Earnings Release • Feb 24, 2011
Earnings Release
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"In 2010 we implemented several important changes to focus on underwear and ensure our continued profitable growth. We have adapted the organization, accelerated the pace of product development and modified our cooperations with distributors. We have also licensed out the product areas to improve their prospects. For the Group, the last quarter of the year generated positive sales and earnings trends. On the other hand, we saw several markets in Southern Europe have a tough time financially, and it will take time to raise volumes in the newly established markets," says Arthur Engel, President.
| SEK million | Oct-Dec 2010 |
Oct-Dec 2009 |
Full-year 2010 |
Full-year 2009 |
|---|---|---|---|---|
| Net sales | 115.9 | 102.2 | 536.0 | 519.9 |
| Gross profit margin, % | 56.3 | 55.7 | 53.6 | 51.3 |
| Operating profit | 24.5 | 19.4 | 126.0 | 112.6 |
| Operating margin, % | 21.2 | 19.0 | 23.5 | 21.7 |
| Profit after tax | 17.6 | 13.5 | 90.8 | 80.9 |
| Earnings per share, SEK | 0.70 | 0.54 | 3.61 | 3.22 |
| Earnings per share after dilution, SEK | 0.70 | 0.53 | 3.57 | 3.21 |
| Brand sales* | 428 | 410 | 1,733 | 1,872 |
*Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales.
For Björn Borg, 2010 was dominated by the work we did to adapt our focus to underwear and further expansion. This meant a year of changes and new investments. We have bolstered the organization with added competence and accelerated our product development. The footwear product area has been licensed out, as was clothing recently to a new partly owned company. We have also devoted more attention to e-commerce. All this is important in order to create a stable platform for the continued development of the Group and the brand.
The development of our biggest area, underwear, was one of our most important jobs during the year. And we succeeded. We have broadened the product assortment for both women and men and delivered exciting new products. It is a matter of testing to find out what is right in each area and focusing on products that gain traction in our markets. We have expanded our offering in new segments by adding a range of bras, a kids collection (launched in spring 2010) and the sportswear collection.
Now that we are fully concentrating on underwear at Björn Borg in Stockholm, we have decided to license out other product groups to external specialists. We feel certain that this will create the best opportunities for underwear and other products.
After the conclusion of the year, in January, we announced a new sportswear venture based in the Netherlands, Björn Borg Sport. By consolidating the competence and experience in the Dutch apparel operations with us here at Björn Borg, we hope to create the best prospects for growth and expand our clothing to more markets. The clothing collections will focus on fashionable, functional sportswear, a product category where we see good opportunities to grow.
The expansion of the apparel operations will mean higher costs in 2011 for the Group, which owns 51 percent of the company, but we see good financial potential going forward.
Footwear operations were taken over in early 2010 by an international company, Trend Design Group. Since then we have seen the product area grow and develop.
Another important step during the year was Björn Borg's takeover of the operations in England from the previous distributor. The organization is in place and the fall collections are being shown with the support of a new showroom at Piccadilly in London. In the U.S., we are mainly focused on expanding our e-commerce presence.
In recent years we have taken important steps in our expansion in cooperation with external distributors. It has become increasingly clear that you need patience and considerable resources to establish a long-term presence in a new market, especially in a tough economic climate. Because of this, we are introducing a two-year test period on cooperations with new distributors in order to evaluate market conditions and the distributor's opportunity and ability to cultivate the market. During this introductory stage, we will assess the market's future development potential.
From several perspectives, 2010 was a good year for Björn Borg, with sales, earnings and margins all rising. We saw the important Swedish market develop positively and greater stability in several markets that had had a tough period. We have begun 2011 with a stable platform in place from which we will continue to invest in future growth. The challenges we face include the cost increases we are seeing in raw materials, production and shipping, as well as the uncertainty that still exists in several of our European markets.
Arthur Engel, President
Brand sales (excluding VAT) for the fourth quarter of 2010 increased by 4 percent to SEK 428 million (410). For the full-year 2010 brand sales decreased by 7 percent to SEK 1,733 million (1,872). Adjusted for currency effects (stronger SEK), sales increased by 12 percent for the quarter and decreased by 1 percent for the full-year 2010. The important Swedish market reported continued growth during the fourth quarter.
Brand sales in the underwear product area fell by 8 percent for the full-year 2010 compared with 2009. Underwear accounted for 67 percent (68) of brand sales during the period.
Sales in the licensed footwear product area decreased by 13 percent for the year as a whole, but rose substantially during the fourth quarter.
In other licensed products, sales decreased for women's clothing in the Netherlands and for bags, while eyewear and fragrances reported growth during the year. As a whole, licensed product sales fell by 9 percent in 2010, mainly due to the decline in women's clothing in the Netherlands.
* Estimated total sales of Björn Borg products at the consumer level, excluding VAT, Borg stores, of which 10 (10) are Group-owned. based on reported wholesale sales.
** Underwear: Men's and women's underwear, swimwear and socks. Adjacent products: Men's clothing. Licensed products: Bags, fragrances, eyewear and women's clothing in the Netherlands.
Smaller markets accounted for 9 percent (10) of total brand sales during the year. Among larger markets, Sweden and Belgium reported growth in 2010, while Norway, Denmark and the Netherlands saw sales decline slightly compared with the previous year. During the fourth quarter sales in the Netherlands were nearly unchanged. Among smaller markets, Finland and Germany posted strong sales trends during the year.
The takeover of the English operations from the previous distributor continued during the fourth quarter.
The Spanish distributor filed for bankruptcy at the end of 2010. Because of the business model Björn Borg uses with its distributors, the bankruptcy has not caused any significant costs for the Group. There is a strong interest in the brand in the country, and negotiations are currently being held with potential partners in the Spanish market.
The previously announced letter of intent on distribution in Poland has been canceled.
During the first quarter of 2011 Björn Borg signed the letters of intent with new distributors in Italy and France. In the company's estimation, the new distributors have the capacity for the necessary investments to establish the brand in these markets
In recent years Björn Borg has expanded to a number of new markets in cooperation with external distributors. The Group has tightened its criteria for new distributors in terms of resources, contact networks and experience. In 2011 Björn Borg will introduce a two-year test period on cooperations with new distributors in order to evaluate market conditions and the distributor's opportunity and ability to cultivate the market. During this introductory stage, we will assess the market's future development potential.
An outlet in Germany was opened by the German distributor during the fourth quarter of 2010. No other changes were made during the year. At year-end there were 47 (46) Björn
Sales and operating profit increased during the fourth quarter.
Group sales during the fourth quarter amounted to SEK 115.9 million (102.2), an increase of 13 percent. Sales were positively affected by higher sales at the wholesale level. The increase was partly due to delayed shipments from the third quarter. Sales within product development trended slightly higher, while retail sales decreased slightly. Excluding nonrecurring revenue in 2009, retail sales showed a slight increase. Excluding currency effects, net sales rose by 15 percent.
Group sales during the year amounted to SEK 536.0 million (519.9), an increase of 3 percent. The increase came from product development (export sales to distributors) and wholesale operations, while lower footwear exports to the Netherlands negatively affected sales in the first quarter of 2010. Sales for Group-owned retail operations decreased. Excluding currency effects, net sales increased by 7 percent.
The gross profit margin rose during the fourth quarter to 56.3 percent (55.7), which was the result of an increased focus on pricing.
Operating profit increased by 26 percent to SEK 24.5 million (19.4) during the quarter with an operating margin of 21.2 percent (19.0). Profit before tax increased to SEK 24.2 million (19.7).
Operating profit was positively affected by increased sales and the improved gross margin. Continued investments in marketing/sales activities and human resources, as well as certain investments in the British market, raised operating expenses.
The gross profit margin increased during the year to 53.6 percent (51.3). Operating profit rose by 12 percent to SEK 126.0 million (112.6) with an operating margin of 23.5 percent (21.7). Profit before tax increased to SEK 124.0 million (111.7). Operating expenses as a share of net sales amounted to 30.1 percent (29.6).
The higher gross margin was partly due to a larger share of higher-margin sales within product development, and to some extent to a weaker USD compared with 2009, which has had a positive effect on the wholesale operations. Increased operating expenses were mainly due to an agreement with the former British distributor during the second quarter, but also to a staffing increase in e-commerce and administration as well as higher marketing expenses. Further cost efficiencies, together with lower investments in the U.S., have compensated positively.
As of December 31, 2010 the company had 25,148,384 shares outstanding. Earnings per share before and after dilution amounted to SEK 3.61 (3.22) and SEK 3.57 (3.21), respectively.
The Group consists as of December 31, 2010 of nine companies that operate under the Björn Borg brand on every level from product development to wholesaling and consumer sales in its own Björn Borg stores.
Sales in the Brand and other segment primarily consist of royalty revenue, sales of services within the Björn Borg network and intra-Group services.
Net sales for the full-year reached SEK 135.5 million (138.3), a decrease of 2 percent. External sales amounted to SEK 51.1 million (54.9). The decrease was mainly due to lower brand sales for the underwear product area, licensed footwear and women's clothing in the Netherlands.
| Sales, SEK thousands | Operating profit, SEK thousands | Operating margin | |||||
|---|---|---|---|---|---|---|---|
| Business segment | Revenue source | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
| Brand and other | Royalties and services | 135,474 | 138,277 | 40,778 | 43,942 | 30% | 32% |
| Product development | Products | 360,633 | 339,179 | 64,371 | 50,984 | 18% | 15% |
| Wholesale operations | Wholesale sales | 208,237 | 193,815 | 21,342 | 9,635 | 10% | 5% |
| Retail | Retailers | 49,097 | 54,491 | –486 | 8,032 | – 1% | 15% |
| Less internal sales | –217,401 | –205,847 | – | – | – | – | |
| Total | 536,040 | 519,915 | 126,005 | 112,594 | 24% | 22% |
Operating profit amounted to SEK 40.8 million (43.9), a decrease of 7 percent for the full-year. Profit was affected by the lower sales, but also by the takeover of the British operations during second quarter as well as higher marketing and HR expenses.
The Group has global responsibility for development, design and production of underwear and adjacent products.
The business segment's net sales amounted to SEK 360.6 million (339.2) during the full-year, an increase of 6 percent. External sales amounted to SEK 270.0 million (257.4). Sales for 2010 were positively affected by an underlying volume increase in the underwear product area at the same time that lower footwear exports to the Netherlands and a lower USD had a negative effect.
Operating profit increased to SEK 64.4 million (51.0) as a result of the improved gross profit margin and increased sales.
The Björn Borg Group is the exclusive wholesaler for the underwear and adjacent products in Sweden, the U.S. and England as well as for footwear in Sweden and Finland.
Net sales in wholesale operations increased by 7 percent during the full-year to SEK 208.2 million (193.8). External sales amounted to SEK 165.9 million (153.1).
Operating profit amounted to SEK 21.3 million (9.6). The increase was due to higher sales, a weaker USD, which affected gross profit positively, and lower investments in the U.S.
The Björn Borg Group owns and operates eight stores in the Swedish market that sell underwear, adjacent products, footwear and licensed products. Additionally, Björn Borg operates two factory outlets and a web shop.
Comparable net sales in the Retail business segment amounted to SEK 49.1 million (54.5) during the full-year, a decrease of 10 percent. The outlets affected sales negatively, while the stores, with a couple of exceptions, developed positively. E-commerce reported sales growth, but from a low level.
The operating loss for the full-year was SEK -0.5 million, against a year-earlier profit of SEK 8.0 million, which was due to the lower sales, increased operating expenses, including for the web venture, and the renovation of a Stockholm store.
Intra-Group sales amounted to SEK 217.4 million (205.8) for the full-year 2010.
The Björn Borg Group is active in an industry with seasonal variations. Sales and earnings vary by quarter. With the current product mix, the third quarter is generally the weakest in terms of profit. See the figure on quarterly net sales and operating profit on page 4.
Cash flow from operating activities in the Group amounted to SEK 72.8 million (94.1) for the full-year 2010. The decline was mainly due to increased tied-up working capital compared with December 31, 2009, partly caused by larger deliveries to wholesale customers at the end of the year, which increased accounts receivable. Together with other current receivables, they were SEK 19.6 million higher than on December 31, 2009. At the same accounts payable were SEK 5.5 million lower than a year earlier.
Total investments in tangible and intangible non-current assets amounted to SEK 7.4 million (4.5) for the full-year, the large part of which was attributable to a new web platform, but also a store renovation and a new enterprise system. During the first quarter Björn Borg Services AB was acquired for SEK 9.1 million, excluding Björn Borg Services' cash and transaction expenses.
For the full-year 2010 cash & cash equivalents decreased by SEK 66.6 million, compared with an increase of SEK 55.0 million in the previous year, mainly due to an increased dividend to shareholders and the temporary increase in tied-up working capital. In 2010, SEK 125.7 million was distributed to shareholders, compared with SEK 37.6 million in 2009.
The Björn Borg Group's cash & cash equivalents and shortterm investments amounted to SEK 229.8 million (296.5) at the end of the period. The equity/assets ratio was 75.8 percent (76.2). The company has no interest-bearing liabilities.
No changes were made with regard to pledged assets and contingent liabilities compared with December 31, 2009. An agreement has been reached on the previously reported dispute with the English distributor regarding undelivered shipments, which affected profit for the second quarter of 2010. For further information, see note 22 on page 56 of the annual report 2009.
The average number of employees in the Group for the period January-December was 100 (92), of whom 63 (60) were women.
No transactions were executed with related parties.
In its operations, the Björn Borg Group is exposed to risks and uncertainties. For further information, refer to pages 37–38 in the annual report 2009.
As previously announced, Björn Borg established a new subsidiary in January 2011 to produce fashionable athletic and functional wear together with the Dutch distributor. The creation of a separate clothing operation based in the Netherlands is another element in the strategy to focus on Björn Borg's core business, underwear, based in Stockholm. The new company, Björn Borg Sport, builds on the clothing concept in the Netherlands, where Björn Borg has established operations and extensive experience from successfully managing the licensed womenswear company for about ten years. The collections, both women's and men's, will primarily include sports fashion and functional sportswear. The
products will be sold to distributors in Björn Borg's current markets, with an initial focus on larger markets. In 2011 Björn Borg Sport will handle some billing for shipments from the former Dutch apparel operations. This is expected to raise the Group's operating expenses by about SEK 10 million in 2011. The new clothing operation is considered to have good financial potential.
Björn Borg AB (publ) is primarily engaged in intra-Group activities. In addition, the company owns 100 percent of the shares in Björn Borg Brands AB, Björn Borg Footwear AB, Björn Borg Inc. and Björn Borg Services AB (dormant). In addition, the company owns 80 percent of the shares in Björn Borg UK.
The Parent Company's net sales for the fourth quarter amounted to SEK 16.1 million (16.1). For the full-year 2010 net sales amounted to SEK 45.8 million (47.6). Profit before tax amounted to SEK 97.6 million (96.9) for the fourth quarter and SEK 68.8 million (84.4) for the full-year. In 2010 a dividend of SEK 100.0 million (100.0) was received from subsidiaries. Cash & cash equivalents and short-term investments amounted to SEK 217.3 million (287.7) on December 31, 2010. For the full-year investments in tangible and intangible non-current assets amounted to SEK 0.8 million (2.3).
Björn Borg currently has 25,148,384 shares outstanding.
The financial objectives of Björn Borg's operations for the period 2010–2014 are as follows:
The long-term objective will be achieved if established markets grow slightly below the average growth target and new markets provide stronger growth. At the start of the period sales growth could fall below the target, since several new markets are being added.
Surplus liquidity generated by meeting the new financial objectives will be distributed gradually over the forecast period, starting in 2010.
Operating investments are expected to fall in the range of 2-5 percent of net sales depending on the addition of any new concept stores.
The Board of Directors has decided to recommend to the Annual General Meeting 2011 a distribution of SEK 5.20 per share for the financial year 2010, corresponding to 144 percent of net income; see above regarding financial objectives and dividend. As proposed, the distribution would be paid through an automatic redemption, whereby every share is divided into a common share and a redemption share. The redemption share will then automatically be redeemed for SEK 5.20 per share. Payment for the redemption share, contingent on the approval of the AGM, is expected to be made around May 25, 2011.
The Board of Directors' proposal corresponds to a transfer to shareholders of SEK 130.8 million (125.7). For 2009 a distribution of SEK 5.00 was paid per share, corresponding to 155 percent of net income.
The annual report for 2010 will be available on the company's website during the week of March 14, 2011.
The Annual General Meeting for the financial year 2010 will be held in Stockholm at 5:00 pm on April 14, 2011.
This interim report has been prepared in accordance with the Annual Accounts Act, RFR 1 Additional Accounting Regulations for Consolidated Groups (December 2010) and IAS 34 Interim Financial Reporting, and for the Parent Company in accordance with the Annual Accounts Act and RFR 2 Accounting in Legal Entities (December 2010).
The same accounting and valuation principles were applied during the year as in 2009, as described on page 47 of the annual report 2009, with the exceptions indicated below.
The new and revised IFRS and the interpretations from IFRIC applied by the Group as of January 1, 2010 have not had a significant impact on the Group's results or financial position, with the exception of IFRS 3 Business Combinations, according to which the transaction expenses in connection with acquisitions are not included in acquisition value and instead are treated as overhead and recognized through profit or loss. According to RFR 2, some of the changes which were introduced in IAS 1 2009 and applied in the consolidated financial statements shall also be applied in the Parent Company. Due to these changes, a separate statement of total comprehensive income and a statement of changes in equity are presented for the Parent Company in this year-end report.
This interim report has been reviewed by the company's auditors. Their review report can be found on page 12.
As a policy, the company does not issue earnings forecasts.
Condensed
| SEK thousands | Oct–Dec 2010 |
Oct–Dec 2009 |
Full-year 2010 |
Full-year 2009 |
|---|---|---|---|---|
| Net sales | 115,893 | 102,247 | 536,040 | 519,915 |
| Cost of goods sold | –50,677 | –45,333 | –248,844 | –253,271 |
| Gross profit | 65,216 | 56,914 | 287,196 | 266,644 |
| Distribution expenses | –27,621 | –24,897 | –106,643 | –102,390 |
| Administrative expenses | –10,104 | –9,210 | –41,037 | –38,463 |
| Development expenses | –2,978 | –3,380 | –13,511 | –13,197 |
| Operating profit | 24,513 | 19,427 | 126,005 | 112,594 |
| Net financial items | –363 | 285 | –2,010 | –936 |
| Profit before tax | 24,150 | 19,712 | 123,995 | 111,658 |
| Tax | –6,581 | –6,219 | –33,232 | –30,756 |
| Profit for the period | 17,569 | 13,493 | 90,763 | 80,902 |
| Profit attributable to: | ||||
| Parent Company's shareholders | 17,723 | 13,487 | 90,897 | 80,867 |
| Minority interests | –154 | 5 | –134 | 35 |
| Other comprehensive income | ||||
| Translation adjustments for foreign operations | 32 | –99 | 253 | 844 |
| Total comprehensive income for the period | 17,601 | 13,394 | 91,017 | 81,746 |
| Total comprehensive income for the period attributable to | ||||
| Parent Company's shareholders | 17,755 | 13,389 | 91,150 | 81,711 |
| Minority interests | –154 | 5 | –134 | 35 |
| Earnings per share, SEK | 0.70 | 0.54 | 3.61 | 3.22 |
| Earnings per share after dilution, SEK | 0.70 | 0.53 | 3.57 | 3.21 |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| Weighted average number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,111,217 |
| Effect of dilution* | 267,798 | 257,957 | 321 818 | 118,910 |
| Weighted average number of shares after full dilution | 25,416,182 | 25,406,341 | 25,470,202 | 25,230,128 |
* Björn Borg has two outstanding incentive programs based on warrants: 2008:1 and 2008:2. For more detailed information, see page 53 of the annual report 2009.
| Condensed | ||
|---|---|---|
| SEK thousands | December 31 2010 |
December 31 2009 |
| Non-current assets | ||
| Goodwill | 13,944 | 13,944 |
| Trademarks | 187,532 | 187,532 |
| Other intangible assets | 6,858 | 3,437 |
| Tangible non-current assets | 7,808 | 11,150 |
| Deferred tax assets | 6,438 | – |
| Total non-current assets | 222,580 | 216,063 |
| Current assets | ||
| Inventories, etc. | 26,239 | 26,455 |
| Current receivables | 85,344 | 65,719 |
| Short-term investments | 35,567 | – |
| Cash & cash equivalents | 194,275 | 296,484 |
| Total current assets | 341,425 | 388,657 |
| Total assets | 564,005 | 604,720 |
| Equity and liabilities | ||
| Equity | 427,276 | 460,956 |
| Deferred tax liabilities | 48,189 | 40,011 |
| Other non-current liabilities | 34,724 | 40,889 |
| Accounts payable | 9,987 | 15,480 |
| Other current liabilities | 43,829 | 47,385 |
| Total equity and liabilities | 564,005 | 604,720 |
Condensed
| SEK thousands | Equity attributable to Parent Company's shareholders |
Holdings without control |
Total equity |
|---|---|---|---|
| Opening balance, January 1, 2009 | 413,724 | 79 | 413,803 |
| Total comprehensive income for the year | 81,711 | 35 | 81,746 |
| New share issues | 2,996 | 2,996 | |
| Dividend for 2008 | –37,589 | –37,589 | |
| Closing balance, December 31, 2009 | 460,842 | 114 | 460,956 |
| Opening balance, January 1, 2010 | 460,842 | 114 | 460,956 |
| Total comprehensive income for the year | 91,150 | –134 | 91,017 |
| New share issues | – | – | |
| Dividend for 2009 | –125,742 | –125,742 | |
| Holdings without control that arose through acquisitions | – | 1,046 | 1,046 |
| Closing balance, December 31, 2010 | 426,250 | 1,026 | 427,276 |
Condensed Oct–Dec Oct–Dec Full-year Full-year SEK thousands 2010 2009 2010 2009 Cash flow from operating activities Before change in working capital 27,490 –3,846 99,486 69,246 Change in working capital 32,005 40,260 –26,733 24,873 Cash flow from operating activities 59,495 36,414 72,753 94,119 Investments in intangible non-current assets –44 –1,741 –4,878 –3,160 Investments in tangible non-current assets –552 –317 –2,498 –1,380 Investments in financial non-current assets – – –9,046 – Sale of tangible non-current assets 161 – 161 – Short-term placement –20,567 – –35,567 – Reversal of deferred tax assets 2,608 – 2,608 – Cash flow from investing activities –18,394 –2,058 –49,220 –4,540 Dividend – – –125,742 –37,589 Incentive programs/new share issues – 28 – 2,996 Cash flow from financing activities – 28 –125,742 –34,593 Cash flow for the period 41,101 34,384 –102,209 54,986 Cash & cash equivalents at beginning of period 153,174 262,100 296,484 241,498 Cash & cash equivalents at end of period 194,275 296,484 194,275 296,484
Group
| SEK thousands | Oct–Dec 2010 |
Oct–Dec 2009 |
Full-year 2010 |
Full-year 2009 |
|---|---|---|---|---|
| Gross profit margin, % | 56.3 | 55.7 | 53.6 | 51.3 |
| Operating margin, % | 21.2 | 19.0 | 23.5 | 21.7 |
| Profit margin, % | 20.8 | 19.3 | 23.1 | 21.5 |
| Return on capital employed, % | 25.7 | 20.9 | 25.7 | 20.9 |
| Return on average equity, % | 20.5 | 18.5 | 20.5 | 18.5 |
| Profit attributable to Parent Company's shareholders | 17,723 | 13,487 | 90,897 | 80,867 |
| Equity/assets ratio, % | 75.8 | 76.2 | 75.8 | 76.2 |
| Equity per share, SEK Investments in intangible non-current assets |
16.99 44 |
18.33 1,741 |
16.99 4,878 |
18.33 3,160 |
| Investments in tangible non-current assets | 552 | 317 | 2,498 | 1,380 |
| Investments in financial non-current assets | – | – | 9,046 | – |
| Depreciation and impairment losses for the period | –1,755 | –1,362 | –7,136 | –7,024 |
| Average number of employees | 100 | 92 | 101 | 92 |
| Group | ||||
|---|---|---|---|---|
| SEK thousands | Oct–Dec 2010 |
Oct–Dec 2009 |
Full-year 2010 |
Full-year 2009 |
| Operating revenue | ||||
| Brand and other | ||||
| External revenue | 10,412 | 10,710 | 51,057 | 54,936 |
| Internal revenue | 24,866 | 22,791 | 84,417 | 83,341 |
| 35,278 | 33,501 | 135,474 | 138,277 | |
| Product development | ||||
| External revenue | 45,897 | 46,048 | 270,029 | 257,391 |
| Internal revenue | 16,284 | 15,697 | 90,604 | 81,788 |
| 62,181 | 61,745 | 360,633 | 339,179 | |
| Wholesale | ||||
| External revenue | 45,051 | 29,759 | 165,859 | 153,102 |
| Internal revenue | 12,042 | 16,177 | 42,378 | 40,713 |
| 57,093 | 45,935 | 208,237 | 193,815 | |
| Retail | ||||
| External revenue | 14,534 | 15,730 | 49,095 | 54,485 |
| Internal revenue | 2 | 6 | 2 | 6 |
| 14,536 | 15,736 | 49,097 | 54,491 | |
| Less internal sales | –53,195 | –54,670 | –217,401 | –205,847 |
| Operating revenue | 115,893 | 102,247 | 536,040 | 519,915 |
| Operating profit | ||||
| Brand and other | 16,832 | 8,638 | 40,778 | 43,943 |
| Product development | 3,540 | 3,026 | 64,371 | 50,984 |
| Wholesale | 1,864 | 2,999 | 21,342 | 9,635 |
| Retail | 2,277 | 4,765 | –486 | 8,032 |
| Operating profit | 24,513 | 19,427 | 126,005 | 112,594 |
| Group | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Q4 2010 |
Q3 2010 |
Q2 2010 |
Q1 2010 |
Q4 2009 |
Q3 2009 |
Q2 2009 |
Q1 2009 |
| Net sales | 115,893 | 170,998 | 100,770 | 148,379 | 102,247 | 155,162 | 97,832 | 164,674 |
| Gross profit margin, % | 56.3 | 52.6 | 55.1 | 51.6 | 55.7 | 50.8 | 50.9 | 49.3 |
| Operating profit | 24,513 | 51,516 | 13,939 | 36,037 | 19,427 | 43,454 | 12,131 | 37,582 |
| Operating margin, % | 21.2 | 30.1 | 13.8 | 24.3 | 19.0 | 28.0 | 12.4 | 22.8 |
| Profit after financial items | 24,150 | 49,772 | 14,644 | 35,429 | 19,712 | 40,830 | 11,871 | 39,245 |
| Profit margin, % | 20.8 | 29.1 | 14.5 | 23.9 | 19.3 | 26.3 | 12.1 | 23.8 |
| Earnings per share, SEK | 0.70 | 1.46 | 0.43 | 1.03 | 0.54 | 1.20 | 0.34 | 1.15 |
| Earnings per share after dilution, SEK | 0.70 | 1.44 | 0.42 | 1.01 | 0.53 | 1.19 | 0.33 | 1.15 |
| Number of Björn Borg stores | 47 | 46 | 46 | 46 | 46 | 45 | 43 | 44 |
| of which Björn Borg-owned stores | 10 | 10 | 10 | 10 | 10 | 10 | 10 | 11 |
| Brand sales | 428,234 | 506,572 | 338,253 | 460,156 | 410,053 * | 501,629 * | 358,037 * | 602,183 |
*Because brand sales for the full-year 2009 have been changed to correct the previously reported figures, quarterly brand sales for 2009 have been updated. Previously reported figures: Q2 2009 = SEK 385,637,000, Q3 2009 = SEK 566,423,000, Q4 2009 = SEK 422,121,000
Condensed
| SEK thousands | Oct–Dec 2010 |
Oct–Dec 2009 |
Full-year 2010 |
Full-year 2009 |
|---|---|---|---|---|
| Net sales | 16,111 | 16,076 | 45,818 | 47,608 |
| Cost of goods sold | –140 | 5 | –368 | –2,407 |
| Gross profit | 15,971 | 16,081 | 45,450 | 45,201 |
| Distribution expenses | –10,100 | –12,814 | –44,742 | –40,826 |
| Administrative expenses | –3,885 | –4,928 | –17,208 | –15,702 |
| Development expenses | –1,554 | –1,971 | –6,883 | –6,281 |
| Operating profit/loss | 432 | –3,633 | –23,383 | –17,608 |
| Dividend from subsidiary | 100,000 | 100,000 | 100,000 | 100,000 |
| Net financial items | –2,882 | 522 | –7,829 | 1,975 |
| Profit before tax | 97,550 | 96,889 | 68,788 | 84,367 |
| Appropriations | 818 | – | 818 | – |
| Tax | 488 | 723 | 8 011 | 4 017 |
| Profit for the period | 98,856 | 97,612 | 77,617 | 88,383 |
| Other comprehensive income | – | – | – | – |
| Total comprehensive income for the period | 98,856 | 97,612 | 77,617 | 88,383 |
| Condensed | ||
|---|---|---|
| SEK thousands | December 31 2010 |
December 31 2009 |
| Non-current assets | ||
| Intangible non-current assets | 1,686 | 1,694 |
| Tangible non-current assets | 2,830 | 4,238 |
| Shares in Group companies | 320,771 | 54,497 |
| Total non-current assets | 325,287 | 60,428 |
| Current assets | ||
| Receivables from Group companies | 47,801 | 88,903 |
| Current receivables | 4,597 | 5,703 |
| Short-term investments | 35,567 | – |
| Cash & cash equivalents | 181,742 | 287,657 |
| Total current assets | 269,707 | 382,263 |
| Total assets | 594,994 | 442,691 |
| Equity and liabilities | ||
| Equity | 189,174 | 214,738 |
| Untaxed reserves | 6,540 | 7,359 |
| Due to Group companies | 383,256 | 207,835 |
| Accounts payable | 2,913 | 1,840 |
| Other current liabilities | 13,111 | 10,919 |
| Total equity and liabilities | 594,994 | 442,691 |
Condensed
| SEK thousands | Full-year 2010 |
Full-year 2009 |
|---|---|---|
| Opening balance | 214,738 | 149,782 |
| New share issues | – | 2,966 |
| Dividend | –125,742 | –37,589 |
| Group contributions | 30,611 | 15,191 |
| Tax effect of Group contributions | –8,050 | –3,995 |
| Total comprehensive income for the period | 77,617 | 88,383 |
| Closing balance | 189,174 | 214,738 |
Net sales less cost of goods sold divided by net sales.
Operating profit as a percentage of net sales.
Profi t margin
Profit before tax as a percentage of net sales.
Equity/assets ratio Equity as a percentage of total assets.
Profit after financial items (over a rolling 12-month period) plus financial expenses as a percentage of average capital employed.
Net profit (over a rolling 12-month period) according to the income statement as a percentage of average equity. Average equity is calculated by adding equity at January 1 to equity at December 31 and dividing by two.
Earnings per share in relation to the weighted average number of shares during the period.
Earnings per share adjusted for any dilution effect.
Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales.
The Board of Directors and the President certify that the year-end report provides a true and fair overview of the operations, financial position and results of the Parent Company and the Group and describes the material risks and uncertainties faced by the Parent Company and the companies in the Group.
Stockholm, February 24, 2011
Fredrik Lövstedt Chairman
Nils Vinberg Vice Chairman
Monika Elling Board Member Kerstin Hessius Board Member
Fabian Månsson Board Member
Mats H Nilsson Board Member
Vilhelm Schottenius Board Member
Michael Storåkers Board Member
Arthur Engel President and CEO
The Group owns the Björn Borg trademark and has operations in five product areas: clothing, footwear, bags, eyewear and fragrances. Björn Borg products are sold in fifteen markets, of which Sweden and the Netherlands are the largest. Operations are managed through a network of product and distribution companies which are either part of the Group or are independent companies with licenses for product areas and geographical markets. The Björn Borg Group has operations at every level from branding to consumer sales through its own Björn Borg stores. Total sales of Björn Borg products in 2010 are estimated SEK 1.7 billion at the consumer level, excluding VAT. Group net sales amounted to SEK 536 million in 2010, with 100 employees at year-end. The Björn Borg share is listed on NASDAQ OMX Nordic, Mid Cap list, since May 7, 2007.
We have reviewed the year-end report for Björn Borg AB (publ) for the period January 1 to December 31, 2010. The Board of Directors and the President are responsible for the preparation and presentation of this year-end report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Standard on Review Engagements (SÖG) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden RS and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the year-end report is not, in all material aspects, prepared in accordance with IAS 34 and the Annual Accounts Act for the Group and in accordance with the Annual Accounts Act for the Parent Company.
Stockholm, February 24, 2011 Deloitte AB
Håkan Pettersson Tommy Mårtensson Authorized Public Accountant Authorized Public Accountant
Annual Report March 2011. The 2011 Annual General Meeting will be held on April 14, 2011. The interim report January–March 2011 will be released on May 4, 2011. The interim report January–June 2011 will be released on August 23, 2011. The interim report January–September 2011 will be released on November 10, 2011.
For further information, please contact: Arthur Engel, President and CEO, telephone +46 8 506 33 700 Magnus Teeling, CFO, telephone +46 8 506 33 700
Björn Borg AB Götgatan 78 SE-118 30 Stockholm, Sweden www.bjornborg.com
Björn Borg is required to make public the information in this report in accordance with the Securities Market Act. The information was released for publication on February 24, 2011 at 7:30 am (CET).
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