Interim Report New Wave Group AB (publ)

Interim Report New Wave Group AB (publ) January-September 2002 Continued growth and a better result than the preceding year. ·During January - September 2002, New Wave increased its sales by 22 percent to SEK 1,108.8 (911.6) million. ·The result after net financial items increased by SEK 4.6 millions to 59.1 (54.5) million, of which acquired units (which mainly have earning ability during the fourth quarter) accounted for SEK -1.3 million. ·The result after net financial items for the third quarter increased by SEK 7 million to 7.3 (0.7) million. The first and third quarters are generally weak, while the second and fourth quarters tend to be stronger. ·The Profiling business area increased its sales by 17 percent to SEK 687.6 (588.0) million. The result after financial items decreased by SEK 2.0 million to SEK 43.8 (45.8) million. Acquired units accounted for SEK -2.0 million. ·The Retailing business area increased its sales by 30 percent to SEK 421.2 (323.6) million. The result after net financial items increased by SEK 6.6 million to SEK 15.3 (8.7) million. Acquired units accounted for SEK 0.7 million. ·New Wave judges that the economical situation still is weak, but the prognosis of sales of between SEK 1,600 and 1,800 million as well as a result exceeding the preceding year remains. ·X-Tend is consolidated as per 1 August 2002 and is not estimated to have any influence on the Group's result for 2002. ·Lensen Beheer B.V. (Toppoint) is consolidated as per 1 July 2002 and is expected to influence the Group's result for 2002 and 2003 slightly, due to several planned market investments. ·New Wave judges that the Corporate Profiling business area has decreased by 10 - 15 during 2002 compared to 2001 and that New Wave has gained market shares in all countries. ·New Wave expects a good result for the fourth quarter. SALES During January - September 2002, New Wave's sales increased by 22 percent to SEK 1,108.8 (911.6) million. For the Profiling business area, sales increased by 17 percent. The Retailing business area's sales increased by 30 percent. Sales in the Swedish market increased by 23 percent and amounted to SEK 676.3 (551.4) million. Sales in the foreign markets increased by 20 percent and amounted to SEK 432.5 (360.2) million. RESULT During January - September 2002, the result after financial items increased by SEK 4.6 million and amounted to SEK 59.1 (54.5) million. The corresponding increase for the third quarter was SEK 6.6 million, which gave a result of SEK 7.3 (0.7) million. The result after financial items has been negatively affected by SEK 1.3 million by acquired units that mainly have their earning ability during the fourth quarter. Therefore, New Wave expects a strong fourth quarter. The gross profit margin increased, compared to the preceding year, and amounted to 43.2 (38.2) percent. This improvement from the preceding year is mainly due to larger gross profit from New Wave in Spain, Sko Team in Sweden as well as better purchase prices and improved logistics. Lensen Beheer (Toppoint), which produces printed pens, mugs, bags and key rings, also contributes to the larger gross profit margin. Segerkoncernen, which by itself produces parts of its sales - hats and socks - contributes as well. The Group's external costs as part of sales increased and amounted to 17.8 (16.3) percent of the Group's sales. The personnel costs increased and amounted to 15 (12.1) percent of the Group's sales. The increased costs can partly be referred to that New Wave owns production units that are cost and personnel intense, but at the same time these generate a larger gross profit. The increased costs are also due to the market investments that New Wave does for further expansion. Depreciations have increased by SEK 11.0 million to SEK 28.3 (17.3) million, of which SEK 4.5 million is goodwill depreciations and SEK 6.5 million other fixed assets; mainly of acquired units. THE CORPORATE PROFILING BUSINESS AREA During January - September 2002, the business area's sales increased by 17 percent to SEK 687.6 (588.0) million. The profit after financial items decreased by SEK 2.0 million and amounted to SEK 43.8 (45.8) million. The improvement in sales was below the expected. Acquired companies reduced the result by SEK 2.0 million. New Wave judges that the Corporate Profiling business area has decreased by approximately 10 - 15 percent during 2002, compared to 2001, and that New Wave has gained market shares in all markets. THE RETAILING BUSINESS AREA During January - September 2002, the business area's sales increased by 30.2 percent to SEK 421.2 (323.6) million. The profit after net financial items increased by SEK 6.6 million and amounted to SEK 15.3 (8.7) million. Acquired companies affected the result positively by SEK 0.7 million. ESTABLISHMENTS ABROAD Germany Sales have increased by 3 percent, compared to the preceding year. The weak economic situation in Germany has lead to a decrease in the market. The result for the whole year will be positive and the company keeps on gaining market shares. Denmark Sales have increased by 8 percent, compared to the preceding year. The margin development has been good, but external and personnel costs have increased due to the sales growth, which was lower than expected. Norway Sales have increased by 6 percent, compared to the preceding year, to SEK103.1 million. The market has decreased in Norway. The margin development has been good, but external and personnel costs have increased, which has lead to a somewhat lower profit than the preceding year. Finland Sales have increased by 20 percent, compared to the preceding year. External and personnel costs have increased, due to the launching of more concepts (Mac One and Jingham etc.), which can be considered as a market investment for future growth. Italy Sales have increased by 6 percent, compared to the preceding year, to SEK 62.0 million, which is good considering that New Wave, Clique and Craft are the only launched trademarks there so far. The result after financial items has improved as well. Spain Sales have increased by 25 percent, compared to the preceding year, which is very good after the losses, partly due to management irregularities, that struck Spain the preceding year. The company accounted for a positive result after the nine first months of 2002 and shows strong growth within promowear. Benelux New Wave Sportswear B.V. has increased its sales by 4 percent, compared to the preceding year. External and personnel costs have increased due to lower sales than expected, which has lead to less profit. However, the Group management expects heavy growth in New Wave Sportswear B.V. through increased focus and synergies with Lensen Beheer B.V. (Toppoint). The development of Lensen Beheer B.V. and X-tend B.V. is going according to plan. The Benelux countries have gained considerably greater importance thanks to the acquisitions of X-tend B.V. and Lensen Beheer B.V. Great Britain The development in Great Britain has been troublesome. Nevertheless, sales are at the same level as the preceding year. Build-up efforts in the marketing, sellers and stock departments have brought on a high cost level. New Wave has since last summer increased its focus on New Wave Sportswear Ltd and Torsten Jansson, the CEO of New Wave Group AB, is now the pro tempore Vice President of the British subsidiary. The former Vice President will become the head of New Wave's trading operations in Great Britain. Peter Koski will start his career in New Wave Sportswear Ltd as Executive Vice President as per 1 January 2003 and will after the first half-year become the Vice President. Today Peter is the Executive Vice President and Financial Manager of Munksjö Paper S.r.l. in Italy. The result development in Great Britain is still modest, which will affect New Wave's result for 2002 negatively. However, a heavy result improvement is expected as early as 2003. France Sales increased by 21 percent, compared to the preceding year, and the result has improved. THE MARKET AS A WHOLE New Wave judges that the Corporate Profiling business area has decreased by 10 - 15 percent during 2002, compared to 2001, and that New Wave has gained market shares in all markets. FRANTEXTIL During 2002, New Wave acquired all shares in Frantextilkoncernen, which is consolidated as per 1 January, 2002. The first half-year was weaker than expected, but the larger part of Frantextil's result and sales can be seen in the third and fourth quarter. The coming Christmas trade looks promising. 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. A fusion of the two companies has been entered into. Synergies: In Frantextil and D&J, New Wave has found 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. X-TEND New Wave has on 30 July 2002 acquired 51 percent of the shares in X-Tend B.V. in the Netherlands. X-Tend has for ten years distributed the trademark CRAFT in the Benelux countries. The acquisition price corresponds to the shares' part of the shareholders' equity of the company. The company's management owns the remaining shares. New Wave has an option to acquire the remaining shares within 5 years, at a purchase price that is based on the company's result for 2004 - 2006. New Wave intends to introduce the promowear concept Mac One / Jingham through X-Tend B.V. from the last quarter of 2002. That will however not contribute to a positive result 2002. X-Tend is expected to have sales of approximately SEK 25 million and to break-even or make a small profit. X-Tend is consolidated as per 1 August 2002 and will not have any affect on New Wave's result for 2002. THE LENSEN GROUP (TOPPOINT) New Wave has on 2 August 2002 acquired Lensen Beheer B.V. and its subsidiaries, from its founder Albert Lensen and the company's management. New Wave owns 75 percent and the company's management owns 25 percent of the company. New Wave will be able to acquire the remaining 25 percent after 2005 at a purchase price based on result. The Lensen Group's operations are concentrated to sales and production of a wide range of promotion and gift products under the trademarks Toppoint and M-Pen. Lensen holds a leading position in the Benelux countries as well as a strong position in Germany, France, Great Britain and Ireland among other countries. The Group's sales are estimated to be approximately SEK 250 million for 2002. The Group currently has 170 employees, most of which work in the Netherlands. Lensen Beheer B.V. has six subsidiaries, all of which are active within the Corporate Profiling business area. Lensen Beheer B.V. is consolidated as per 1 July 2002. The acquisition is expected to have small affects on the result for 2002 and 2003, since several market investments will be made. Synergies: Few of New Wave's and the Lensen Group's markets and products collide. Therefore, New Wave expects there to be great synergies within the sales, marketing and distribution areas in the future. This will demand market investments during the first year. PURCHASING FROM THE FAR EAST Robert Wu will be the Group's Asian manager, responsible for the New Wave office in China, which has 12 employees, and the New Wave office in Bangladesh, which has 22 employees. He will begin his work with developing New Wave's purchasing in the Far East as well as its trading operations in Europe on 1 February 2003. Today, Robert works as the regional manager for Isaberg Rapid AB. His location is Shanghai and his responsibilities cover Asia, New Zeeland and Australia. LOGISTICS The construction work of the new warehouse for the Profiling business area in Dingle 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 fourth quarter of 2002 as well as the first quarter of 2003. The warehouse is toll free and will primarily function as a backup warehouse for New Wave and Clique - New Wave's largest promowear trademarks in Europe. The new warehouse will lead to a reduction of external warehouses and also improve the service offered to subsidiaries in Europe. This will lead to lower capital binding in single warehouses as well as better service for the end-users. THE MARKET FOR THE CORPORATE PROFILING BUSINESS AREA The market for Corporate Profiling is a fragmented and fairly immature market all over Europe, consisting of a few large companies and many smaller ones. New Wave's goal is to use large scale advantages within the design / product development, purchasing, logistics, marketing and customer service areas to be the leader of the market's development as well as to build a stable platform all over Europe. New Wave's customers are retailers who in their turn sell to end-users. The retailers sell promowear and / or business gifts and / or working clothes. Through the most recent acquisitions (Sagaform, D&J and Toppoint), New Wave has entered the market for business gifts and is now a supplier with more to offer to its customers. New Wave also sees great large scale advantages in the business gifts market, which will be developed during 2003. THE MARKET FOR THE RETAILING BUSINESS AREA New Wave sells textile products, shoes and gifts under owned trademarks and trademarks on license to the Retailing business area. Large scale advantages between this area and the Corporate Profiling business area are reached within purchasing, design and logistics. New Wave focuses on the less fashion sensitive areas, such as Craft's functional underwear and Seger's socks. The positive development of Craft continues. Sagaform's sales in the Retailing business area is still stable. Sagaform is a good example of synergies between the Retailing and the Corporate Profiling business areas, since part of their range can be introduced to current New Wave's customers. The year previous to New Wave's acquisition of Sagaform, Sagaform had sales of approximately SEK 5 million within the Corporate Profiling business area and now, one year after the acquisition, the estimated sales are SEK 45 million within the same area. CAPITAL BINDING During the period in question, the capital binding of goods and claims has increased by SEK 64.2 million to SEK 997.6 (933.4) million. Acquired companies that were not part of the Group on 30 September 2001 (Frantextil, Toppoint and X-Tend), are binding SEK 130.6 million in stocks and claims. Thus, other companies have decreased their binding in stocks and claims by SEK 66.4 million. INVESTMENTS, FINANCING AND LIQUIDITY The Group's cash-effecting net investments in fixed assets amounted to SEK -125.4 (-66.5) million during January - September 2002. Cash flow amounted to SEK 7.3 (-24.0) million before investments and acquisitions and SEK - 118.1 (-90.5) million after investments and acquisitions during January - September 2002. Liquid funds amounted to SEK 12.1 million as at 30 September 2002, compared to SEK 78.0 million as at 30 September 2001. Net borrowings amounted to SEK 767.5 million as at 30 September 2002, compared to SEK 705.0 million as at 30 September 2001, an increase by SEK 62.5 million. PERSONNEL AND ORGANISATION The number of employees as at 30 September 2002 amounted to 721, compared with 468 as at 30 September 2001. The increase is mainly due to the acquisitions of Frantextil and the Lensen Group. VIEWS ON THE FISCAL YEARS 2002 AND 2003 New Wave expects the Group's result to improve, even though the economic situation still is weak, something that brings on uneven sales and difficulties in making any prognosis of the development. Sales for the year 2002 are estimated to amount to approximately SEK 1,600 - 1,800 million and the result is expected to improve from the preceding year. THE PARENT COMPANY Sales amounted to SEK 70.4 (75.9) million. The result after financial items amounted to SEK 38.0 (41.7) million. During January - September 2002, the net borrowing increased by SEK 85.8 million and net investments amounted to SEK 34.5 (67.9) million. OPTION PROGRAM According to a decision made by the Annual General Meeting, New Wave has made 300,000 option rights at SEK 2.50 per item out to persons in leading positions with the right to acquire shares (1 June and 30 June) in 2005 at the fixed price of SEK 106.40 (after the last split). Options with a total value of SEK 601,000 (equivalent to 80%) were signed as at 30 September. ACCOUNTING METHOD The accounting method that was used during the preceding year has been practised now as well, except for one change that has been accounted for in the section Shareholders' equity. (See the Balance Sheet in the Financial Information section.) COMING INFORMATION Report for January - December 2002 will be published on 18 February 2003. Borås, 31 October 2002 New Wave Group AB (publ.) Torsten Jansson CEO 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 AUDITION REPORT We have briefly audited this interim report according to the recommendation given by the FAR (the Swedish association for authorized auditors). A brief audition is very limited. Nothing that shows that this interim report does not fulfil the demands drawn up by the laws that regulate the stock market and annual reports has been found. Borås, 31 October 2002-10-29 Bertel Enlund Per Schwartzman Authorized auditorAuthorized auditor Ernst & Young AB Ernst & Young AB ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/10/31/20021031BIT00020/wkr0001.doc The full report http://www.waymaker.net/bitonline/2002/10/31/20021031BIT00020/wkr0002.pdf The full report

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New Wave Group is a clothing company concentrating on sportswear and casual clothes.

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