumables
2) Work in progress and semi-finished goods
3) Long-term contracts
4) Finished goods and goods for resale
5) Advances
Total inventories
26
Alfaparf Group
10,518,756
11,673,502
1,886,269
1,707,419
0
0
15,837,475
20,317,188
74,003
122,813
28,316,503
33,820,922
27
Alfaparf Group
Balance Sheet
Liabilities
Balance Sheet
31 december 2014
31 december 2013
Liabilities
31 december 2014
A) Shareholders´ equity
D) Payables:
Group shareholders’ equity:
3) Due to shareholders for financing:
I) Share capital
71,000,000
71,000,000
II) Share premium reserve
0
0
III) Revaluation reserve
0
0
2,035,097
2,035,097
IV) Legal reserve
V) Statutory reserves
VI) Reserve for own shares in portfolio
VII) Other reserves:
31 december 2013
- due within one year
0
0
- due beyond one year
0
0
- due within one year
50,008,541
44,599,365
- due beyond one year
49,586,170
57,417,828
4) Due to banks:
5) Other loans:
(30,035,407)
(12,156,226)
- due within one year
0
0
(42,988,705)
(31,283,884)
- due beyond one year
0
0
- Translation reserve
(9,381,067)
(3,206,707)
- Extraordinary reserve
15,211,997
15,211,997
248,426
406,653
7,122,368
7,122,368
0
0
0
0
5,871,002
(11,704,821)
19,019,244
20,167,352
48,870,692
49,174,050
600,000
600,000
- Undivided profits
- Other reserves
VIII) Profit (loss) carried forward
IX) Profit (loss) for the year
Total Group shareholders’ equity
6) Advances:
- due within one year
- due beyond one year
7) Due to suppliers:
- due within one year
- due beyond one year
12) Taxes payable:
X) Minority interest share of capital and reserves
XI) Minority profit (loss) for the year
Total minority interest share of shareholders’ equity
5,243
4,974
- due within one year
4,786,735
7,373,708
0
0
- due beyond one year
1,101,075
865,834
5,243
4,974
13) Due to social security:
1,404,957
1,586,942
48,875,935
49,179,024
9,429,084
9,012,805
260,000
390,000
- due within one year
Total shareholders’ equity (A)
14) Other:
- due within one year
B) Provisions for risks and charges:
1) for pension and other similar costs
- due beyond one year
678,566
495,590
2) taxes, deferred or current
7,954,068
7,479,696
3) other
2,636,203
3,028,998
11,268,837
11,004,284
Total provisions for risks and charges (B)
15) Due to other Group companies:
- due within one year
Total payables (D)
E) Accrued liabilities and deferred income
C) Employee severance indemnity
1,138,499
0
0
136,444,232
142,420,487
2,064,005
1,299,140
199,791,508
205,354,381
1,451,446
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
MEMORANDUM ACCOUNTS
2) collateral
on behalf of third parties
Total memorandum accounts
28
Alfaparf Group
29
Alfaparf Group
0
0
0
0
Income Statement
Income Statement
31 december 2014
31 december 2013
206,787,120
217,286,776
(4,095,780)
4,270,760
0
0
349,404
602,114
A) Value of production
1) Revenues from sales and services
3) Change in long-term contracts
4) Own work capitalised
0
0
- other revenues and income
3,435,000
3,611,736
Total value of production (A)
206,475,744
225,771,386
a) long-term loans:
0
0
b) long-term investments
- from others
0
0
c) short-term investments
0
0
1,302,599
2,250,033
0
0
d) Other income:
- other financial income
17) interest and other financial charges:
6) For raw materials, consumables and goods for resale
58,276,345
68,644,724
- interest expenses for bonds
7) For services
56,549,319
65,016,478
- other interest and financial charges
5,431,995
6,784,043
35,945,064
39,015,939
8,247,587
9,046,083
956,341
2,317,192
3,232,639
2,344,708
9) For personnel:
a) Wages and salaries
b) Social security charges
c) Employee severance indemnity
17bis) Foreign exchange gains (losses)
Total financial income and charges
(15+16-17+/-17bis) (C)
d) Pensions and similar benefits
e) Other costs
10) Amortisation, depreciation and write-downs:
a) Amortisation of intangible assets
5,327,788
5,469,587
b) Depreciation of tangible assets
3,732,900
3,849,660
13,274
2,032,116
2,764,414
3,055,751
458,697
129,063
1,227,623
597,386
c) Other write-downs of fixed assets
d) Write-downs of working capital:
- write-downs of receivables
11) Change in inventories of raw materials,
consumables, and goods for resale
12) Provisions for risks and charges
13) Other provisions
14) Other operating expenses
Total production costs (B)
DIFF. BETWEEN VALUE OF PRODUCTION
AND PRODUCTION COSTS (A-B)
30
Alfaparf Group
0
16) Other financial income:
- from other Group companies
B) Production costs
8) For use of third party assets
0
15) Income from equity investments in:
- other companies
5) Other revenues and income:
- contributions for operating expenses
31 december 2013
C) Financial income and charges
2) Change in inventories, work in progress
semi-finished and finished goods
31 december 2014
0
0
5,112,144
9,067,427
187,276,130
217,370,157
19,199,614
8,401,229
31
Alfaparf Group
0
0
7,040,042
7,840,390
(4,583,095)
(10,698,808)
(10,320,538)
(16,289,165)
Income Statement
31 december 2014
31 december 2013
0
0
0
0
0
520,346
0
0
D) Value adjustments to investments
18) revaluations:
a) equity investments
b) long-term
investments
19) write-downs:
a) equity investments
b) long-term
investments
c) short-term
investments
Total value adjustments to investments (18-19)
0
0
0
(520,346)
0
0
2,111,880
2,210,294
0
0
E) Extraordinary income and charges
20) Income:
- gains on disposal of assets the revenue from which
may not be stated under A5
- other extraordinary income
21) Expenses:
- losses on disposal of assets the effect
of which may not be stated under no. 14
- taxes from previous years
75,478
346,442
817,626
2,195,108
Total extraordinary items (20-21) (E)
1,218,776
(331,256)
PRE-TAX PROFIT (A-B+/-C+/-D+/-E)
10,097,852
(8,739,538)
5,900,502
8,167,487
(1,673,652)
(5,202,204)
- other extraordinary charges
22) Income taxes for the year:
- current taxes
- deferred and prepaid taxes
23) PROFIT (LOSS) FOR THE YEAR
5,871,002
(11,704,821)
- Group share
5,871,002
(11,704,821)
0
0
- minority interest share
32
Alfaparf Group
35
Alfaparf Group
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