Annual Report - Alfaparf Group · 2017-03-21 · cial development, as end consumer purchases through beauty profes-sionals account for a significant por-tion of turnover. In 2015,

Annual Report

2015

Profile

A journey of growth since 1980

Business areas and brands

The business model and principles

Research and innovation

Production

Distribution

Professional training

Environmental sustainability, quality, safety

Shareholders and governance

Corporate structure

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The Alfaparf group

ALFAPARF is a multinational com-pany operating in the professional beauty industry, the first in the world to be 100% Italian owned. It operates in the hair, face and body care sectors, integrating research, production and distribution.

Its mission is to elevate the quality of the service offered by hairstyl-ists and beauty centres by provid-ing products and services that ex-press Italian taste and creativity as well as international trends.

The Group owns the brands AL-FAPARF Milano, DIBI Milano, Olos, Becos, TeN, il Salone Milano, Yel-low, Alta Moda è… and Decoderm.

Its products and services are based on Italian research, collaboration with professionals at international level, technological know-how and direct knowledge of beauty pro-fessionals and their requirements.

The Group has five production facilities (in Italy, Brazil, Mexico, Venezuela and Argentina) and more than 1,300 employees, in-cluding roughly 400 in Italy. Its products and services are distrib-uted in roughly one hundred coun-tries through a network of twenty branches and more than one hun-dred distributors.

ALFAPARF Milano is the most wide-spread Made in Italy brand in the world in the professional hairstyl-ists channel. The ALFAPARF Group is the absolute leader in Italy in the professional aesthetics channel.

Roberto Franchina is the Group’s founder and Chairman, and Attilio Brambilla is the Vice Chairman.

Alfaparf Group Alfaparf Group2 3

1980. The year the group was found-ed. Registered office: Vaprio d’Adda, in the province of Milan. Employees: not many more than a dozen. Roberto Franchina, the founder, began to de-velop business in northern Italy with products for the hairstylists channel.

1989. Launch of the Semi di Lino line.

1990. Launch of the Evolution of the Color, the permanent colour.

1995. First exports to Spain. This was followed by the arrival in Latin Ameri-ca and the opening of the first branch-es in Brazil, Mexico and Argentina.

1997-98. The first production facili-ties built in Brazil and Mexico.

2000. Italian production activities transferred to Osio Sotto (Bergamo).

2002. From a set of companies, the ALFAPARF Group was born, an Italian beauty multinational with turnover of roughly € 60 million: more than 90% of which is generated abroad.

2003. Business launched in China.

2004. Launch of the TeN (skincare) brand for the aesthetics channel.

2008. Expansion works began on the facilities in Italy, Mexico and Brazil. Launch of the Private Label project, to develop production on behalf of third parties by exploiting the Group’s in-depth know-how, especially in the area of hair colour products.

2009. ALFAPARF acquired the GTS Group, founded in the late 1970s, which produces and distributes professional beauty products and beauty care equip-ment for beauty centres.

2010. ALFAPARF incorporated the operations of GTS and the businesses were combined at the Osio Sotto loca-tion. In the global professional beauty industry, the ALFAPARF Group is the first to be 100% Italian owned.

2011. ALFAPARF debuted in the con-sumer channel in Brazil with the Alta Moda è… (Hair Care) brand, distrib-uted in shops specialised in hair care products, health and beauty retailers and perfumeries.

2012. Re-launch of activities in Chi-na with a new distribution structure. Intensification of exports to Russia. Commercial activities launched in In-dia, Morocco, the Baltic and Balkan States and Azerbaijan. The new fa-cility in Venezuela began operating. The project began for the facility in Argentina.

2014. ALFAPARF Group reorganised its activities by creating two region-al entities (Americas and Eurasia/Af-rica/Oceania) in order to accelerate global growth.

2015. In an unfavourable market environment, the ALFAPARF Group achieved some of the best financial results of its recent history.

A journey of growth since 1980

Profile

The ALFAPARF Group has based its growth on the Hair Care segment. Sol-id basic skills, research and collabora-tion with hairstylists at international level have led the way to the affirma-tion of the ALFAPARF Milano brand in Italy as well as abroad, and more recently Yellow, a simpler, more acces-sible brand for emerging markets.

Activities in the area of professional aesthetics (Skin & Body Care), which began in 2004 with the launch of the TeN brand, developed significantly


ALFAPARF Milano. This is the Group’s main brand (50% of turnover) and is supported by firm dedication to innovation. The product portfolio, which covers all professional require-ments (colour, form, care, styling), consists of twenty lines and more than three hundred products. Semi di Lino and Evolution of the Color are the brand’s flagship lines.

Yellow. This brand was founded in Brazil to meet the needs of the local population (hair straightening prod-ucts). Today, it is marketed all over the world and targets the younger range of the market with seven lines, 150 individual items and a competi-tive quality/price ratio, which is also suitable for consumers from coun-tries with lower spending power.

Eleven brands: some of which have become traditional points of refer-ence for hair care and beauty profes-sionals, and others which provide a re-sponse to new concepts of well-being and beauty. They are all the result of top-level research and contribute to the creation of a product portfolio with few equals.

Altamoda è... Launched in Brazil and distributed in Argentina and Mexico as well, this is the first AL-FAPARF Group brand meant for re-tail distribution. It includes hair care, hair colour and nail products.

Il Salone Milano. This is a new hair care product line featuring an excel-lent quality/price ratio. It is targeted at specialised retail channels and hair salon customers.

Business areas

The brands: focus on hair

in 2009 with the acquisition of GTS Group, which owns brands with a well established market position. Today, ALFAPARF is the top Italian operator in professional aesthetics and is creat-ing a plan for considerable expansion in its main markets abroad as well.

The diversification strategy has led to the construction of an offer that covers all professional requirements in hair, face and body care, meeting the demand of the various market segments.


DIBI Milano. With 40 years of his-tory in professional aesthetics and distribution across more than thirty countries, the brand has now be-come synonymous with the beauty centre. The distinctive quality of this line is its focus on technology applied to beauty, made possible thanks to partnerships with prestigious univer-sities. The DIBI Milano beauty centres offer a diagnostics system and lines of high-quality beauty products with guaranteed, certified results.

Becos. This line includes a full range of products, equipment and servic-es for beauty professionals. Becos Clubs are intended for those who love glamour and focus on fashion.

Olos, La Bellezza è Natura. This is a cutting-edge brand in natural re-search and treatments.

TeN. The acronym stands for Tec-nologia e Natura (Technology and Nature), but also for “10”, in terms of performance quality. This line fea-tures a broad range of advanced pro-fessional beauty products.

APG Tech. With nearly forty years of experience in the professional aes-thetics channel, the ALFAPARF Group develops and markets latest genera-tion technologies and equipment to meet all the needs of a modern beau-ty centre. Design, development and assembly: everything is strictly Made in Italy to provide our commercial partners with the best guarantee of certification and quality.

Solarium. This is a line of sun prod-ucts for the face, body and hair cre-ated with advanced photoprotec-tive technology.

Decoderm Make Up I Care. A Make Up Care line with no parabens or per-fumes, which understands the skin, takes care of it and enhances the beauty of every woman.

The business model and principles

The ALFAPARF Group works on the basis of a model that integrates re-search, production and distribution to guarantee direct control through-out the entire value chain.

Its business is organised based on the matrix model typical of international groups, which involves close function-al collaboration between business divisions (Hair Care, Skin & Body Care, production on behalf of third parties, retail) and the geographical macro-regions. Amongst other advantages, this model makes it possible to most effectively respond to the evolution of demand in the Group’s markets.

The principles:

1. Supporting beauty professionals in accordance with their respective characteristics.

2. Continuously researching products and services capable of improving the offerings of beauty professionals.

3. Ensuring the capacity to respond to market developments at all times.

4. Tending towards continuous im-provement.

5. Circulating ideas and knowledge acquired from experience operat-ing worldwide.

6. Basing products and services on di-rect knowledge of beauty profes-sionals and their needs.

The brands: focus on skin

The ALFAPARF Group has always been committed to promoting re-search and innovation, giving rise to several products that have been met with praise in Italy and abroad. It ben-efits from a strong push towards in-novation from its collaboration with the best beauty professionals and an international distribution net-work that takes into account demand trends and directs research.

The commitment to research has intensified in recent years, with ac-tivities expanding to new areas and abroad, an increased workforce (which has surpassed fifty employ-ees) and personnel training.

In Hair Care, the main effort has been focused on hair colour as well as tech-nical products such as bleaches and straighteners. In 2015, research en-deavours resulted in the registration of four patents (a hair straightening composition, an oxidation colour ap-proach, composition based on direct colorants, oxidation colour base).

In Skin & Body Care, research is con-centrated on moisturising, anti-aging and anti-cellulite products and on the matching of particular products with beauty treatment equipment, as effectiveness is closely linked to application methods.

Research activities are primarily conducted in the Italian lab in Osio Sotto (Bergamo), where raw mate-rials are assessed and selected (in-cluding those used for production abroad), product formulas are stud-ied and some effectiveness testing is carried out. The clinical safety and effectiveness of the products are certified by third-party institu-tions. There are also research labs in Brazil and Mexico.

To test the products, the Osio Sotto lab relies on two in-house depart-ments: a Technical Hair Care Centre and a Pilot Skin & Body Care Centre.

Outside effectiveness testing is a well-established practice in Skin & Body Care. In 2015, a considerable ef-fort was made to extend this to Hair Care as well through testing on vari-ous products (shampoos, condition-ers, masks) which involved around one hundred volunteer consumers invited to compare the different for-mulas of each product.

The results made it possible to gath-er data that can be used for commer-cial development, as end consumer purchases through beauty profes-sionals account for a significant por-tion of turnover.

In 2015, a collaboration was launched with a toxicology centre, which will further support the Group’s commit-ment to product safety.

Research and innovation

Production

100,000 of production surface area

130 million pieces produced

approximately


The production structure meets glob-al distribution requirements with five facilities in Italy, Brazil, Mexico, Ven-ezuela and Argentina. The production surface area, which has nearly doubled in the last five years, has reached al-most 100,000 square metres: 35,000 in Brazil, 35,000 in Mexico, 15,000 in Italy, 3,500 in Venezuela and 10,000 in Argentina.

In 2015, production at the five fa-cilities reached roughly 130 million items. The main facilities by product volume are those in Italy and Mexi-co. The Italian facility in Osio Sotto (Bergamo) is responsible for more complex production and manufac-tures products for the commercial divisions in Europe and Asia.

Since the early 2000s, plant expan-sion has been accompanied by the adoption of management systems that facilitated the achievement of high quality standards. The Italian fa-cility has been certified in accordance with ISO 9001 and Good Manufac-turing Practice (GMP) 22716, which establishes manufacturing manage-ment methods, equipment, means and rules to ensure appropriate quality standards. Production activi-ties are carried out based on the ISO 10001 (customer satisfaction), Total Productive Maintenance and Overall Equipment Effectiveness guidelines. In 2015, ALFAPARF was given the status of Authorized Economic Op-erator (AEO), which certifies its reli-

ability with respect to the customs authorities. Also during the year, the Group adopted the organisation and management model pursuant to Ital-ian Legislative Decree 231/2001.

The other four facilities (Mexico, Brazil, Venezuela and Argentina) have also been, or are about to be, given certifications that place them at excellent quality levels.

Project Development and Packaging Engineering departments have also opened in Italy, Brazil and Mexico.

A Group function (Total Quality De-partment) is responsible for ensur-ing compliance with quality stand-ards in Italy and abroad.

Every facility has a quality lab for in-dividual components, semi-finished goods, raw materials, packaging and finished goods.

Know-how, presence in strategic geographical areas and operational flexibility have made ALFAPARF the ideal business partner for beauty multinationals as well as large-scale retailers. Thus, in addition to manufacturing its own brands, it has started production on behalf of third parties: the first agreement, entered into with one of the main worldwide distributors of profes-sional beauty products, was fol-lowed by important contracts with other multinationals as well.

m2


Aside from its widespread geo-graphical presence, ALFAPARF has focused its commercial network on the quality of its relationship with beauty professionals. Objective: supplementing product sales with services that enable hairstylists and beauty professionals to best manage business activities and provide timely responses to new demand trends.

The ability to move from product supplies to a wide range of services has also acquired strategic impor-tance in the world of professional beauty: speed of response and qual-ity are prerequisites for remaining competitive.

Based on this vision, the Group has created a broad training programme on technical/professional as well as managerial aspects. Hairstylists and beauty professionals can now find the best courses to meet their development needs based on their own experience and capabilities, which are organised by more than fifty Group training centres.

The robust international distribu-tion network is one of the strengths of the Group, which serves 300,000 customers in roughly one hundred countries.

Commercial activity is based on two operating models: branches (pre-sent in twenty countries plus Italy) and third-party distributors that have entered into exclusive agree-ments with ALFAPARF. Different models are used in different mar-kets (depending on demand char-acteristics, ALFAPARF’s positioning, growth targets).

The branches, managed by the AL-FAPARF Group management, can rely on more than five hundred agents that dialogue with in excess of 50,000 beauty professionals to enrich knowledge and gain the ex-perience required to understand new needs and promote innovation.

The activities of distributors (more than one hundred worldwide) is sup-ported with marketing, training and sales assistance services.

Distribution

Professional training

300,000 customers in 100 nations

Environmental sustainability, quality, safety

Shareholders and governance


For the ALFAPARF Group, a better world begins with companies that produce quality while respecting the environment and personal safe-ty. The protection of health and safety at work is one of the Group’s priority objectives.

ALFAPARF adopts a Quality, Health, Safety and Environment Policy, which recognises the principles of prevention and protection as unwa-vering values while making a com-mitment to civil society.

The focus on these topics has been developed and refined over time through internal communica-tions and training programmes. In particular, communications have dealt concretely with occupational health and safety risks and preven-tion measures.

Occupational health and safety and en-vironmental protection training is car-ried out systematically to ensure that personnel always remain up-to-date on regulations, share best practices and, in general, remain knowledgeable about the entire organisation.

Plant management meets high envi-ronmental protection requirements. Protecting the integrity, health and well-being of employees underlies the development strategy with the objective of pursuing sustainable competitiveness over time.

In 2015, programmes continued in or-der to improve attitudes, behaviours and, in general, the personal sense of responsibility with respect to safety. The positive trend in accident indica-tors shows that the Group has made significant steps forward in spread-ing a culture of safety.

The Group’s business and brands are owned by Beauty & Business Spa and Alfa Parf Group Spa, held by Beauty Business Holding Spa, a company with subscribed and paid-up share capital of € 71 million.

Beauty Business Holding Spa’s share-holders are: - Roberto Franchina (60.96%), found-

er of the company and Chairman of the Board of Directors;

- La Compagnia Immobiliare S.r.l. (23.80%);

- Attilio Brambilla (15.24%), Vice Chair-man of the Board of Directors.

The members of the Board of Direc-tors are Roberto Franchina and At-tilio Brambilla.

The members of the Board of Statu-tory Auditors are:- Andrea Casarotti, Chairman;- Alessandro Ricci;- Giuseppe Caldesi Valeri.

The auditing company is BDO.

Beauty & Business S.p.A.

(Italy)

Prod./Comm.

100%

RobertoFranchina

60.96%

AttilioBrambilla

15.24%

La CompagniaImmobiliare srl

(Italy)

23.80%

Beauty Business Holding S.p.A.(Italy)

Holding company

Alfa Parf Espana

(Spain)

Comm.

100%

Delly

Distribuidora Ltda

(Brazil)

Comm.

1.07%

Dobos

S.A. de C.V.

(Mexico)

Prod./Comm.

0.01%

Industrial Chemical

Cosmetics Holding

(Malta)

0.01%

Porta Nuova S.A.

(S. Domingo)

Comm.

0.1%

Cosmetica

Chi.Cosm. Ltd

(Chile)

Comm.

0.01%

Sabama Ltda

(Colombia)

Comm.

0.15%

Cosmeticos E. Cos

S.A.

(Ecuador)

Comm.

1%

P.T. ENIMLAD(Indonesia)

Comm.

1%

Percosm S.A.C.(Perù)Comm.

0.58%

Alfa Parf Group S.p.A.(Italy)

Sub-holding Operativa

100%

Prodicos S.A.(Argentina)

Prod./Comm.

2.79%

Calan Cosmetics Co. Ltd(China)Prod.

100%

0.45%

Pol.Cosm

Sp. Z.o.o.

(Poland)

Comm.

100%

Maresana

Lda

(Portugal)

Comm.

100%

Costa Rica Cosmeticos

CostDist SRL

(Costa Rica)

Comm.

100%

Alfa Parf Shangai

Trading CO. Ltd

(China)

Comm.

100%

Alfhair Ltd

(Australia)

Comm.

100%

Porta Nuova S.A.

(S.Domingo)

Comm.

99.90%

Industrial Chemical

Cosmetics Holding Ltd

(Malta)

99.99%

Delly

Distribuidora Ltda

(Brazil)

Comm.

98.30%

Prodicos S.A.

(Argentina)

Prod./Comm.

97.21%

Clio Cosmeticos

S.A. de C.V.

(El Salvador)

Comm.

99%

Percosm

S.A.C.

(Perù)

Comm.

99.42%

E.Cos S.A.

(Ecuador)

Comm.

99%

Guatemala

Cosmeticos S.A.

(Guatemala)

Comm.

80%

Cosmetica

Chi.Cosm. Ltd

(Chile)

Comm.

99.99%

DIS. MAR.

Cosmetics C.A.

(Venezuela)

Comm.

99.99%

Alfa Parf

Russia S.r.l.

(Russia)

Comm.

100%

Dobos

S.A. de C.V.

(Mexico)

Prod./Comm.

99.99%

Alfaparf American

Division Distribution

S.A.

(Uruguay)

99%

Hel Cosm

S.P.L.C.

(Greece)

Comm.

100%

B.I.P. Inc.

(U.S.A.)

Comm.

100%

Sabama Ltda

(Colombia)

Comm.

99.85%

Industria Veprocosm

C.A.

(Venezuela)

Prod.

99.55%

Prodob de Mexico

S.A. de C.V.

(Mexico)

Prod./Comm.

99.80%

Delly

Kosmetic Ltda

(Brazil)

Prod.

99.93%

Corporate structure


P.T. ENIMLAD

(Indonesia)

Comm.

99%

Delly

Kosmetic Ltda

(Brazil)

Prod.

0.07%

Alfaparf American

Division Distribution

S.A.

(Uruguay)

1%

Prodob de Mexico

S.A. de C.V.

(Mexico)

Prod./Comm.

0.20%

DIS. MAR.

Cosmetics C.A.

(Venezuela)

Comm.

0.01%

Sampacosm Ltda

(Brazil)

Comm.

99.99%

Clio Cosmetics

S.A. de C.V.

(El Salvador)

Comm.

1%

Guatemala

Cosmetics S.A.

(Guatemala)

Comm.

20%

Letter from the Chairman

Report on operations

Business segment trends

182021

Financial year 2015

Dear Shareholders,

The ALFAPARF Group closed the year 2015 with brilliant results: turn-over has grown, efficiency has im-proved and the operating margin has reached excellent levels. 2015 will be remembered as one of the best years of our recent history. These results prove the validity of the strategic de-cisions made in recent years and are even more important in light of the unfavourable performance in the ref-erence market.

Again in 2015, the economies of the countries with the largest Group presence slowed down or even took a step back. The Latin American econo-my is experiencing a particularly diffi-cult phase. In 2015, GDP in Brazil reg-istered the worst result since 1990, contracting by nearly 4%, the most significant downturn in the last 25 years. An analogous contraction was seen in Venezuela’s GDP. Other coun-tries in which we carry on business (Argentina and Mexico, for example) performed better, but they certainly were not to the point of being able to drive revenues. In Italy, where skin & body care activities are currently concentrated, consumption is strug-gling to take off. Overall, there was an unfavourable economic situation, which ALFAPARF was able to respond to by developing product innovation, accelerating the diversification of its international presence, enhancing its production organisation and improv-ing management efficiency.

Market knowledge and the ability to perceive market trends, combined with the valuable contributions made by our research centres, have ena-bled us to create products that re-

spond well to new consumer needs. In 2015, both divisions (Hair Care and Skin & Body Care) were enhanced with high-quality solutions and the foundations were laid to introduce further innovations in 2016.

Export trends, which benefitted from a more effective distribution organi-sation, played a role in the positive revenue performance. The Group has strengthened in markets in which it was already present (in particular, good results were achieved in Ire-land, Romania, Poland, China, Israel, Jordan, the United Arab Emirates and Iran) and distribution was launched in new countries (South Korea, Myan-mar and Saudi Arabia).

In general, sales in the countries in which ALFAPARF does not have branches recorded positive results thanks to new agreements with dis-tributors which, in the future, may develop into the opening of new branches. The extent of sales can-not yet be compared with that of the countries in which the Group has had a traditional presence and operates through its branches, but a signifi-cant sales base is being constructed to boost diversification, one of the Group’s strategic objectives.

The full utilisation of production ca-pacity has also fuelled revenues. In recent years, the Group’s production system has grown in size as well as quality, with the opening of a new plant in Argentina (which increased the number of ALFAPARF’s produc-tion sites to five), the expansion of other plants and the awarding of quality certifications. In addition to consolidating our international or-ganisation, these investments have


Letter from the Chairman

strengthened our capacity to act as an industrial partner to important beauty brands, which in 2015 trans-lated into new and important pro-duction agreements.

The brilliant operating profit came in the wake of an improvement in efficiency. Already in past years, the Group worked diligently on this front with initiatives throughout all areas of the organisation. In 2015, we con-tinued along this path by cutting the cost of goods sold, improving pay-ment terms and focusing production.

Beyond the targets reached in the individual production or sales activi-ties, the most important effect of this long-term work is that today, the efficient use of resources plays an integral role in the Group’s cul-ture and is an objective seen as a pri-ority at all levels. The end operating profit, with a re-cord EBITDA that reached 20%, con-tributed to improving an already sat-isfactory financial position in 2015. Hence, the 2015 financial statements provide a snapshot of a solid Group which is easily capable of meeting

the commitments it has made in re-cent years and continuing with its ambitious international develop-ment plan.

Lastly, it is also worth mentioning another significant goal reached by the Group, which is directly linked to its 2015 results. In its April 2016 edition, the US magazine Women’s Wear Daily (www.wwd.com), the un-disputed point of reference for the world of fashion and the beauty in-dustry, published the global ranking of the top one hundred beauty com-panies. ALFAPARF made this ranking for the first time, in 93rd place. This is a historical result, which fills us with pride. It is also a recognition of the effort invested by everyone and a certification of the role we have at-tained in global industry. Lastly, it is a further motivation to continue to make our way in markets worldwide.

Roberto FranchinaALFAPARF Group Chairman

The consolidated financial statements of Beauty Business Holding Spa, which heads up Group operations, closed with net revenues of € 234.4 million (+13.4% compared to € 206.7 million in 2014): € 145.3 million earned in the Americas and € 89.1 million in Europe, Africa, Asia and Oceania. This extremely positive result would have been even better at 2014 exchange rates: € 249 million in turnover, repre-senting growth of 20.5%.

Raw material purchases rose by 5.7% to € 66.4 million (against € 62.8 million in 2014), proportionately in line with sales growth. However, the impact of raw material purchases on turnover declined from 30% in 2014 to 28%.

General expenses were up (+9%) to € 67.4 million in 2015 against € 61.9 million in 2014. However, also in this case the impact of this item on turno-ver decreased, albeit slightly (1%).

The positive cost and revenue trends resulted in a decisive improvement in value added: € 100.5 million in 2015 against € 81.9 million in 2014 (+23%).

In 2015, growth resumed in the num-ber of employees (1,355 compared to 1,280 in 2014) and personnel expens-es, after a considerable reduction last year, came to € 50.6 million (+5%).

Despite a significant bad debt provi-sion (68%), the profit from ordinary op-erations reached € 36.1 million, up 76% compared to € 20.5 million in 2014.

The overall operating profit was im-pacted by difficult exchange rates in certain countries in which the Group operates through its subsidiaries. The slowdown in some Latin American economies (particularly in Brazil and Venezuela) and the resulting weak-ness in their currencies had a not in-significant impact on the accounts. Considering the items not associated with ordinary operations (particu-larly exchange losses), the operating profit would be very positive: € 25.6 million, up 61.2% compared to € 15.9 million in 2014.

As at 31 December, Beauty Business Holding Spa achieved profit for the year of € 7.8 million (up 32.9% com-pared to € 5.7 million in 2014) with a cash flow of € 21.5 million (against € 18.9 million in 2014). These are the Group’s best results in its recent his-tory, and demonstrate the organi-sation’s capacity to rapidly adapt business management to market conditions.


Report on operations

Hair Care

In 2015, the Hair Care segment achieved revenues of € 126.5 million, up 13% compared to 2014 (at constant exchange rates, there would have been growth of 21% compared to 2014).

The main brand, ALFAPARF Milano, resumed double-digit growth (+10%) thanks to its very good performance in Italy where, despite the slow progress of consumption, ALFAPARF Milano improved its positioning by aiming for innovation and closeness to beauty professionals. Good news was also re-ceived from China, where growth has been sustained (+68.9%), making it possible to cultivate ambitions for de-velopment in the coming years.

The branch in Argentina also made good progress: in that country the ALFAPARF Milano brand is a leader in hairstyling salons and enjoys great notoriety amongst end consumers. Positive results were also achieved by the US branch, which also benefitted from the increase in value of the dol-lar compared to the euro. ALFAPARF Milano performed particularly well in Ecuador (+50%), after a difficult 2014, and in the Dominican Repub-lic (+44.6%). Overall, performance in these countries offset the difficulties seen in Brazil.

Hair Care turnover growth was cer-tainly fuelled by product innovation, which leveraged the traditional points of strength of the ALFAPARF Milano brand, above all colour. Of particular note was the restyling of Colorwear and rEvolution, a line of direct col-ours, presented in the summer, which brought to the fore the creativity of hairstylists. In addition, ten new tones of Evolution Cube were launched, in combination with the Metamorphosis

collection. Precious Nature was also introduced, a product line based on natural ingredients and oils inspired by Expo 2015.

Particularly positive results were also achieved by Yellow, a brand with a solid positioning in the Americas, with sales rising by 25% on average in Co-lombia, Mexico, Argentina and the Do-minican Republic. The brand under-went a considerable visual restyling and has been enriched by new lines: Liss Therapy, which is oil-based, and Extreme Therapy, for the reconstruc-tion of very damaged hair.

Skin & Body Care

In 2015, the Skin & Body Care seg-ment achieved revenues of € 32.9 million, up 3.2% compared to 2014.

The year was characterised by two trends: acceleration in the interna-tionalisation process and product innovation.

One of the Group’s strategic objec-tives is to bring the historical brands of the Skin & Body Care division, which now generates revenues mainly in the domestic market, abroad. In 2015, important steps were made in this direction with the opening of direct branches of this division in Poland and Australia, where sales rose signifi-cantly (+99.2% in Poland and +134.5% in Australia). Over the year, the Rus-sian branch also made progress, and reached the break-even point. Today, the products of DIBI Milano, the divi-sion’s flagship brand, are present in around thirty countries and can count on the support of four branches.

Business segment trends


Supply innovation has been seen par-ticularly in equipment for APG Tech brand beauty centres. The launch of the Epildream One, a new hair-removal laser which represents the top of the market due to its speed, strength and adaptability to all skin types, made a significant contribu-tion to growth. Another piece of equipment successfully launched in 2015 was the Fisiosphere which uses Dual Energy System Technology to enable beauty professionals to pro-vide anti-cellulite, toning and cellular regeneration treatments.

Innovation was also seen in the product offering. The historical DIBI Milano brand, still the leader in the Italian professional market, success-fully launched new lines for the face (Prodigio 40) and for the treatment of body imperfections (Sincrony). With a view to international development, White Science was also launched, a line of products that reduce stains, even out skin tone and brighten the complexion by making it lighter. For the first time in the recent history of

the DIBI Milano brand, the new line was presented abroad before being presented in Italy. The year 2015 also brought growth for the Becos brand, thanks to the launches of Shape and Chic, for body care, and Lift Couture, a face care line that relies on an instrument that can distribute and massage the product around the eyes and lips.

Olos, the natural treatment brand, also had an important year in 2015. In particular, it launched Olosage, the face care line that fights attacks from atmospheric pollution, and Olos Gourmet, a body care product line inspired by the Italian culinary tradition.

Continuous, intense support has been offered to Skin & Body Care division customers in the form of promotional initiatives and profes-sional training. During the year, the Bergamo Pilot Centre welcomed more than fifty thousand Italian and foreign customers.

Retail

In 2015, sales to end consumers achieved revenues of € 22.2 million, down 19.9% compared to 2014. Also in this case, as in the Hair Care segment, the result was negative-ly affected by exchange rates: at constant exchange rates, the loss would have been limited to 7% com-pared to 2014.

Sales of the Altamoda è… brand, the Group’s first brand intended ex-clusively for retail distribution, grew markedly in Argentina (+110.4%) and in Mexico (+127.2%), partially offset-ting the results in Brazil (where the brand was launched in 2011), which was burdened by the recession and the currency depreciation.

During the year, the Il Salone Milano brand developed for chains of stores specialised in beauty products was launched.

Private Label

In 2015, production on behalf of third parties achieved revenues of € 52.8 million, up 48.5% compared to 2014.

This was a particularly impressive result, which reflects the Group’s ca-pacity to take advantage of the qual-ity of its plants and production pro-cesses, the geographic localisation of its facilities and ALFAPARF’s capacity for innovation, which have certainly played a key role in the development of industrial partnerships.

2016 half-year report

In the first six months of 2016, the AL-FAPARF Group continued the growth trend that characterised the same period of 2015, although this is not fully reflected in the financial state-ments due to unfavourable trends in exchange rates.

The Beauty Business Holding con-solidated financial statements as at 30 June 2016 recorded net revenues of € 115.9 million, in line with € 115.8

million in 2015: at constant exchange rates, revenues at 30 June would have reached € 132.6 million, repre-senting growth of 15% compared to the first half of 2015.

In particular, the American conti-nent generated revenues of € 66.6 million, while Europe, Africa, Asia and Oceania generated € 49.3 mil-lion. At business unit level, Hair Care achieved revenues of € 60.1 million, Skin & Body Care reached € 18.4 mil-lion, Private Label € 27.5 million and Retail € 9.9 million.

EBITDA rose from € 24.8 million in June 2015 to € 27.4 million in June 2016, in line with the positive trend already seen in 2015.

The international presence was de-veloped and the offer was renewed during the period.

International development regarded in particular the Skin & Body Care di-vision, which is committed to export-ing the products and skills gained in professional aesthetics to the markets where the Group is already present with Hair Care brands. Dur-ing the half, it opened commercial branches in the United States, the Dominican Republic and Guatemala.

There were several new items intro-duced into the portfolio, with the launch of products and new lines in Hair Care (which regarded, in par-ticular, the ALFAPARF Milano, Yel-low and Il Salone Milano brands) and in Skin & Body Care (which involved the DIBI Milano, TeN and Solarium brands and the segment of equip-ment for beauty centres).

Financial Statements

Consolidated Financial Statement as at 31 December

2015

Balance Sheet Balance Sheet

Alfaparf Group26 Alfaparf Group27

Assets 31 december 2015 31 december 2014

A) Subscribed capital unpaid 0 0

B) Fixed assets

I) Intangible fixed assets:

1) Start-up and expansion costs 51,154 76,730

2) Research, development and advertising costs 308,378 449,570

3) Patents and know-how 81,583 88,111

4) Franchise, licenses, trademarks and similar rights 6,794,807 7,442,439

5) Goodwill 64,110 0

6) Work in progress and prepayments on account 426,973 275,954

7) Other intangible fixed assets 3,467,321 4,440,475

8) Consolidation difference 11,197,420 14,020,021

Total intangible fixed assets 22,391,746 26,793,300

II) Tangible fixed assets:

1) Land and buildings 7,195,550 8,651,778

2) Plant and equipment 11,576,434 14,038,617

3) Fixtures and fittings, tools and other equipment 693,032 934,092

4) Other assets 1,168,361 1,243,436

5) Work in progress and prepayments on account 46,042 172,891

Total tangible fixed assets 20,679,419 25,040,814

III) Long-term investments:

1) Equity investments in:

a) Subsidiaries 0 0

b) Associates 102,000 102,000

2) Due from:

d) Others:

- due within one year 0 0

- due beyond one year 1,304,769 1,427,343

3) Other securities 0 0

Total long-term investments 1,406,769 1,529,343

Total fixed assets (B) 44,477,934 53,363,457

C) Working Capital

I) Inventories:

1) Raw materials and consumables 11,141,654 10,518,756

2) Work in progress and semi-finished goods 1,939,061 1,886,269

3) Long-term contracts 0 0

4) Finished goods and goods for resale 17,480,487 15,837,475

5) Advances 151,559 74,003

Total inventories 30,712,761 28,316,503

Assets 31 december 2015 31 december 2014

II) Receivables:

1) From customers:

- due within one year 62,718,037 64,120,858


3) From associates:


- due beyond one year 0 0

4bis) Tax credits:



4ter) Deferred tax assets:



5) From others:



Total receivables 97,067,415 101,259,683

III) Short-term investments:

3) Other equity investments 3,467 3,467

6) Other securities 0 0

Total short-term investments 3,467 3,467

IV) Cash and cash equivalents:

1) Bank and postal deposits 20,048,675 14,261,415

2) Cheques 0 0

3) Money and cash securities 71,463 181,351

Total cash and cash equivalents 20,120,138 14,442,766

TOTAL WORKING CAPITAL (C) 147,903,781 144,022,419

D) Accrued income and prepayments 2,517,571 2,405,632

TOTAL ASSETS (A+B+C+D) 194,899,286 199,791,508

Balance Sheet Balance Sheet


Liabilities 31 december 2015 31 december 2014

A) Shareholders´ equity

Group shareholders’ equity:

I) Share capital 71,000,000 71,000,000

II) Share premium reserve 0 0

III) Revaluation reserve 0 0

IV) Legal reserve 2,256,253 2,035,097

V) Statutory reserves

VI) Reserve for own shares in portfolio

VII) Other reserves: (31,975,355) (30,035,407)

- Undivided profits (36,884,559) (42,988,705)

- Translation reserve (15,970,861) (9,381,067)

- Extraordinary reserve 13,728,899 15,211,997

- Other reserves 7,151,166 7,122,368

VIII) Profit (loss) carried forward 0 0

IX) Profit (loss) for the year 7,803,710 5,871,002

Total Group shareholders’ equity 49,084,608 48,870,692

X) Minority interest share of capital and reserves 3,706 5,243

XI) Minority profit (loss) for the year 0 0

Total minority interest share of shareholders’ equity 3,706 5,243

Total shareholders’ equity (A) 49,088,314 48,875,935

B) Provisions for risks and charges:

1) for pension and other similar costs 931,627 678,566

2) taxes, deferred or current 7,107,514 7,954,068

3) other 2,115,882 2,636,203

Total provisions for risks and charges (B) 10,155,023 11,268,837

C) Employee severance indemnity 1,041,951 1,138,499

Liabilities 31 december 2015 31 december 2014

D) Payables:

3) Due to shareholders for financing:



4) Due to banks:



5) Other loans:



6) Advances:

- due within one year 370,658 248,426


7) Due to suppliers:


- due beyond one year 600,000 600,000

12) Taxes payable:


- due beyond one year 0 1,101,075

13) Due to social security:


14) Other:


- due beyond one year 130,000 260,000

15) Due to other Group companies:


Total payables (D) 133,470,699 136,444,232

E) Accrued liabilities and deferred income 1,143,299 2,064,005

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 194,899,286 199,791,508

MEMORANDUM ACCOUNTS

2) collateral

on behalf of third parties 0 0

Total memorandum accounts 0 0

Income Statement Income Statement


31 december 2015 31 december 2014

A) Value of production

1) Revenues from sales and services 234,460,134 206,787,120

2) Change in inventories, work in progress

semi-finished and finished goods 3,584,624 (4,095,780)

3) Change in long-term contracts 0 0

4) Own work capitalised 367,006 349,404

5) Other revenues and income:

- contributions for operating expenses 0 0

- other revenues and income 2,209,732 3,435,000

Total value of production (A) 240,621,496 206,475,744

B) Production costs

6) For raw materials, consumables and goods for resale 72,356,083 58,276,345

7) For services 61,025,755 56,549,319

8) For use of third party assets 6,458,312 5,431,995

9) For personnel:

a) Wages and salaries 37,038,816 35,945,064

b) Social security charges 8,773,961 8,247,587

c) Employee severance indemnity 972,449 956,341

d) Pensions and similar benefits

e) Other costs 3,871,754 3,232,639

10) Amortisation, depreciation and write-downs:

a) Amortisation of intangible assets 5,211,980 5,327,788

b) Depreciation of tangible assets 3,108,187 3,732,900

c) Other write-downs of fixed assets 79,095 13,274

d) Write-downs of working capital:

- write-downs of receivables 4,632,315 2,764,414

11) Change in inventories of raw materials,

consumables, and goods for resale (2,332,164) 458,697

12) Provisions for risks and charges 672,625 1,227,623

13) Other provisions 0 0

14) Other operating expenses 6,856,029 5,112,144

Total production costs (B) 208,725,197 187,276,130

DIFF. BETWEEN VALUE OF PRODUCTION AND PRODUCTION COSTS (A-B)

31,896,299 19,199,614


C) Financial income and charges

15) Income from equity investments in:

- other companies 0 0

16) Other financial income:

a) long-term loans:

- from others 0 0

b) long-term investments 0 0

c) short-term investments 0 0

d) Other income:

- other financial income 1.265.098 1.302.599

- from other Group companies 0 0

17) interest and other financial charges:

- interest expenses for bonds 0 0

- other interest and financial charges 8.322.286 7.040.042

17bis) Foreign exchange gains (losses) (7.499.311) (4.583.095)

TOTAL FINANCIAL INCOME AND CHARGES (15+16-17+/-17BIS) (C)

(14.556.499) (10.320.538)


Income Statement


D) Value adjustments to investments

18) revaluations:

a) equity investments 0 0

b) long-term

investments 0 0

19) write-downs:

a) equity investments 0 0

b) long-term

investments 0 0

c) short-term

investments 0 0

Total value adjustments to investments (18-19) 0 0

E) Extraordinary income and charges

20) Income:

- gains on disposal of assets the revenue from which may not be stated under A5

0 0

- other extraordinary income 3.929.481 2.111.880

21) Expenses:

- losses on disposal of assets the effect

of which may not be stated under no. 14 0 0

- taxes from previous years 2.653.840 75.478

- other extraordinary charges 798.805 817.626

Total extraordinary items (20-21) (E) 476.836 1.218.776

PRE-TAX PROFIT (A-B+/-C+/-D+/-E) 17.816.636 10.097.852

22) Income taxes for the year:

- current taxes 7.970.675 5.900.502

- deferred and prepaid taxes 2.042.251 (1.673.652)

23) PROFIT (LOSS) FOR THE YEAR 7.803.710 5.871.002

- Group share 7.803.710 5.871.002

- minority interest share 0 0

alfaparfgroup.com

Documents

Annual Report - Alfaparf Group · 2017-03-21 · cial development, as end consumer purchases through beauty profes-sionals account for a significant por-tion of turnover. In 2015,