Przedsiebiorstwo Handlu Zgrnzng Blton : Sharp increase in the PHZ Baltona Capital Group financial results in 2

Baltona Group, which is the leading operator of duty-free stores located at the regional airports in Europe, and a part of the Flemingo International Group, has shown a significant improvement in its financial results for the year 2015.

Sharp increase in the PHZ Baltona Capital Group financial results in 2015

Baltona Group, which is the leading operator of duty-free stores located at the regional airports in Europe, and a part of the Flemingo International Group, has shown a significant improvement in its financial results for the year 2015.
• sales revenues in all sectors - travel retail, food & beverage, as well as B2B increased by double digits
• consolidated sales revenues increased by 21% from PLN 363.2 million in 2014 to PLN 438.2 million in 2015
• EBITDA amounted to PLN 16.1 million in 2015 as compared to PLN 9.4 million in 2014, which gives 71% increase y/y
• EBITDA result adjusted for one-off events amounted in 2015 to PLN 17.2 million as compared to PLN 10.1 million in 2014
• in 2015 net profit attributable to dominant shareholders amounted to PLN 2.7 million as compared to PLN -3.9 million loss in 2014
• in 2015 operating cash flow increased to PLN 8.2 million as compared to PLN 4.1 million in 2014
Throughout 2015 Baltona Group recorded regular increase in sales revenues observed in all sectors of its activity - travel retail, food & beverage, as well as B2B. Last year sales revenues produced in open-access and duty-free stores increased to PLN 264.7 million as compared to PLN 232.0 million in 2014, whereas sales revenues generated in food courts amounted to PLN 45.1 million as compared to PLN 34.2 million in 2014. The above results represent 14% increase y/y in case of open-access and duty-free stores, and 32% increase y/y in case of food courts.
Despite the fact, that the company ceased its activity at the Cracow airport and reorganised its business at the airport in Katowice Pyrzowice, Baltona Group recorded significant increase in sales revenues in travel retail. This double digit improvement is attributable to the business development at the remaining airports in Poland. Significant increase generated in the open-access and duty-free stores located abroad must be also borne in mind. One such example is Liege - the largest cargo airport in Belgium - where the sales level recorded by Baltona Group in 2015 was a few times greater as compared to 2014.
Satisfactory results were also observed in high margin food & beverage sector, which undergoes permanent development. In 2015 sales level produced in food courts at the airports and railway station in Cracow increased by 32% y/y.
Significant revenues increase was also observed in the B2B sector, which covers supply of goods to the ships and diplomatic posts. These activities are mainly conducted by Shipchandlers and Chacalli De Decker, which are Baltona's subsidiaries. Last year sales level increased by 33% y/y, from PLN 98.5 million in 2014 to PLN 131.0 million in 2015. It must be noted, that the majority of revenues increase in this sector was observed in the first half of the year, as starting from Q3 of 2015 the Company launched the sector reorganization and continued to cease the least profitable sales.
As a result consolidated sales revenues increased by 21% y/y, from PLN 363.2 million in 2014 to PLN 438.2 million in 2015.
Intensified activities, improved margin and better costs distribution contributed to sharp increase of EBITDA result, which increased by 71% y/y from PLN 9.4 million in 2014 to PLN 16.1 million in 2015. EBITDA result adjusted for one-off events amounted in 2015 to PLN 17.2 million as compared to adjusted EBITDA of PLN 10.1 million in 2014.
Net profit attributable to the parent company's shareholders amounted in 2015 to PLN 2.7 million as compared to PLN 3.9 million loss in 2014. Improved net financial condition of the company was a result of costs optimisation and increased sales revenues in the main sectors of the company's activity i.e. open-access and duty-free stores, as well as food courts.
Good financial results contributed to satisfactory operating cash flow amounting to PLN 8.2 million, which is two times higher y/y.
At the end of 2015 net debt/adjusted EBITDA ratio amounted to 1.9x, which must be regarded as a safe level considerably lower than at the end of 2014, when it amounted to 3.1x.
Piotr Kazimierski comment - CEO Baltona S.A.
Very good results observed in 2015 prove, that development strategy carried out in a consistent way brings expected effects. Now Baltona Group has a real chance to record regular increase and improve goodwill. Optimised operative activities and constant development of the main sectors resulted in exceptionally satisfactory EBITDA. In 2015 it amounted to PLN 16.1 million as compared to PLN 9.4 million in 2014. During the last few quarters we have observed regular sales increase in all sectors of activities. That has been obviously the result of our intensified business activities at the airports located both in Poland and abroad, along with considerable increase in the number of passengers. In 2015 over 30 million of passengers travelled at the Polish airports, which represents more than 10% increase y/y. We are very pleased with the dynamic development of the Polish airports, like the one in Gdańsk (almost 15% increase in the number of passengers y/y), Katowice (almost 15% increase in the number of passengers y/y) or Modlin (almost 50% increase in the number of passengers y/y). These are the places, where Baltona is the leading lessee of commercial space. Although our activity at the Cracow airport has been ceased and we have reorganised our business at the airport in Katowice Pyrzowice, sales level generated at the remaining airports proves to stay very satisfactory. This is also correlated with a dynamic increase in the spending per passenger amount, which is a very important index in evaluation of our business activity. We take constant efforts to tailor our offer to the customers' needs and are pleased to see, that these efforts bring expected effects.
The beginning of this year was very good, so we are optimistic over the future. In February 2016 we concluded another concession agreement on running trading and culinary activity in Non Schengen area at the Katowice Pyrzowice airport, where we expect to start our business as the sole operator in the middle of this year. In the Q2 of 2016 we should also know the winning bid in the call for tenders on the service to be provided at the Gdańsk airport, where for the last several years we have been running our business with the hope for future cooperation. As the passenger traffic is dynamically growing and the airports undergo constant development, we will scrutinize the market. We keep on extending our business activities in new locations and intensifying our commitment at the airports, where Baltona stores already exist.
We are also in the process of developing our new food concept - Cavarious café. We hope that a number of new coffee bars will be opened this year at a few other airports, and maybe even railway stations. Looking at the railway station in Cracow we are sure, that our know-how in terms of providing service in travel areas is very effective not only at the airports or seaports. It must be noted, that gross margin in the food sales is greater than in case of retail. For this reason further development of food services will affect performance of Baltona Group in a very positive way, as we will take advantage of the economies of scale -says Piotr Kazimierski, president of the board in PHZ Baltona S.A.

Additional information can be obtained from:
Joanna Sokołowska, CC Group Sp. z o.o.
Tel. [phone]
e-mail: [e-mail]
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PHZ Baltona S.A. Capital Group sales goods in duty-free stores located mainly at the airports and border crossings. Stores managed by the Group are located in Poland (majority), Romania, France, Italy, Ukraine, Belgium, Germany and Netherlands. Moreover, the Group supplies diplomatic posts, as well as ship crews and vessels mooring in the Polish seaports (shipchandler). In 2012 the Group extended the scope of its activities with the gastronomic services (sale of food and beverages in food courts and coffee bars located at the airports and railway stations or in their neighbourhood) and the sale of goods in B2B sector. In 2010 PHZ Baltona S.A. attracted its strategic investor - Flemingo International Limited with its registered office in Dubai, which is an international operator of duty-free stores with over 140 stores in 32 countries. PHZ Baltona S.A. is a publicly held company. Its shares are listed on the Warsaw Stock Exchange.

March 25, 2016