SMCP S A : Consolidated financial statements extract 2023

2023

Consolidated financial statements extract

At December, 31 2023

March 8th, 2024

Financial statements

1. Consolidated financial statements extract

1.1 Consolidated financial statements

1.1.1 CONSOLIDATED INCOME STATEMENT

(In millions of euros)	Notes	12/31/2022	12/31/2023
Revenue	5.1	1,205.8	1,230.5
Cost of sales	5.2	(436.6)	(455.3)
Gross Margin		769.2	775.2
Other operating income and expenses	5.3	(242.8)	(259.1)
Personnel costs	5.4	(259.8)	(279.7)
Depreciation, amortisation and impairment		(156.1)	(156.9)
Free share plans (LTIP)	5.5	(5.6)	(3.0)
Current operating income		104.9	76.5
Other income and expenses	5.6	(12.4)	(25.9)
Operating profit		92.5	50.5
Financial income and expenses		(1.2)	(0.8)
Cost of net debt		(22.6)	(27.1)
Financial income (expense)	5.7	(23.8)	(27.9)
Profit/(loss) before tax		68.7	22.6
Income tax expense	5.8	(17.4)	(11.4)
Net profit for the period		51.3	11.2
Net profit for the period - Group share		51.3	11.2
Basic earnings per share - Group share (in €)	5.9	0.68	0.15
Diluted earnings per share - Group share (in €)	5.9	0.65	0.14

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Financial statements

1.1.2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In millions of euros)	12/31/2022	12/31/2023
Net profit for the period	51.3	11.2
Actuarial losses on defined benefit plans, net of tax	1.1	(0.2)
Items that may not be reclassified to profit or loss	1.1	(0.2)
Gains/(losses) on derivative financial instruments (cash flow hedges), net of tax	2.4	(1.2)
Gains/(losses) on exchange differences on translation of foreign operations	2.3	(2.0)
Items that may be reclassified to profit or loss	4.7	(3.2)
Other comprehensive income/(loss), net of tax	5.8	(3.4)
TOTAL COMPREHENSIVE INCOME/(LOSS)	57.1	7.8

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Financial statements

1.1.3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS
(In millions of euros)	Notes	12/31/2022	12/31/2023
Goodwill	6.10	626.3	626.7
Trademarks		663.0	663.0
Other intangible assets	6.3.2	11.4	12.0
Property, plant and equipment	6.11	82.5	83.1
Rights of use	6.11	454.1	445.4
Non-current financial assets	6.12	18.7	18.5
Deferred tax assets	6.13	35.7	32.0
Non-current assets	5.8.2	1,891.7	1,880.7
Inventories		291.6	281.8
Trade and related receivables	6.14	62.9	68.2
Other current assets	6.3.2	61.4	69.2
Cash and cash equivalents	6.11	73.3	50.9
Current assets	6.12	489.2	470.1
TOTAL ASSETS	6.15	2,380.9	2,350.8
EQUITY AND LIABILITIES
(In millions of euros)	Notes	12/31/2022	12/31/2023
Share capital		83.9	83.9
Share premium		949.6	949.5
Reserves and retained earnings		146.3	151.7
Treasury shares		(7.7)	(5.0)
Equity - Group share	6.10	1,172.1	1,180.1
Total equity		1,172.1	1,180.1
Long-term lease liabilities	6.3.2	302.9	305.7
Long-term financial borrowings	6.11	261.9	223.5
Other non-current liabilities	6.11	0.1	0.1
Non-current provisions	6.12	0.7	0.7
Net employee defined benefit liabilities	6.13	4.2	4.9
Deferred tax liabilities	5.8.2	169.2	166.9
Non-current liabilities		739.0	701.8
Trade and other payables	6.14	171.8	161.9
Short-term lease liabilities	6.3.2	100.0	106.6
Bank overdrafts and short-term borrowings and debt	6.11	104.2	113.6
Short-term provisions	6.12	1.6	1.3
Other current liabilities	6.15	92.2	85.5
Current liabilities		469.8	468.9
TOTAL EQUITY AND LIABILITIES		2,380.9	2,350.8

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Financial statements

1.1.4 CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions of euros)	Notes	12/31/2022	12/31/2023
Profit/(loss) before tax	6.1.1.1	68.7	22.6
Depreciation, amortisation and impairment		156.1	156.9
Other non-recurring income and expenses with no cash impact		12.4	25.9
Financial income (expense)		23.8	27.9
Free share plan (LTIP)		5.6	3.0
Sub-total*	4.2 / 4.3	266.6	236.4
(Increase)/decrease in trade and other receivables
and prepayments		(5.5)	(2.6)
(Increase)/decrease in net inventories after provisions		(58.0)	9.7
Increase/(decrease) in trade and other payables		18.1	(10.8)
Change in working capital requirement		(45.4)	(3.7)
Reimbursed/(paid) income tax		(12.2)	(16.9)
Net cash flow from operating activities		209.0	215.8
Purchases of property, plant and equipment and intangible assets	6.1.2 / 6.2	(45.5)	(54.2)
Sales of property, plant, equipment and intangible assets		0.0	(0.8)
Purchases of financial instruments		(2.7)	(3.5)
Proceeds from sales of financial instruments		3.6	2.9
Acquisitions of subsidiaries net of acquired cash	3	0.0	(6.1)
Net cash flow used in investing activities		(44.6)	(61.7)
Treasury shares buyback programme		(7.4)	(2.4)
Issuance of financial borrowings	6.11	0.0	32.6
Reimbursement of financial borrowings	6.11	(85.0)	(76.2)
Lease payment reimbursement	6.3	(120.9)	(128.2)
Other financial income and expenses		0.5	(0.8)
Interest paid	5.7	(9.9)	(16.3)
Net cash flow from financing activities		(222.7)	(191.3)
Net foreign exchange difference		0.2	(0.5)
CHANGE IN NET CASH AND CASH EQUIVALENTS		(58.1)	(37.7)
Cash and cash equivalents at the beginning of the period		131.3	73.3
Bank credit balances at the beginning of the period		(1.9)	(2.0)
NET CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	6.9	129.4	71.3
Cash and cash equivalents at the end of the period		73.3	50.9
Bank credit balances at the end of the period		(2.0)	(17.2)
NET CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	6.9	71.3	33.7

• Current operating income before depreciation, amortisation, impairment and before the free share plan (LTIP).

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Financial statements

1.1.5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

					Treasury
(In millions of euros)	Notes	Number of OS	Share capital	Share premium	shares
BALANCE AT JANUARY 1, 2022		74,798,149	83.3	950.1	(5.4)
Net profit at December 31, 2022		-
Cumulative actuarial losses on defined benefit plans, net of tax		-
Gains/(losses) on exchange differences on translation of foreign
operations		-
Gains/(losses) on derivative financial instruments
(cash flow hedges), net of tax		-
Other comprehensive income/(loss)		-
Total comprehensive income/(loss)		-
Appropriation of N-1 income		-
Dividend paid		-
Capital increase/(decrease)		-	0.0
Conversion of free shares		-	0.0
Conversion of class G preferred shares		737,189	0.6	(0.6)
Free Share Plan (LTIP)		-			5.2
Purchase of treasury shares	5.5	-			(7.5)
Total transactions with shareholders		737,189	0.6	(0.6)	(2.3)
BALANCE AT DECEMBER 31, 2022	6.10.1	75,535,338	83.9	949.6	(7.7)
Net profit at December 31, 2023
Cumulative actuarial losses on defined benefit plans, net of tax
Gains/(losses) on exchange differences on translation of foreign
operations
Gains/(losses) on derivative financial instruments
(cash flow hedges), net of tax
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Appropriation of N-1 income
Dividend paid
Capital increase/(decrease)
Conversion of free shares
Conversion of class G preferred shares		753,192	0,0	(0,0)
Free Share Plan (LTIP)					5.1
Purchase of treasury shares					(2.4)
Total transactions with shareholders		753,192			2.7
BALANCE AT DECEMBER 31, 2023		76,288,530	83.9	949.5	(5.0)

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Financial statements

Reserves and	Revaluation of			Net profit
defined benefit	Translation	Future cash flow	for the period - Group	Total	Total
retained earnings	liabilities	adjustment	hedges	Share	Group share	equity
67.4	0.5	(1.2)	(1.4)	23.9	1,117.2	1,117.2
				51.3	51.3	51.3
	1.1				1.1	1.1
		2.3			2.3	2.3
0.0	0.0	0.0	2.4	0.0	2.4	2.4
	1.1	2.3	2.4	0.0	5.8	5.8
	1.1	2.3	2.4	51.3	57.1	57.1
23.9				(23.9)	0.0	0.0
					0.0	0.0
					0.0	0.0
					0.0	0.0
					0.0	0.0
0.1					5.3	5.3
					(7.5)	(7.5)
24.0				(23.9)	(2.2)	(2.2)
91.3	1.6	1.1	1.0	51.3	1,172.1	1,172.1
				11.2	11.2	11.2
	(0.3)				(0.3)	(0.3)
		(2.0)			(2.0)	(2.0)
			(1.2)		(1.2)	(1.2)
	(0.3)	(2.0)	(1.2)		(3.4)	(3.4)
	(0.3)	(2.0)	(1.2)	11.2	7.8	7.8
51.3				(51.3)

(2.4)					2.7	2.7
					(2.4)	(2.4)
48.9	-	-	-	(51.3)	0.3	0.3
140.2	1.3	(0.9)	(0.2)	11.2	1,180.1	1,180.1

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Financial statements

Note 1General information

The financial statements were approved by the Board of Directors on February 28, 2024 and will be approved by the General Meeting of June 6, 2024.

1.1 PRESENTATION OF THE GROUP

SMCP SA was incorporated in France on April 19, 2016 as a joint stock company (Société Anonyme par Actions).

The consolidated Group (the "Group") includes the parent company, SMCP SA, and its subsidiaries. The Company's registered office is located at 49, rue Étienne Marcel, 75001 Paris, France. It has been listed on Euronext Paris since October 2017.

The Group's main business activities include the creation and sale of apparel and accessories on the accessible luxury segment under the Sandro, Maje, Claudie Pierlot and Fursac brands mostly through stores, corners in department stores or its own websites, in France and internationally.

At December 31, 2023, the Group operated 1,730 stores (including 775 Sandro, 640 Maje, 233 Claudie Pierlot and 82 Fursac), of which 1,373 were directly operated (including 591 Sandro, 490 Maje, 210 Claudie Pierlot and 82 Fursac), and 357 were partnered. These brands are present internationally in 47 countries.

1.2 SIGNIFICANT EVENTS

1.2.1 International, macro-economic and geopolitical context

Due to the deterioration of the macro economic context, impacting traffic and consumer purchasing power, SMCP revised its annual financial guidance in September 2023; In January 2024 the guidance was then slightly revised downwards following a deteriorated consumer environement in December.

1.2.2 Shareholding structure

On March 1, 2023, a press release was issued on behalf of bondholders and GLAS (London Branch), announcing the launch of a process to sell the pledged stake of approximately 37% of the share capital held by European TopSoho S.à r.l and GLAS (London Branch). This press release indicated that at this initial stage of the sale process, the timetable for such a sale, its conclusion or not, the identity of any buyer(s) and whether all or part of the pledged shares could be sold to one or more buyers were uncertain and it was therefore not yet possible to assess whether or not the transaction would trigger a subsequent mandatory takeover bid.

1.2.4 Share buyback programme

The Group completed its share buyback announced in October 2023, involving 680,000 SMCP shares purchased over the period from October 9 to November 7, 2023. These share buybacks are intended to cover the free share plan (LTIP).

1.2.5 Evolution of financial liabilities

Compared to December 31, 2022, the Group obtained an extension of its financial liabilities. The amortisable term borrowings and revolving credit facility set up in May 2019 with an initial maturity scheduled for May 2024 were extended until May 2026. In addition, the State-guaranteed loan issued in 2021, with a maturity in 2024, was extended until 2027.

During the 2023 financial year, the Group also repaid, as planned, the third tranche of €55 million of the €265 million amortisable term borrowings as well as the second tranche of €14 million of the State Guaranteed Loan of €140 million (see detail in Note 6.9), and the first tranche of €5.3 million of the State Guaranteed Loan of €53 million.

1.3 BASIC PRINCIPLES AND DECLARATION OF COMPLIANCE

The Group's consolidated financial statements as of December 31, 2023 cover the 2023 calendar year.

All amounts are expressed in millions of euros unless stated otherwise.

The Group's consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS, see Note 2.2) as adopted by the European Union and mandatory as of December 31, 2023, and no standard or interpretation has been subject to early application.

These standards and interpretations are available on the European Union website (see Note 2.2 for details of new texts applied and texts applicable at a later date).

The consolidated financial statements were prepared on a historical cost basis, except for financial assets and liabilities that have been measured at fair value in accordance with IFRS.

1.2.3 Acquisition of Australia/New Zealand network

As part of its Retail distribution policy, on January 1, 2023 SMCP brought in house the point of sale network previously operated by a local partner in Australia and New Zealand. These two countries represent around 40 physical and e-commerce points of sale, distributing the products from the Sandro, Maje and Claudie Pierlot brands. Through this acquisition, SMCP strengthens its position in Asia Pacific, in a profitable and developing market.

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Financial statements

Note 2Accounting rules and policies

2.1 BASIC PRINCIPLES AND STATEMENT OF COMPLIANCE

Pursuant to European Regulation No. 1606/2002 of July 19, 2002, the consolidated financial statements of the SMCP Group for the 2023 financial year have been prepared in compliance with the International Financial Reporting Standards as published and approved by the European Union as of December 31, 2023, the application of which is mandatory as of that date.

These International Standards include the IFRS (International Financial Reporting Standards), the IAS (International Accounting Standards) and the interpretations of the IFRS IC (International Financial Reporting Standards Interpretations Committee).

All these texts adopted by the European Union are available on the European Union legislation website at: http://eur-lex.europa.eu/ homepage.html.

2.2 CHANGES IN ACCOUNTING STANDARDS APPLICABLE TO SMCP

The application of the standards, amendments and interpretations that came into force on January 1, 2023 did not have a material impact on the Group's financial statements, including IFRS 17 on insurance contracts.

2.2.1 Amendment to IFRS 16 on rent adjustments

The IASB extended the amendment issued in May 2020 to IFRS 16 relating to the recognition of rent adjustments granted by landlords in connection with the Covid-19 pandemic until June 30, 2022. This amendment simplifies the analysis to be performed by tenants and allows, under certain conditions, the effect of these adjustments to be recognised immediately in the income statement in the form of negative variable rents (see Note 6.3).

2.2.2 Pillar 2

On October 8, 2021, the OECD/G20 Inclusive Framework approved a two-pillar solution to reform the international tax system and respond to the tax challenges arising from the digitalisation of the economy. The first pillar ("Pillar One") aims to introduce new rules to reallocate certain amounts of taxable income to market jurisdictions, while the second pillar ("Pillar Two") aims to introduce a minimum effective tax rate of 15%.

Although the Group does not fall within the scope of Pillar One, it meets the threshold criteria for the application of Pillar Two. The SMCP Group monitors the implementation of these rules in the national legislation of the jurisdictions in which the Group operates. Based on the texts available to date and the work carried out by the Group as at December 31, 2023, the estimated impact should be limited.

2.2.3 New standards and amendments

The Group has not early adopted any of the new standards and amendments listed below that could affect it and whose application is not mandatory on January 1, 2023.

• Amendment to IAS 1 - Presentation of financial statements: Classification of liabilities as current or non-current;
• Amendment to IFRS 16 - Lease liabilities in the event of a lease disposal;
• Amendment to IAS 7 and IFRS 7 - Supplier financing arrangements;
• Amendment to IAS 21 - Absence of convertibility

A study of the impacts and practical consequences of applying these standards and amendments is currently underway. These standards and amendments do not contain any provisions that conflict with the Group's current accounting practices.

2.3 LEGISLATIVE CHANGES

On April 14, 2023, France's pension reform law was enacted. The measures resulting from this reform have been taken into account in determining the Group's commitment at December 31, 2023. The impact of this analysis is not material for the Group.

2.4 ACCOUNTING POLICIES

In each of the notes to this document, the accounting policies applied by the Group are presented in a highlighted text box.

2.5 JUDGEMENTS AND ESTIMATES

The preparation of financial statements requires Management to make judgements and estimates which are based upon certain assumptions and have an impact on the amounts of assets, liabilities, income and expenses reported in those financial statements.

The main estimates and assumptions relate to:

• measurement of intangible assets and goodwill (Note 6.4);
• measurement of deferred tax assets (Note 5.8);
• determination of provisions (Note 6.12) and uncertain tax positions;
• the estimate of lease renewal assumptions and the corresponding valuation of right-of-use assets, as well as their potential residual values, in particular the value of leasehold rights in the French environment (Note 6.3);
• impairment of inventories (Note 6.6);
• IFRS 15 provisions for returns (Note 5.1).

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Management reviews these estimates if there are changes in the circumstances on which they were based, if new information comes to light, or based on experience. As a result, the estimates used at December 31, 2023 could be subject to significant changes in the future.

The assumptions on which the main estimates and judgements are based are detailed in the notes to these financial statements.

2.6 CONSIDERATION OF CLIMATE RISKS

At present, the SMCP group's exposure to the consequences of climate change remains limited, and its impact on the financial statements is considered insignificant.

The Group has been measuring greenhouse gas emissions related to its activity for several years, and is committed to a strategy to reduce its carbon footprint. In this respect, the Group has committed to reducing its direct emissions by 42.5% (mainly on-site energy consumption) in absolute terms between 2021 and 2030, and its indirect emissions related to production and product transportation by 25%. These targets were validated in December 2023 by the Science-Based Targets (SBTi) initiative, a leading international organisation which independently assesses whether companies' carbon trajectories are in line with the targets set by the Paris Climate Agreement.

The strategy will be implemented based on an action plan, which covers:

• Using materials with a lower environmental impact (recycled, organic etc..);
• Improving supplier energy performance;
• Reducing the use of air transport;
• Inventory management based on demand planning;
• Using renewable energy in stores and reducing store energy consumption.

With regard to the impact on business plans, based on which impairment tests of intangible assets with an indefinite useful life are carried out, the execution of this strategy is reflected:

• by certain investments (CAPEX, including for store renovation investments);
• by expenses recorded in the income statement (operating expenses, including freight or raw material costs);
• as well as by taking into account certain assumptions for the construction of business plans (for example, the ratio between the cost of goods of the products paid by SMCP and the selling price to the end customer).

These elements are taken into account in the financial construction of the business plans, particularly in the short term, based on knowledge of current assumptions and the most likely changes in the short term.

In the longer term, the effects of climate change cannot be quantified at this stage.

Financial statements

2.7 CONSOLIDATION PRINCIPLES

The Group applies IFRS 10 "Consolidated Financial Statements" and IFRS 12 "Disclosure of Interests in Other Entities".

IFRS 10, which deals with the recognition of consolidated financial statements, presents a single consolidation model that identifies control as the criterion to be met in order to consolidate an entity. An investor controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are all entities controlled by the Group.

Subsidiaries are consolidated as from the date on which they are controlled by the Group, and are deconsolidated as from the date on which they cease to be controlled by the Group.

Intragroup balances and transactions are eliminated.

Consolidated entities have a December 31 accounting year-end and use the accounting rules and policies defined by the Group.

All the subsidiaries owned by the Group are included in the scope of consolidation (Note 8.4).

2.8 TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS

2.8.1 Transactions and balances

Foreign currency financial statements of entities consolidated by the Group are translated into euros at the exchange rate applicable as of December 31, 2023. The exchange rate is calculated against the euro, which is the presentation currency of the Group's financial statements.

The financial statements of entities that are prepared in a different functional currency are translated into euros:

• at the period-end exchange rates for assets and liabilities;
• at the exchange rate in force at the transaction date for income and expense items, or at the average exchange rates for the period if that rate approximates the exchange rates in force at the date of the transaction.

Any resulting translation differences thereby stem from the difference between the translation rate used at the end of the previous year or during the year, and the rate used at the end of the following year. They are recognised in consolidated equity in "Other comprehensive income/(loss)".

The expenses, income and flows of each of the two financial years were converted at the average rate.

Assets and liabilities were converted at the closing rate in force on 12/31/2023.

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