Interim report New Wave Group AB (publ)

INTERIM REPORT NEW WAVE GROUP AB (publ) January - September 2000 "The profit increase continues" * During the period January-September 2000, New Wave increased its sales by 33 per cent to SEK 782,1 (588,7) million. * The profit after net financial items increased to 65,9 (39,8). * The profit after net financial items for the period October 1999 to September 2000 was 80,1 MSEK (51,4). * The Profiling business area increased its sales by 58 per cent to SEK 527,0 (333,0) million. The profit after net financial items amounted to SEK 54,0 (31,9) million. * The Retailing business area sales amounted to SEK 255,1 (254,5) million. The profit after net financial items amounted to SEK 11,9 (7,9) million. * Texet AB was consolidated from May 1, 2000. In order to take advantage of the synergies, the business of Matching Textil AB has been coordinated with Texet AB from September 1, 2000. The costs of this coordination have been taken into account in the third quarter. * During the third quarter, the profit has been affected in a negative way by business set up in United Kingdom as well as New Wave's investment in e-commerce through Cyberwave AB. Sales During the period January to September 2000, New Wave's sales increased by 33 per cent to SEK 782,1 (588,7) million. For the Profiling business area, sales rose by 58 per cent. For the Retailing business area sales were unchanged. Sales on the Swedish market increased by 28 per cent to SEK 512,4 (400,3) million. The corresponding increase on the foreign markets amounted to 44 per cent. Sales by Texet AB is consolidated from January 1, 2000. Profit During the period January to September 2000, profit after net financial items increased to 65,9 SEK (39,8) million. The gross profit margin increased compared to last year and amounted to 37,9 (33,0) per cent. The profit after net financial items for the period October 1999-September 2000 amounted to SEK 80,1 (51,4) million. From May 1, 2000 Texet AB was consolidated as if it had been acquired from January 1, 2000. The net result for the period January - April equals to zero. Goodwill of 60,3 MSEK is depreciated by 5 % per year. During spring profit and sales have been influenced in a negative way by delivery difficulties on all markets. These problems are now solved and for coming seasons the delivery security is high. In addition, the profit for July-September has been affected in a negative way by approx. 2 MSEK, by business set up in United Kingdom as well as New Wave's investment in Cyberwave AB. This investment has a negative effect on the result, in principle due to the fact that the invoicing to retailers has not yet started. The major part of these costs will be turned into incomes during the last quarter. The costs of coordination for Texet AB and Matching Textil have affected the third quarter in a negative way. An allocated SPP-refund of 8 MSEK has been included in the result. The Profiling business area During the period January-September 2000 the Profiling business area sales rose by 58 per cent to SEK 527,0 (333,0). The profit after net financial items amounted to SEK 54,0 (31,9) million. The Retailing business area The Retailing business area sales rose to SEK 255,1 (254,5) million. The profit after net financial items for the business area amounted to 11,9 (7,9) million. Business abroad The Netherlands Since September 1, 1999, the acquired business of the profiling company Town & Country VOF operates within New Wave Sportswear B.V. The trademark Clique is distributed on this market. United Kingdom On November 1, 1999, New Wave acquired the British profile company Jay Kay Group Ltd. Jay Kay has so far distributed the brand Airak in a very slim assortment consisting principally of t-shirts, sweatshirts and shirts. Through this acquisition, New Wave has access to one of the biggest profile markets in Europe. Due to delays, the trademarks Clique and New Wave were launched on the British market first during the second quarter. The British Market is expected to be business area Profiles biggest market in Europe. There is a big interest from the market, however the launching has been delayed due to the delivery problems mentioned. This has led to a lower result during the first 9 months than expected. However, New Wave still has a very positive view of the British market. France On April 2, 2000, a subsidiary was established on the French market. All staff has been recruited and an office set up in Lyon. Initially, distribution will be handled from New Wave's subsidiary in Italy. Only the trademark Clique is distributed on the French market. Belgium A sales office will be established during the next six months. The delay is due to a prolonged recruitment process in order to find the right personnel. Distribution to the Belgian market will be handled by the Dutch company Germany Growth in sales remain favourable in Germany. Sales for the Profiling business area has exceeded last year considerably. Short-term growth has been given priority over profit on the German market. Spain Both sales and profit have improved considerably in Spain compared to last year. Switzerland During the third quarter, a company has been established in Switzerland in order to take care of the group´s administration of licenses and trademarks. Integration of Texet AB Texet is integrated according to plan. New Wave anticipates considerable synergy effects as a result of the acquisition, through the improved ability to coordinate the purchasing of goods and services, as well as logistics and marketing. The total long- term impact of this synergy is estimated to SEK 17-25 million. Texet AB will distribute the following brands: James Harvest Sportswear, Printer, Jingham and MacOne. During fall Matching Textil AB and Texet AB have been coordinated, which is estimated to yield cost savings of SEK 5-7 million per year included in the synergies mentioned. The full effect of the savings will take place first 12 months after. The coordination costs have been included in the result for the third quarter. The new group has, for the rolling one year period October 1999 to September 2000, a proforma turnover of SEK 990 million. The estimated turnover for the year of 2000 is estimated to 1,100 MSEK. E-commerce New Wave Group AB is in the process of establishing an e-commerce company, Cyberwave AB, within the Profiling business area. The system will provide the possibility for New Wave Group to promote one common site that can be accessed by all end-customers with links to retailers for direct trade on the net. The retailers can also connect their own addresses, which the end-customer can use for direct trade on the net. The e-commerce company will put all New Wave Groups' brands/concepts in the Profiling business area such as Clique, New Wave, Mac One, Jingham, Cottover, on the market. The e-commerce company will in the future also explore the possibility of co-operation with other suppliers of supplementary products such as "hard" promo articles and workwear. The e-commerce system will be launched in all countries where New Wave Group has Company Profiling activities, starting in Sweden in the fall of 2000. The objective is to offer the best and most extensive electronic market place in the Profiling business, to get the market leading position within this area and to have 500 retailers connected to the system within a year from startup. bred Dressmart New Wave Group has offered options to shareholders who represent more than 90 % of capital and votes in Dressmart. The options imply a right for the shareholders to sell their shares in Dressmart to New Wave Group. The options are conditioned by among other things the other shareholders' right to acquisition. New Wave's objective to acquire Dressmart is in line with its investment in BTB through Cyberwave AB. Logistics New Wave Group has together with the municipality of Munkedal, formed the company Dingle Industrilokaler. New Wave Group owns shares corresponding to 49 % of the capital and votes while the municipality of Munkedal owns 51 %. The company will provide industrial premises for limited use by December 1, 2001. New Wave Group AB estimates a saving of 5-7 MSEK per year from 2002 by coordinating the handling of inventories. Investments The Group's net investments in fixed assets for the period Jan-Sep 2000 was SEK 18,8 (17,1) million. Financing and Liquidity Cash flow after investments and acquisitions for the period was SEK -196,2 (-99,9) million. Liquid assets at the end of September 2000 amounted to SEK 7,8 million compared to SEK 38,4 million for the same period in 1999. Net borrowing amounted to SEK 486,2 million compared to SEK 357,1 million for the corresponding period in 1999, an increase of SEK 129,1 million. Personnel The number of employees in the past 12-month period (October 1999 - September 2000) was 305 persons, compared to 228 last year. The increase is due mainly to taking on employees from the acquired companies of Texet AB as well as the companies in The Netherlands and United Kingdom. Refund SPP The allocated SPP-refund amounts to SEK 10,5 million. The amount has been accounted to the present value of SEK 8,0 million during the second quarter of 2000. Split of shares The Annual General Meeting decided, May 12, 2000, to effect a share splitting of the New Wave Group AB's shares 2:1. The total amount of shares increased from 3 550 052 to 7 100 104. The first trading day after the split of shares was July 28, 2000. Convertible program In June 2000, the company launched a convertible program for the personnel. The convertible program will give a dilution of approx. 2,1 % of the share capital. The Parent Company During January -September 2000 sales increased by SEK 18,3 to SEK 42,5 (24,2) million. The profit after financial items amounted to 17,0 SEK (6,2) million. For the period January-September 2000, net borrowing increased by SEK 102,0 (73,0) million and investments by SEK 1,1 (1,6) million. Borås, November 1, 2000 New Wave Group AB (publ) Torsten Jansson Managing Director Forthcoming information The annual report will be published February 19, 2001. For further information, please contact: Managing Director, Torsten Jansson, telephone +46 708 99 80 50, +46 33 22 58 55, E-mail: torsten.jansson@nwg.se Purchasing Manager, Jörgen Bender, telephone +46 708 99 80 55, +46 33 22 58 54, E-mail: jorgen.bender@nwg.se Examination Report In overall this interim report has been examined according to the recommendations outlined by the Swedish Institute of Authorized Public Accountants. However an overall examination is limited in comparison to an audit. Nothing has appeared which would imply that the report does not fulfil the legal requirements of financial statements. Bertel Enlund Per Schwartzman Authorized public Authorized public accountant accountant Ernst & Young AB Ernst & Young AB Results, SEK million Jan-Sept Jan-Sept Jan-Dec 2000 1999 1999 Invoiced sales 782,1 588,7 799,0 Operating expenses Goods for resale - 485,9 - 394,7 - 530,3 Other external expenses - 129,3 - 73,0 - 102,3 Personnel costs - 82,5 - 63,0 - 86,0 Depreciation of tangible and intangible fixed assets - 14,3 - 9,9 -13,9 Allocated SPP 8,0 Operating profit 78,1 48,1 66,5 Net financial items - 12,2 - 8,3 - 12,4 Profit after net financial items 65,9 39,8 54,1 Tax on the profit/loss for the period - 21,5 - 11,6 - 17,4 Minority share of the profit/loss for the period - 0,4 - 0,3 - 0,1 Result for the period 44,0 27,9 36,6 (Texet AB was consolidated on May 1, 2000 as if it was acquired on January 1, 2000. The profit for the period January-April 2000 is equal with 0, which means no elimination is shown.) Quarterly Results, SEK million 2000 1999 Quarter Q1 Q2 Q3 Q1 Q2 Q3 Q4 Invoiced sales 207,6 323,3 251,2 176,4 214,3 198,0 210,3 Goods for -131,1 -199,3 - 155,5 - 113,7 - 141,5 - 139,5 - 135,6 resale Gross profit 76,5 124,0 95,7 62,7 72,8 58,5 74,7 Gross profit in 36,9% 38,4% 38,1% 35,5% 34,0% 30,0% 35,5% % External costs -38,6 - 47,5 - 43,2 - 32,7 - 22,6 - 17,7 - 29,4 Personnel costs -23,6 - 32,7 - 26,2 - 21,2 - 20,7 - 21,1 - 23,0 Depreciation - 3,9 - 5,1 - 5,3 - 3,1 - 3,5 - 3,3 - 4,1 Allocated SPP 8,0 Operating 10,4 46,7 21,0 5,7 26,0 16,4 18,2 profit/loss Interest income 0,5 0,7 0,7 1,2 0,9 0,5 0,1 Interest - 3,6 - 5,1 - 5,5 - 4,7 - 2,5 - 3,7 - 4,1 expense Profit after 7,3 42,3 16,2 2,2 24,4 13,2 14,2 net financial items Tax - 3,0 - 11,9 - 6,5 - 0,8 - 6,8 - 4,0 - 5,8 Minority share - 0,4 0,2 - 0,2 - 0,1 - 0,2 0,2 Result for the 3,9 30,6 9,5 1,3 17,6 9,0 8,6 period Balance Sheet SEK million Sept 30 Sept 30 Dec 31 2000 1999 1999 Assets Intangible fixed assets 118,6 45,9 59,4 Tangible fixed assets 49,1 40,7 39,4 Stock 505,8 313,3 275,8 Accounts receivable 208,5 174,4 137,6 Other short-term receivables 45,0 20,8 15,0 Liquid assets 7,8 38,4 41,8 Total assets 934,8 633,5 569,0 Total liabilities and shareholders' equity Shareholders' equity 326,2 190,1 198,8 Minority interest 1,7 1,4 1,2 Interest-bearing liabilities 486,2 357,1 290,5 Non-interest-bearing liabilities 120,7 84,9 78,5 Total liabilities and shareholders' equity 934,8 633,5 569,0 Funds Statement SEK million Jan - Jan - Jan - Sept Sept Dec 1999 1999 2000 Current operations Cash flow before changes in working capital 66,2 39,8 54,7 Items not included in the cash flow Depreciation 14,3 9,9 13,9 Paid tax - 15,8 - 7,9 -11,6 Cash flow before changes in working capital 64,7 41,8 57,0 Changes in working capital -242,1 - 124,6 - 53,6 Cash flow after changes in working capital -177,4 - 82,8 3,4 Investment in fixed assets - 21,0 - 17,5 - 35,0 Sale of fixed assets, net 2,2 0.4 2,5 Cash flow after investments - 18,8 - 17,1 - 32,5 Loans raised 174,5 111,4 45,4 Dividends paid - 12.0 - 5.6 - 5,7 Cash flow from the financial business 162,5 105,8 39,7 Cash flow for the year - 33,7 5,9 10,6 Available funds in the beginning of the year 41.8 32,4 32,4 Exchange rate differences in available funds - 0.3 - - 1,2 Available funds in the end of the year 7,8 38,3 41,8 Key Figures SEK million Jan-Sept Jan-Sept Jan-Dec 2000 1999 1999 Growth in sales 32,8 9,0 12,5 Sales per employee 3,4 2,6 3,3 Gross profit margin, % 37,9 33,0 33,6 Operating margin, % 10,0 8,2 8,3 Profit margin, % 5,6 4,7 4,6 Return of shareholder's equity, % 22,4 20,8 19,9 Return of capital employed, % 16,4 14,1 15,3 Equity ratio, % 35,1 30,0 35,1 Debt/equity ratio, % 146,6 168,0 125,0 Interest cover ratio, times 5,6 4,6 4,6 Rate of turnover in capital, times 1,4 1,4 1,5 Rate of stock turnover, times 1,7 1,9 2,1 Investments 18,8 17,1 32,5 Cash flow after investments - 196,2 - 99,9 - 29,1 Profit per share, SEK before dilution 6,92 4,65* 6,10* Profit per share after dilution 6,88 - - Shareholder's equity per share, SEK 45,95 31,5* 33,15* Share price, December 31, SEK - - 87,5* Dividend per share, SEK - - 2,00* * Split 2:1 taken into account Shareholders New Wave had 3.495 shareholders at September 30, 2000. Institutional investors accounted for 24 per cent of the capital and 5 per cent of the votes. The ten largest shareholders accounted for 66,1 per cent of the capital and 89,0 per cent of the votes. Foreign investors accounted for 7,7 per cent of the capital and 3,3 per cent of the votes. New Wave's Share Structure Share series Number Number Percentage Percentage of shares of votes of capital of votes Series A shares 2,918,460 29,184,600 41.10% 87.47% Series B shares 4,181,644 4,181,644 58.90% 12.53% Total 7,100,104 33,366,244 100.00% 100.00% New Wave's Ten Major Shareholders Shareholder Number Percentage Percentage Number of shares of capital of votes of votes Torsten Jansson 77.000 B / 38.8% 80.5% 26,861,600 2,678,460 A Småbolagsfonden 335,700 B 4.7% 1.0% 335,700 Öresund Invest 285,000 B 4.0% 0.9% 285,000 Banque Intl a 282,600 B 4.0% 0.8% 282,600 Luxembourg CR Suisse EQT 280,000 B 3.9% 0.8% 280,000 Domani 239,764 B 3.4% 0.7% 239,764 Catella Reavinstfond 160,000 B 2.3% 0.5% 160,000 Birgitta Möller 151,783 B 2.1% 0.5% 151,783 Niclas Möller 102,954 B 1.5% 0.3% 102,954 Tord Rosén 100,000 A 1.4% 3.0% 1,000,000 Total 4,693,261 66.1% 89.0% 29,699,401 Distribution of Shareholders New Wave Sept 30, 2000 Number Number Percentage Percentage of shares of votes of capital of votes Sweden 6,551,376 32,277,516 92.3% 96.70% Owners residing outside Sweden, exkl. USA 546,928 1,086,928 7.7% 3.30% USA 1,800 1,800 0.0% 0.00% Total 7,100,104 33,366,244 100.00% 100.00% The New Wave Group in Brief New Wave is a clothing company that creates, acquires and develops brands in the leisure industry. New Wave operates in two business areas; in the corporate profiling market, selling to independent profiling companies, and the retail market, selling mainly to sportswear retailers. By operating in both of these market sectors, the Group achieves co- ordination advantage and a better risk spread. The Group's best-known brands are Clique, Craft, Grizzly, James Harvest Sportswear, New Wave, Printer and Pax. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/11/01/20001101BIT00460/bit0001.doc http://www.bit.se/bitonline/2000/11/01/20001101BIT00460/bit0002.pdf