Interim Report New Wave Group AB (publ)

Interim Report New Wave Group AB (publ) January-June 2002 Strong second quarter · During January - March 2002, New Wave increased its sales by 22 percent and to SEK 327.6 (267.9) million. · The result after financial items decreased by SEK 11.7 to -2.9 (8.8) millions, of which acquired units (which mainly have earning ability during the 4:2 quarter) accounted for SEK -3.6 million. · The Profiling business area increased its sales by 5 percent to SEK 181.3 (172.5) million. The result after financial items decreased by SEK 12.8 million to SEK -7.4 (5.4) million. Acquired units accounted for SEK -3.5 million. Sales during March were much worse than expected, mainly in Sweden and Germany. Sales during April were much better. · The Retailing business area increased its sales by 53 percent to SEK 146.3 (95.4) million. The result after financial items increased by SEK 1.1 million to SEK 4.5 (3.4) million. · The cash flow, after a change in operating capital, amounts to SEK -11.6 (-61.5) million. · The Board has decided to suggest to the annual general meeting that the dividend should be SEK 3.00 (2.50) per share, totalling to SEK 21.8 million and split 2:1. · The Board has decided to withdraw its suggestion of a new issue to the annual general meeting. The cause is the current state of the market, as well as the fact that no new capital from the shareholders is necessary for now. · Through the season changes in the acquired companies, as well as the increased turbulence in the market, the second and fourth quarter have a greater impact on the result for the whole year. · Since Easter, the sales have got a new start after the difficulties during March. In New Wave's judgement, the economic situation is still very shaky, but the prognosis of sales of SEK 1.6-1.8 million as well as a result that is better than the result of the preceding year remains. SALES During January - March 2002, New Wave's sales increased by 22 percent to SEK 327.6 (267.9) million. For the Profiling business area, sales increased by 5 percent. March was a tough month for the Profiling business area, mainly in Sweden and Germany. The Retailing business area's sales increased by 53 percent. Sales in the Swedish market increased by 35 percent and amounted to SEK 218.2 (161.2) million. Sales in the foreign markets increased by 3 percent and amounted to SEK 109.4 (106.7) million. RESULT During January - March 2002, the result after financial items decreased by SEK 11.7 million and amounted to SEK -2.9 (8.8) million. The result after financial items has been negatively affected by SEK 3.6 million by acquired units that mainly have their earning ability during the fourth quarter. The gross profit margin increased, compared to the preceding year and amounted to 41.8 (38.3) percent. This improvement from the first quarter of the preceding year is mainly due to larger gross profit from Segerkoncernen (which was acquired on 1 September, 2001), Craft and the subsidiaries in Spain and Holland. The Group's external costs as part of sales increased and amounted to 21 (18) percent of the Group's sales. The personnel costs increased and amounted to 16 (13) percent of the Group's sales. The increased share of external and personnel costs in relation to sales can, compared to the preceding year, mainly be referred to acquired companies as well as New Wave's new operations abroad. Depreciations have increased by SEK 3.9 million to Sek 9.2 million, of which SEK 2.0 million is goodwill depreciations and SEK 1.9 million other fixed assets; mainly acquired units. THE PROFILING BUSINESS AREA During January - March 2002, the business area's sales increased by 5 percent to SEK 181.3 (172.5) million. The profit after financial items decreased by SEK 12.8 million and amounted to SEK -7.4 (5,4) million. The improvement in sales was below the expected and mainly due to, as accounted for above, extremely low sales during March. Acquired companies reduced the result by SEK -3.5 million. THE RETAILING BUSINESS AREA During January - March 2002, the business area's sales increased by 53 percent to SEK 146.3 (95.4) million. The profit after net financial items increased by SEK 1.1 million and amounted to SEK 4.5 (3.4) million. ESTABLISHMENTS ABROAD Germany The first quarter was weak, but during April things have taken a positive turn. Denmark Sales like the preceding year, which is lower than expected. Norway The first quarter was weak, but during April things have really taken a positive turn. Finland Continued positive development with good profitability, in spite of weak development of the market during March. Italy Good profit development and sales are also expected to get better. Spain After the loss in Spain last year, due to management irregularities among other things, the development of the company is now positive. It showed a positive result for the first quarter. Holland/Benelux Sales like the preceding year, which is lower than expected. Great Britain The development in Great Britain during 2001 was troublesome. Build-up efforts in the marketing, sellers and stock departments have brought on a high cost level. The first quarter was below the expected when it comes to sales, but the development has taken a positive turn, judging by the result, which was better than the preceding year. New Wave expects Great Britain to become one of the Group's largest markets. France The growth in sales was good, even though it was below New Wave's expectations. However, New Wave judges that the efforts in France will take a positive turn. SAGAFORM AB During the second quarter of 2001, New Wave acquired 50.1 percent of the votes and capital in Sagaform. The largest part of sales and profit in Sagaform can be found in the fourth quarter. The Sagaform Group is expected to have sales of approximately SEK 120 million during 2002, with good profitability. Synergies: The integration of Sagaform is according to plan and Sagaform's sales to the profiling market is expected to amount to SEK 40 million, compared to SEK 5 million per year before the acquisition. Since New Wave's other profiling companies offers parts of Sagaform's range to their customers, a large number of customers are reached. 4YOURLOGO.COM The e-trading site 4yourlogo.com has been launched in the Swedish and Norwegian markets. During the next few years, the site will be launched in all countries where New Wave is distributing promowear. SEGERKONCERNEN AB New Wave acquired all shares in Segerkoncernen AB in 2001. The company is consolidated as per 1 September, 2001. Seger has been developing according to plan, when it comes to both sales and result. Segerkoncernen is expected to have sales of SEK 150 million during 2002 with good profitability. Synergies: · Production will consist of caps, scarves and socks for the Profiling business area. New Wave expects a substantial increase in sales, since these ranges will be launched in the Swedish market, but also in other countries where New Wave operates. · Further launching of Seger outside of Sweden will be handled by sellers or distributors representing Craft in countries where Seger lacks distribution today. FRANTEXTIL During 2002, New Wave acquired all shares in Frantextildoncernen, which is consolidated as per 1 January, 2002. The first quarter was weaker than expected, but the larger part of Frantextil's result and sales can be seen in the third and fourth quarter. Frantextilkoncernen consists of two companies: Frantextil AB, which mainly supplies domestic textile products and terry cloth to the retailing market and Dahlin & Johansson Textil AB, which mainly supplies gifts and terry cloth to the Swedish market, but also to Norway and Finland. Synergies: In Frantextil and D&J, New Wave has got companies that complete the Group with terry cloth, domestic textile, business gifts and other gifts. This means that New Wave is able to offer a more complete range to its clients. MINORITY INTERESTS The rest of the outstanding shares in Dressmart AB have been paid after delivered arbitration. BUYING AND LOGISTICS The construction work of the new warehouse for the Profiling business area began during February 2002, and the warehouse will come into use at the end of the year. Initially, the operation of the new warehouse will affect the result negatively by SEK 2-4 million during the third and fourth quarters of 2002. The yearly estimated savings thereafter are estimated to be SEK 5- 7 million. CAPITAL BINDING During the period in question, the capital binding of goods and claims has increased by SEK 117.7 million to SEK 911.1 (793.4) million. Acquired companies that were not part of the company during the first quarter of 2001 (Sagaform, Segerkoncernen and Frantextil), are binding SEK 179 million in stocks and claims. Therefore, other companies have decreased by SEK 61.3 million thanks to the continued focus on logistics. INVESTMENTS, FINANCING AND LIQUIDITY The Group's cash-effecting net investments in fixed assets amounted to SEK -35.2 (4.1) million during January - March 2002. Cash flow after investments and acquisitions amounted to SEK -46.8 (86.1) million during January - March 2002. Liquid funds amounted to SEK 4.0 million as at 31 March 2002, compared to SEK 33.9 million as at 31 March 2001. Net borrowings amounted to SEK 629.2 million as at 31 March 2002, compared to SEK 548.1 million as at 31 March 2001, an increase of SEK 81.1million. The Group has confirmed credit facilities of SEK 1,100 million. PERSONNEL AND ORGANISATION The number of employees as at 31 March 2002 amounted to 512, compared with 335 as at 31 March 2001. The increase is mainly due to the acquisitions of Sagaform, Frantextil and Segerkoncernen. VIEWS ON THE FISCAL YEAR 2002 New Wave expects the Group's result to improve, even though the economic situation is very unstable, something that brings on uneven sales and difficulties in making any prognosis of the development. This was obvious during the autumn, when the third quarter was much worse than expected and the fourth quarter was very strong. Sales for the year 2002 are estimated to be approximately SEK 1,600-1,800 million, even though March did not meet the expectations by far. The result is estimated to be better than the preceding year. THE PARENT COMPANY Sales decreased by 21 percent to SEK 20.5 (25.9) million. The result after financial items was SEK 10.9 (13.5) million. During January through March the net borrowing increased by SEK 24.1 million and net investments amounted to SEK 23.1 (-3.4) million. ANNUAL GENERAL MEETING The Annual General Meeting will take place on 28 May at 4 pm at the auditorium of Föreningssparbanken on ¤sbogatan 8 in Borås. DIVIDEND The Board of Directors decided to propose to the Annual General Meeting a dividend of SEK 3.00 (2.50) per share, corresponding to a total of SEK 21.8 million. SPLIT 2:1 The Board of Directors decided to propose to the Annual General Meeting a decrease of the share's nominal amount from SEK 1.00 to SEK 0.50 (split 2:1). NEW ISSUE The earlier considered new issue of SEK 100-150 million will not take place due to the current situation in the market, which has led to that the Group doesn't have enough liquidity for an expansion. However, the Board will demand authorization from the Annual General Meeting for a possible future new issue that might take place in connection with an expansion or acquisition. COMING INFORMATION · Annual General Meeting, 28 May 2002. · Report for January through June 2002 will be published on 20 August 2002. · Report for January through September will be published on 31 October 2002. Borås, 7 May 2002 New Wave Group AB (publ.) The Board of Directors FOR MORE INFORMATION, PLEASE CONTACT: Vice President Torsten Jansson Phone: +46 (0) 708 99 80 50, +46 (0) 33 22 58 55 E-mail: torsten.jansson@nwg.se Executive Vice President Göran Härstedt Phone: +46 (0) 708 99 80 17, +46 (0) 22 58 63 E-mail: goran.harstedt@nwg.se Chief Financial Officer Krister Magnusson Phone: +46 (0) 708 99 80 21, +46 (0) 33 22 58 54 E-Mail: krister.magnusson@nwg.se ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/08/20/20020820BIT00300/wkr0001.doc The full report http://www.waymaker.net/bitonline/2002/08/20/20020820BIT00300/wkr0002.pdf The full report