Life after Chichvarkin: why Euroset loses the revenue and profit again

Over the last two years, retail sales decreased by 12%, while net profit fell almost five times.
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Proceeds of "Euroset" in 2014 was slightly less than 72 billion rubles., Follows from the financial statements under IFRS parent company Euroset Holding NV holding Why is so important this index?

Firstly, revenue in 2014 was lower than revenues in 2008 (78.9 billion rubles.), When co-owner Yevgeny Chichvarkin was still nowadays polo player and wine merchant in London.

Secondly, "Euroset" in 2010, does not disclose data of its consolidated financial statements: first retail chain was preparing for the IPO (did not happen), then lost independence and came under the full control of "VimpelCom" (number 25 in the ranking of RBC 500) and " MegaFon »(number 29 in the ranking of 500 RBC). But at the disposal of RBC was reporting "Euroset" in accordance with IFRS for the previous few years, which makes it possible to study the company's finances since leaving Chichvarkin.

The company's revenue after the sharp fall in 2009 (plus the impact of the crisis restructuring of the business in order to increase profitability) reached a peak in 2012 - 82.2 billion rubles. But then it began to decline and dropped by 12% in two years. President of "Euroset"Alexander Malis, in an interview to "Interfax", said comparing finpokazateli "Euroset" with previous periods "generally incorrect."

Why "comparison is incorrect"? In December 2012 a businessman Alexander Mamut sold his 50.1% stake in "Euroset". Retail network on equal terms become proficient "Vympelcom" and "Megaphone", who decided to make a change in the business of "Euroset". Prior to this, mobile operators pay independent of their networks (not just "Euroset", but the same "The Messenger") fee for new subscribers, often arranging a race with each other, but now the point in subsidized, in fact, a subsidiary business was not.

In 2012, "Euroset" has received almost 11 billion rubles. commissions from the mobile operators (13% of revenue), two years later - four times smaller, 2.7 billion rubles. (4%). At the same time a commission on shareholders decreased even more - the proceeds of "VimpelCom" for two years decreased by 4.6 times (conclusion on the exact reduction of commissions from "Megaphone" can not be done on the basis of available reports).

Meanwhile Mr.less than in 2014. The shareholders have provided almost 92% of the commission from the mobile operators (from 2.5 to 2.7 billion rubles.). Another representative of the "Big Three" - MTS - ceased cooperation with "Euroset" and "The Messenger" (owned by his brother the president of "Euroset" Oleg Malis) and develops its own retail.

But over the last two years not only decreased revenues from the mobile operators, but also revenues from sales of goods - "Euroset" core business. In 2014, revenues from the sale of smartphones, phones, digital devices and accessories decreased by 7% relative to the index of 2012, to 60.5 billion rubles.

The only growing business companies in 2012-2014 - is the sale of financial services. In 2014, "Euroset" has received 4.7 billion rubles. Commissions from payments and financial services revenues for the first time on the financial segment exceeded the commission from the mobile operators.

Why debt decreased, despite the drop in profit? Due to business restructuring in 2009-2010 and increased profitability (for example, from 2008 to 2013, the gross margin from sales of goods increased by 10 percentage points)?laquo; Euroset "had become profitable again. The net loss in 2008 turned into a profit for the of 2010 (plus 5.6 billion rubles.). EBITDA was negative in 2008, by 2012, up to a maximum value (plus 9.2 billion rubles.).

But after the fall of commission payments from shareholders - "MegaFon" and "VimpelCom" net profit "Euroset" for two years has decreased five times, EBITDA - four times.

Yet a positive operating cash flow allowed the "Euroset" to the end of 2014 to collect the accounts of almost 13 billion rubles. The accumulated amount of money for the first time exceeded the financial debt of the company (about 10 billion rubles.), Which is denominated in rubles. Moreover, capital "Euroset" for the first time in a long time became positive.

President of "Euroset" Alexander Malis, in January 2015, admitted that management anticipated a large-scale banking crisis and therefore saving money.

What makes the top management? From 1 January to 23 October 2008 12 key "Euroset" managers received 499.2 million rubles. If considered as a full month of October, that is, 499.2 million paids the first ten months, the average monthly gross income of one manager was RUR 4.16 million.

After the "Euroset" started business restructuring of the key managers fell to four in 2010. The greatest income they earned in 2012, the year of the highest rates of "Euroset" - 4.71 million rubles. per month. In 2014, the average monthly gross income for these managers was 4.42 million rubles.

But the reward key executives is not limited to the salary. In 2009, "Euroset" has introduced two phantom option to be paid in cash - one for the CEO and the other for a limited number of employees, including three key executives. Under the terms of the option, Malis had to get 2% "of the difference between the value of the business and the amount of $ 452 million, provided that the value of the business <...> will exceed $ 2 billion." Group key managers - 1% on the same terms.

According to statements 1 December 2012, a few days before the closing of the sale of shares of Mamut, this option was exercised. To deal "Euroset" was valued at $ 2.14JPL, excluding net debt. From this amount, Malis could earn on the option about $ 34 million, other managers -. About $ 17 million in "Euroset" refused to comment on the stock option program.

December 7, 2012 the company has introduced two new phantom option with a maturity of December 31, 2015. The remuneration for the new option is tied to the increase in the company's business value, calculated on the basis of EBITDA.

Although in 2013-2014 EBITDA fell, in 2015 this indicator at the "Euroset", according to "Vedomosti", suddenly began to grow. EBITDA margin increased by 2.8 percentage points for the nine months to 5.2%, and EBITDA increased by itself and does 84% ​​( "Vedomosti" did not disclose the absolute values). In the "Euroset" tied profitability growth with the rejection of Samsung products and increasing sales of more marginal products of local brands.

As the company is going to survive the stagnation of the economy? If you are falling revenue and profit, one option - to reduce costs. The main items in operating costs at the "Euroset" - rental costs salons and labor costs (80% in total).

It was on aShort for these costs bet top management. The financial report for the 2014 assessment of the future growth of the company's value for the option program is based on a forecast of cost reductions on the rent by 17% in 2015, labor costs - by 7%. At the same time top management hoped that the commission from the mobile operators will increase once a year by 65%, but the commission of payments and financial services will be reduced by 1%.

But the commission from the mobile operators continued to decline: according to "Vedomosti", in the first nine months of 2015, they decreased by 10% compared to the same period in 2014. The representative of "Euroset" told RBC that the increase in fees from operators of 65% is the data from the old application to the reporting, "the reality of the commission from the mobile operators will decline even more than 10%."

How are plans to reduce costs? The cost of rent fell within the budget, said RBC representative of "Euroset". As for the employees, then, according to him, the number in 2015 as a whole will not change, since all major reductions have been in the past year, due to which the fund has decreased ALIyou are working: "We've never been inflated state. Formally, the reduction affected only the office, so the total number of employees is not so noticeable. "