Interim report New Wave Group AB 1st Quarter

INTERIM REPORT NEW WAVE GROUP AB (publ) January - March 2000 "The strong profit improvement continues" * During the period January-March, 2000, New Wave increased it sales by 18 per cent to SEK 207.6 (176.4) million. * The profit after net financial items increased by 232 per cent and was SEK 7.3 (2.2) million. * The profit after net financial items for the period April 1999 to March 2000 was SEK 59.1 ( 36.4) million. * The Profiling business area increased sales by 26 per cent to SEK 113.7 (90.2) million. The profit for the Profiling business area after net financial items was SEK 4.2 (0.9) million. * The Retailing business area increased sales by 14 per cent to SEK 93.9 (82.6) million. The profit for the Retailing business area after net financial items was SEK 3.1 (1.3) million. * On January 19, 2000, a public offer was presented to the shareholders of Texet AB. The offer is valid to April 25, 2000. * New Wave has decided to establish e-commerce for the Profiling business area. * On April 2, 2000 a subsidiary company, wholly owned by New Wave, was established on the French market. Sales During the period January to March 2000, New Wave sales increased by 18 per cent to SEK 207.6 (176.4) million. For the Profiling business area, sales rose by 26 per cent. For the Retailing business area sales rose by 14 per cent. Sales on the Swedish market increased by 6 per cent to SEK 129.4 (122.3) million. The corresponding increase on the foreign markets amounted to 45 per cent. Profit During the period January to March 2000, profit after net financial items increased to 232 per cent and amounted to 7.3 (2.2) million. The gross profit margin increased compared to the preceding year and amounted 36.9 (35.5) per cent. The profit after net financial items for the period April 1999-March 2000 amounted to SEK 59.1 (36.4) million. The Profiling business area The Profiling business area sales rose by 26 per cent to SEK 113.7 (90.2) million. The profit after net financial items was SEK 4.2 (0.9) million. The Retailing business area The Retailing business area sales rose by 14 per cent to SEK 93.9 (86.2) million. The profit after net financial items was SEK 3.1 (1.3) million . Establishments abroad The Netherlands Since September 1, 1999 , the acquired business of the profiling company Town & Country VOF operates within New Wave Sportswear B.V. This market is evolving well in terms of sales as well as profits. Untied 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. New Wave has, during the first quarter of 2000, introduced Clique onto the British market. The distribution of Airak will only continue on the British market. Sales territories has also been established in Scotland and Ireland. The British Market is expected in the long run to be the business area Profiles biggest market in Europe. The development after the acquisition so far has been better than expected and the interest from the market is great. France On April 2, 2000, a subsidiary company was formed on the French market. All staff has been employed and the office has been set up in Lyon. Initially, distribution will be administered from New Wave's subsidiary company in Italy. Belgium A sales office will be established during the second quarter of 2000. Distribution to the Belgian market will be from the Dutch company Switzerland The establishment of business in Switzerland will be moved forward to the end of 2000 or the beginning of 2001. Denmark Both sales and profit trends in Denmark are good and are in line with New Wave's expectations. Germany Growth in sales remains good in Germany. The sales for the Profiling business area has exceed last year's figure 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 with last year. Altogether will probably the market investments in United Kingdom, France and Belgium initially effects the financial results negatively. Public Offer Texet AB At the extra General Meeting of March 31, accepted the Board of Director's proposal to make a public offer to the shareholders of Texet AB (publ) ("Texet") to acquire all shares through a special new issue. Texet is listed on the Swedish IM-list. Previously, New Wave has held no shares in Texet. The major shareholders of Texet, who owns 87 per cent of the votes and 56 per cent of the capital in Texet are positive towards the offer. Through the acquisition of Texet, New Wave confirms its leading position as the leading Profiling company in Northern Europe and one of the leading players in Europe as a whole. The international distribution net of Texet will provide a strong base for New Wave's further expansion. The value of the offer The offer equals a bidding offer of SEK 95,496,621. The Reason for the Offer Through the acquisition of Texet, New Wave will be one of the leading Profiling companies in Europe. Simultaneously, New Wave receives one of the strongest brands on the Profiling market, James Harvest Sportswear. New Wave expects large synergy effects, e.g. through co-ordinated purchase of goods as well as services, estimating approximately SEK 10-15 million nd within a year from the take-over, which is planned to the 2 quarter of 2000. Furthermore, long-term economies of scale will be gained through actions regarding logistics and marketing, estimated to another SEK 7-10 million on an annual basis. Altogether, this will produce long-term synergy effects of approximately SEK 17-25 million. The new group has a pro-forma turnover 1999 of SEK 984.4 million. For 2000, the merged turnover is estimated to exceed SEK 1,200 million. After the acquisition, New Wave, will employ approximately 260 people, of which 38 are employed in Texet. The Managing Director of Texet, Björn Härenstam, will remain in his position. The intention is to let Texet continue working through its present channels of distribution. E-commerce New Wave Group AB has decided to establish an e-commerce company 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 e-commerce company will put all New Wave Groups' brands/concepts in the Profiling business area 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 the 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 starting up. bred bas. Investments The Group's net investments in fixed assets for the period Jan-Mar 2000 was SEK 4.3 (7.1) million. Financing and Liquidity Cash flow after investments for the period was -SEK 59.5 (92.7) million. Liquid assets at the end of March 2000 were SEK 32.6 million compared with SEK 20.7 million for the same period in 1999. On March 31, 2000, net borrowing was SEK 341.2 million compared with SEK 329.6 million for the corresponding period in 1999. This is an increase of SEK 11.6 million. Personnel The number of people employed on a yearly basis over the past 12 months (April 1999-March 2000) was 262, compared with 221 people during the period April 1998-March 1999. This increase is due to personnel employed in the acquired companies in the Netherlands and United Kingdom. Refund SPP Regarding information from SPP the allocated refund will be SEK 6.1 million. The amount has not yet been accounted. Share splitting The board has decided to suggest the Annual General Meeting to effect a share splitting of the New Wave Group AB's shares 2:1. The total amount of shares increases from 2 997 404 till 5 994 808. The Parent Company During January - March 2000 the sales increased by 39 per sent to SEK 10,2 (7.6) million. The profit after financial items reduced to SEK 2.0 (2.6) million. For the period January-March 2000, net borrowing increased by SEK 25.1 million and investments by SEK 1.3 million. Annual General Meeting The Annual General Meeting of New Wave Group AB will take place on May 12, 2000 at 2 p.m. at Föreningssparbanken, Åsbogatan 8, Borås. Payment of Dividend The board has decided to suggest that the Annual General Meeting increases the dividend to SEK 4.00 (1.90) per share for the business year 1999, totalling approximately SEK 12.0 million. Borås, April 19, 2000 New Wave Group AB (publ) Board of Directors Forthcoming information Report for the period January-June 2000 will be published on July 27, 2000 Report for the period January-September 2000 will be published on November 1, 2000. For further information, please contact: General Manager, Torsten Jansson, telephone +46 708 99 80 50, +46 33 22 58 55, E-mail: torsten.jansson@nwg.se Financial Manager, Jörgen Bender, telephone +46 708 99 80 55, +46 33 22 58 54, E-mail: jorgen.bender@nwg.se ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/19/20000419BIT01070/bit0001.doc http://www.bit.se/bitonline/2000/04/19/20000419BIT01070/bit0002.pdf