Interim / Quarterly Report • Aug 17, 2018
Interim / Quarterly Report
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BJÖRN BORG AB INTERIM REPORT JANUARY – JUNE 2018
"In the second quarter we again saw that anything is possible, and at the same time that the Swedish national football squad showed that the team is stronger than the individual, our Swedish stores increased their revenues by 15 percent compared with the previous year. It had been some time since we had such strong growth for comparable stores. We also set a new record: Our gross margin has never been higher at nearly 60 percent," commented CEO Henrik Bunge.
| SEK millions | April-June 2018 |
April-June 2017 |
January June 2018 |
January June 2017 |
July 2017- June 2018 |
Full-year 2017 |
|---|---|---|---|---|---|---|
| Net sales | 140.3 | 134.8 | 309.5 | 320.5 | 710.1 | 696.5 |
| Gross profit margin, % | 59.9 | 52.1 | 58.3 | 50.3 | 55.7 | 54.0 |
| Operating profit | 2.9 | –0.3 | 18.0 | 6.5 | 66.9 | 55.4 |
| Operating margin, % | 2.1 | –0.2 | 5.8 | 2.0 | 9.4 | 7.9 |
| Profit after tax | 1.5 | –3.3 | 16.3 | 1.7 | 52.0 | 37.4 |
| Earnings per share before dilution, SEK | 0.06 | –0.11 | 0.66 | 0.07 | 2.07 | 1.48 |
| Earnings per share after dilution, SEK | 0.06 | –0.11 | 0.66 | 0.07 | 2.07 | 1.48 |
| Brand sales* | 294 | 271 | 706 | 708 | 1,540 | 1,542 |
* Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported sales at the wholesale level.
In the second quarter we again saw that anything is possible, and at the same time that the Swedish national football squad showed that the team is stronger than the individual, our Swedish stores increased their revenues by 15 percent compared with the previous year. It had been some time since we had such strong growth for comparable stores. We also set a new record: Our gross margin has never been higher at nearly 60 percent.
At the same time I would add that our markets continue to develop at different rates. Total net sales in the quarter amounted to SEK 140.3 million, a year-over-year increase of 4.1 percent. Growth is being driven by Sweden and Finland, both wholesale and for comparable stores. Our focus on e-commerce is also driving growth, both in our own e-commerce and our e-tailers. On the other hand, we had a very weak quarter in Belgium and the Netherlands, where we are losing sales in our own stores and at the wholesale level compared with the previous year. Our distributors in Norway and Denmark continue to underperform year-over-year.
The gross profit margin is, as planned, significantly better than the previous year at 59.9 percent (52.1). Adjusted for currency effects, mainly a weaker USD in relation to EUR, the margin would have been 58.1 percent. We increased expenses
by SEK 6.9 million in the quarter, partly due to different classifications, but mainly because we have decided to invest more in marketing than in the same quarter last year. Thanks to the higher revenue, coupled with the improved gross profit margin, we increased our operating profit to SEK 2.9 million (–0.3) despite higher operating expenses.
I am pleased with our performance in the quarter. We achieved a great deal and strengthened the organization. We have recruited a new manager in Germany, Jörn Walther, and a new CFO, Jens Nyström, from the outdoor clothing company Haglöfs. Our current CFO, Daniel Grohman remain at Björn Borg as Business Development Director. Both Jens and Jörn are expected to begin this fall. Our work with e-tailers, our own e-commerce and marketplaces is producing good growth and we continue to strengthen our position in sports apparel. The latter is largely thanks to a successful collaboration with the Japanese designer Naito Shinpei. What we have to continue to focus on is a turnaround in Benelux and for the distributors in Norway and Denmark. Lastly, it was a quarter where both sales and profitability were better than the previous year.
Let's go!
Brand sales are a calculation of the total sales value of Björn Borg products at the consumer level excluding VAT. The second quarter of 2018 saw an improvement in brand sales. All product groups are growing except bags, which declined slightly. The strongest growth is in sports apparel, footwear and eyewear, but underwear is also generating good growth. In total, brand sales rose in the second quarter by 9 percent to SEK 294 million (271). Adjusted for currency effects, brand sales were up 4 percent for the quarter. For the first half-year brand sales fell slightly to SEK 706 million (708), or by 0.3 percent. Adjusted for currency effects, brand sales were down 4 percent.
Brand sales in the underwear product area were 2 percent lower in the first half of 2018, while sports apparel decreased 4 percent. Underwear accounted for 59 percent (59) of brand sales.
Brand sales of footwear increased 1 percent compared with the first half of 2017, while other licensed products rose 23 percent with eyewear and homewear accounting for much of the increase, while bags were in line with the previous year. In total, brand sales of licensed products increased 4 percent in the first half of the year.
Among large markets, Sweden saw very positive development. Other markets declined year-over-year with Norway, Denmark and Finland seeing big decreases. The smaller markets are growing compared with the previous year.
One Björn Borg store was closed in Sweden in the second quarter and none were opened. As of June 30, 2018 there were a total of 38 (39) Björn Borg stores, of which 34 (33) are Group-owned.
Net sales grew in the second quarter largely due to a stronger EUR, but also through growth in the wholesale business in Sweden and Finland as well as e-commerce. Operating profit rose year-over-year thanks to a better gross profit margin.
The Group's net sales amounted to SEK 140.3 million (134.8) in the second quarter, an increase of 4.1 percent. Currencies positively affected quarterly sales. Adjusted for currency effects, sales were up 1.2 percent.
Aside from currencies, the positive sales trend is mainly due to apparel and underwear sales by the Swedish wholesale business, which is performing well. It is in the customer segment sports apparel distribution that the company is mainly growing. The Finnish apparel and underwear company is also developing well and growing mainly at the wholesale level, but also in retail operations. The footwear wholesale company had a good quarter and grew year-old-year. The Swedish business is generating growth, while the Finnish business declined year-over-year. Sales turned higher for the Swedish retail company in the second quarter. For comparable stores sales rose 15 percent, but in total they declined slightly due to three fewer stores than the second
quarter of 2017. E-commerce grew 9 percent in the quarter, mainly thanks to better conversion of website traffic than the previous year. The Benelux business declined 22 percent year-over-year. Wholesale and retail sales are both down from the previous year. Comparable stores dropped 6 percent and in total retail sales fell 12 percent. The product company's external sales decreased year-over-year, driven by poor performance in the Norwegian market. External royalties decreased slightly.
The Group's net sales for the first half of 2018 amounted to SEK 309.5 million (320.5), a decrease of 3.4 percent. Excluding currency effects, sales were down 5.6 percent.
As of January 1, 2018 footwear distribution in Denmark is managed by an external partner, which has negatively affected net sales since the Group's net sales now come in the form of royalties instead of wholesale revenues. Adjusted accordingly, this reduced the Group's net sales 1.6 percent for the first half-year.
The Benelux companies reported a net sales decline of 12 percent compared with the previous year in both its wholesale and retail operations. Sales for comparable stores were down 11 percent. The Finnish company that distributes underwear and apparel is also losing ground compared with the previous year. The first half of 2017 was very strong in Finland thanks to a number of large new customers, which accounted for the growth. Sell-through by these customers has not kept pace with selling-in in 2017, which led to lower sales in the first half of 2018. The wholesale footwear business has stopped distribution in Denmark as of January 1, 2018. Distribution is instead managed by an external partner, which led to a decrease in net sales of about SEK 6 million, while the Swedish, Finnish and Baltic businesses grew 2 percent. The Swedish wholesale underwear and apparel business is developing very well and grew year-over-year by nearly 30 percent. Growth is driven by higher sales in the customer segment sports apparel distribution. Sales declined year-over-year for the Swedish retail company due to three fewer stores, but for comparable stores they rose 5 percent. E-commerce generated good growth of 28 percent, mainly thanks to better conversion of website traffic than the previous year. The product company's external sales decreased year-overyear, driven by poorer performance in the Danish and Norwegian markets. External royalties increased slightly.
| Operating revenue, SEK thousands January-June |
Operating profit, SEK thousands January-June |
Operating margin, % January-June |
|||||
|---|---|---|---|---|---|---|---|
| Segment | Revenue source | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| Wholesale | Products | 210,366 | 226,030 | 15,600 | 3,280 | 7 | 2 |
| Consumer Direct | Products | 83,971 | 82,793 | –8,290 | –12,975 | –10 | –161 |
| Distributors | Products | 203,507 | 218,521 | 4,163 | 6,358 | 2 | 3 |
| Licensing | Royalties | 33,178 | 26,676 | 6,500 | 9,788 | 20 | 37 |
| Less internal sales | –215,018 | –228,769 | – | – | – | – | |
| Total | 316,004 | 325,252 | 17,973 | 6,451 | 6 | 2 |
The gross profit margin for the second quarter increased to 59.9 percent (52.1). A weaker USD coupled with a strong EUR positively affected margins. Adjusted for currency effects, the gross profit margin would have been 58.1 percent. Aside from currencies, the gross profit margins were positively affected by about SEK 1.3 million by changes in classifications of expenses, as a result of which more expenses are recorded under marketing expenses and less under costs of goods sold. Adjusted for both currency effects and the changes in classifications, the gross profit margin was 57.1 percent. The remaining improvement in gross profit margins compared to last year is related to that 2017 was negatively impacted by one-time effects due to the acquisition of the Benelux.
Other operating revenue amounted to SEK 2.1 million (5.7) and mainly related to unrealized gains on accounts receivable in foreign currency and positively affected profit.
Operating expenses rose SEK 6.9 million compared with the previous year with the changes in expense classifications accounting for an increase of SEK 1.3 million. Adjusted for the above, operating expenses rose SEK 5.6 million or 7.4 percent. The increase is mainly in marketing and distribution expenses.
The combination of higher revenue, the improved gross profit margin and higher operating expenses led to an increase in operating profit to SEK 2.9 million (–0.3). The operating margin was 2.1 percent (–0.2).
Net financial items amounted to SEK 0.3 million (-1.8). The bond portfolio and bond loan that previously affected the financial net have now been divested and did not affect the financial net in the quarter. The remaining year-over-year improvement mainly related to the revaluation of financial assets and liabilities in foreign currency. Profit before tax rose to SEK 3.2 million (–2.1).
The gross profit margin for the first half-year increased to 58.3 percent (50.3). A weaker USD coupled with a strong EUR positively affected margins. Adjusted for currency effects, the gross profit margin would have been 55.5 percent. Aside from currencies, the gross profit margins were positively affected by about SEK 3.5 million by changes in classifications of expenses, as a result of which more expenses are recorded under marketing expenses and less under costs of goods sold. Adjusted for both currency effects and the changes in classifications, the gross profit margin was 54.3 percent. The remaining improvement in gross profit margins compared to last year is related to that 2017 was negatively impacted by one-time effects due to the acquisition of the Benelux.
Other operating revenue amounted to SEK 6.5 million (4.8) and mainly related to unrealized gains on accounts receivable in foreign currency and positively affected profit.
Operating expenses rose SEK 9.7 million compared with the previous year with the changes in expense classifications accounting for an increase of SEK 3.5 million. Adjusted for the change in the expense classification, operating expenses rose SEK 6.2 million or 3.9 percent.
The combination of lower revenue, the improved gross profit margin and operating expenses that were slightly higher than the previous year led to an increase in operating profit to SEK 18.0 million (6.5). The operating margin was 5.8 percent (2.0).
Net financial items amounted to SEK 4.3 million (–1.8). The bond portfolio and bond loan that previously affected the financial net have now been divested and did not affect the financial net in the quarter, SEK 0.0 million (1.1). The remaining year-over-year improvement mainly related to the
revaluation of financial assets and liabilities in foreign currency. Profit before tax rose to SEK 22.3 million (4.7).
Björn Borg has changed its segment reporting as of the first quarter of 2018. The reason is that the company has become much more integrated after the Benelux acquisition, which made the previous reporting method obsolete. The new segments correspond to the company's primary revenue sources: Wholesale, Consumer Direct, Distributors and Licensing, which is also how the business is monitored internally in the Group. Comparative figures for 2017 have been restated and are comparable with the new segmentation.
The segment consists of revenue and expenses associated with the Björn Borg Group's wholesale operations. The Group has wholesale operations in Sweden, Finland, the Netherlands, Belgium, Germany and England for apparel and underwear as well as in Sweden, Finland and the Baltic countries for footwear.
The segment's operating revenue decreased to SEK 210.4 million (226.0) in the first half of 2018. External operating revenue amounted to SEK 209.3 million (207.7), an increase of 1 percent. One change from the previous year in the segment is that the Group no longer has a wholesale footwear business in Denmark, which as of 2018 falls within the Licensing segment. Adjusted for Danish footwear distribution, external sales rose about 4 percent. Sales to e-tailers, which primarily sell online, are growing in all markets. Growth in the e-tail segment was 26 percent in the first half of 2018 and amounted to SEK 38.3 million (30.5). The Swedish wholesale business was up year-over-year in apparel, underwear and footwear. Benelux declined from the previous year with the Belgian part of the business losing more than the Dutch. Finland also lost ground from the previous year, but the comparable period was very strong thanks to a number of large new customers, which accounted for the growth. Sell-through by these customers has not kept pace with selling-in in 2017, which led to lower sales in the first part of 2018. Smaller markets also lost ground compared with the previous year.
Operating profit amounted to SEK 15.6 million (3.3). The improvement is mainly due to higher gross profit margins. The previous year had lower gross profit margins because gross profit was pushed back in connection with the Benelux acquisition. Currencies also had a positive effect on margins with a stronger EUR and a weaker USD than the previous year. Other operating expenses increased 7 percent year-over-year, partly due to the currency effects, but also because of higher marketing and distribution expenses.
The segment consists of revenue and expenses associated with the Björn Borg Group's direct sales to consumers. The Björn Borg Group owns and operates a total of 34 stores and factory outlets in Sweden, Finland, the Netherlands, Belgium and England with sales of underwear, sports apparel, adjacent products and other licensed products. In addition, Björn Borg sells online through www.bjornborg.com.
Operating revenue in the Consumer Direct segment rose in the first half of 2018 to SEK 84.0 million (82.8). External operating revenue rose to SEK 84.0 million (80.6), up 4 percent. The increase is due to strong e-commerce sales, which grew 28 percent compared with the previous year. Total sales at the retail level in Sweden fell 7 percent year-over-year due to fewer stores, while comparable stores grew 5 percent. The Benelux stores performed weakly and sales were down 10 percent in total and 11 percent for comparable stores. The Finnish stores grew 10 percent and
comparable stores were up 4 percent. The store in England was down year-over year. In total, sales for comparable stores decreased 5 percent.
The operating loss for the first half of 2018 was SEK 8.3 million, against a year-earlier loss of SEK 13.0 million. The improvement was due to higher gross profit margins than the previous year. The previous year had lower margins because gross profit was pushed back in connection with the Benelux acquisition. External operating expenses increased year-over-year mainly due to higher distribution and marketing expenses in e-commerce.
The Distributors segment mainly consists of revenue and expenses associated with sales to external distributors of product groups developed by the company.
The segment's operating revenue amounted to SEK 203.5 million (218.5) in the first half of 2018. External operating revenue decreased to SEK 15.3 million (25.7), or by 41 percent from the previous year. Lower sales to both of our major distributor markets, Norway and Denmark, are the reason for the decrease.
Operating profit fell to SEK 4.2 million (6.4) due to the lower external sales in the segment. The gross profit margin was slightly better than the previous year. Operating expenses were lower due to the lower sales
The Licensing segment mainly consists of royalty revenue from licensees and expenses for the Group associated with the licensing operations.
The segment's operating revenue amounted to SEK 33.2 million (26.7) in the first half of 2018. External operating revenue decreased to SEK 7.5 million (11.3) as the previous year included one-off revenue of about SEK 4.1 million. Adjusted for the above, sales rose 3 percent with footwear and eyewear accounting for most of the growth, while bags decreased from the previous year.
Operating profit decreased to SEK 6.5 million (9.8) for the first half-year. The decline is a result of the lower external sales in the segment.
Intra-Group sales for the first half of 2018 amounted to SEK 215.0 million (228.8).
The Björn Borg Group is active in an industry with seasonal variations. Sales and earnings vary by quarter. See the figure on quarterly net sales and operating profit on page 4.
The Group's cash flow from operating activities amounted to SEK 17.7 million (12.0) in the first half of 2018. The year-overyear improvement primarily comes from a better operating profit, while working capital has increased and negatively affected cash flow primarily due to higher inventory.
Cash flow from investing activities was negative at SEK –7.8 million (20.4). The main investments were in an existing store, the development of the e-commerce platform and the company's enterprise system as well as the acquisition of the minority share of 25 percent in Björn Borg Finland Oy for about SEK 3 million. Total investments in tangible and intangible non-current assets amounted to SEK 4.8 million (4.8) for the period.
Financing activities generated a negative cash flow of SEK –28.3 million (–39.0). The negative flow comes from the company's distribution to shareholders of SEK 50.3 million (50.3).
The Björn Borg Group's cash & cash equivalents and investments amounted to SEK 40.2 million (41.6) at the end of the period with interest-bearing liabilities of SEK 168.2 million (167.3). The net debt thereby amounts to 127,9 MSEK (125,7).
The company's bond loan issued in April 2012 expired and was repaid in the second quarter of 2017. The bond loan has been replaced by a three-year, SEK 150 million revolving credit from Danske Bank.
The bond portfolio that the company previously managed due to the surplus liquidity which arose from the issuance of the bond loan has now essentially been divested. As of June 30 the book value of the bonds was SEK 0.5 million (1.6), which represents the fair value on the same date.
In addition to the revolving credit of SEK 150 million, Björn Borg has an overdraft facility of SEK 90 million from Danske Bank.
As a commitment for the overdraft facility and three-year revolving credit, the company has pledged to ensure that the ratio between the Group's net debt and rolling 12-month operating profit before depreciation and amortization does not exceed 3.00 on the last day of each quarter. Moreover, the Group will maintain an equity/assets ratio of at least 35 percent.
As of June 30, 2018 the ratio was 1.67 (2.00) and the equity/assets ratio was 45.3 percent (45.7).
No changes were otherwise made with regard to pledged assets and contingent liabilities compared with December 31, 2017.
The average number of employees in the Group was 212 (206) for the twelve-month period ending June 30, 2018, of whom 67 percent (68) are women.
There were no material transactions with related parties during the period.
In its operations the Björn Borg Group is exposed to risks and uncertainties. Information on the Group's risks and uncertainties can be found on pages 60-61 and in note 3 in the annual report 2017.
Björn Borg AB (publ) is primarily engaged in intra-Group activities. During the period the company acquired the minority share of 25 percent in Björn Borg Finland Oy. The purchase price for the minority share was EUR 300 thousand. As of June 30, 2018 the company owns 100 percent of the shares in Björn Borg Brands AB, Björn Borg Footwear AB, Björn Borg Inc., Björn Borg Services AB, Björn Borg UK and Bjorn Borg Finland Oy. In addition, the company owns 75 percent of the shares in Bjorn Borg (China) Ltd.
The Parent Company's net sales for the first half of 2018 amounted to SEK 53.4 million (52.2).
Profit before tax amounted to SEK 6.0 million (3.8) for the first half-year. Cash & cash equivalents and investments amounted to SEK 5.5 million (1.6) as of June 30, 2018.
There are no significant events to report after the reporting period.
Björn Borg currently has 25,148,384 shares outstanding.
The Board of Directors of Björn Borg has established a business plan for the period 2015-2019 with the following long-term financial objectives:
The sales target for 2019 corresponds to average annual organic growth of 19 percent from the full-year 2017. The sales increase, along with the increase in the operating margin, is expected to come from new product groups in sports fashion as well as expanded geographical distribution within all the product groups.
The Annual General Meeting held on May 17, 2018 resolved to distribute SEK 2.00 (2.00) per share to the shareholders for the financial year 2017. Christel Kinning, Fredrik Lövstedt, Mats H Nilsson and Heiner Olbrich were re-elected to the Board of Directors. Göran Carlson and Alessandra Cama were elected as new Directors. Martin Bjäringer and Lotta de Champs had declined re-election. The total number of board members is six. The meeting resolved to re-elect Heiner Olbrich as Chairman of the Board of Directors.
This condensed interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable provisions of the Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with chapter 9 of the Annual Accounts Act on interim reporting and RFR 2 Accounting in Legal Entities. The accounting principles applied in the interim report conform to the accounting principles applied in the preparation of the consolidated accounts and annual report for 2017 with the exception of IFRS 15 and IFRS 9, which are applied as of January 1, 2018. The accounting principles are described on page 56 in the annual report 2017.
IFRS 15 Revenue from Contracts with Customers IFRS 15 Revenue from Contracts with Customers introduces a new model for revenue recognition (five-step model) based on when control of a good or a service is conveyed to the customer. IFRS 15 replaces all previous standards, statements and interpretations that concern revenue recognition. Björn Borg has applied IFRS 15 as of January 1, 2018. The transition to IFRS 15 has not had a material impact on revenue recognition or the financial reporting compared with previously applied principles.
IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement and contains new rules on the classification and impairment of financial assets as well as hedge reporting. Björn Borg has applied IFRS 9 as of January 1, 2018 and comparative information has not been restated.
Financial assets are classified according to IFRS 9 based on the business model that the asset is managed in and its cash flow characteristics. Björn Borg applies two different business models. For cash & cash equivalents, accounts receivable and other current receivables such as loans and accounts receivable under IAS 39 the company's business model is "hold to collect," which means that the purpose of the financial assets is to collect on contractual cash flows. Financial assets included in this business model are recognized at amortized cost. For short-term investments held for trading under IAS 39 the company's business model is "other," which means that the holding is held for trading purposes. Financial assets included in this business model are recognized at fair value through profit or loss. The new classification of financial assets does not entail any material differences from previously applied principles with respect to the recognition and measurement of financial assets.
The new impairment model for financial assets is based on expected losses instead of incurred losses. The Group applies the simplified model for accounts receivable, i.e., the provision will correspond to the full lifetime expected loss. Björn Borg's application of the model shows that the effect of the transition does not have a material impact on the recognized values due to the short term and risk characteristics of the receivables. The simplified model cannot be applied to cash & cash equivalents, but the effect is not expected to be material since they mature in less than one year and the counterparties are stable Nordic banks with high ratings. Financial assets recognized at fair value through profit or loss as well as equity instruments are not governed by the impairment rules.
This interim report has not been reviewed by the company's auditors.
As a policy, the company does not issue earnings forecasts.
CONDENSED
| SEK thousands | Note | April-June 2018 |
April-June 2018 |
January June 2018 |
January June 2017 |
July 2017- June 2018 |
Full-year 2017 |
|---|---|---|---|---|---|---|---|
| Net sales | 1 | 140,341 | 134,844 | 309,545 | 320,501 | 685,526 | 696,482 |
| Other operating revenue | 2,080 | 5,738 | 6,459 | 4,751 | 9,481 | 7,773 | |
| Operating revenue | 142,421 | 140,582 | 316,004 | 325,252 | 695,007 | 704,255 | |
| Goods for resale | –56,326 | –64,604 | –128,982 | –159,443 | –289,750 | –320,211 | |
| Other external expenses | 2 | –42,307 | –35,201 | –90,163 | –81,149 | –182,982 | –173,967 |
| Staff costs | –36,705 | –37,016 | –71,797 | –70,396 | –140,164 | –138,763 | |
| Depreciation/amortization of tangible/ | |||||||
| intangible non-current assets | –2,431 | –2,222 | –4,512 | –4,487 | –9,931 | –9,906 | |
| Other operating expenses | –1,764 | –1,829 | –2,577 | –3,326 | –5,291 | –6,041 | |
| Operating profit | 2,888 | –290 | 17,973 | 6,451 | 66,889 | 55,367 | |
| Net financial items | 328 | –1,789 | 4,342 | –1,765 | 2,137 | –3,969 | |
| Profit before tax | 3,216 | –2,079 | 22,315 | 4,686 | 69,026 | 51,398 | |
| Tax | –1,742 | –1,263 | –5,982 | –3,008 | –17,000 | –14,026 | |
| Profit for the period | 1,474 | –3,342 | 16,333 | 1,678 | 52,026 | 37,372 | |
| Profit for the period attributable to | |||||||
| Parent Company's shareholders | 1,505 | –2,794 | 16,553 | 1,712 | 51,938 | 37,099 | |
| Non-controlling interests | –31 | –548 | –219 | –34 | 88 | 273 | |
| Earnings per share before dilution, SEK | 0.06 | –0.11 | 0.66 | 0.07 | 2.07 | 1.48 | |
| Earnings per share after dilution, SEK | 0.06 | –0.11 | 0.66 | 0.07 | 2.07 | 1.48 | |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| SEK thousands | Note | April-June 2018 |
April-June 2018 |
January June 2018 |
January June 2017 |
July 2017- June 2018 |
Full-year 2017 |
|---|---|---|---|---|---|---|---|
| Net profit for the period | 1,474 | –3,342 | 16,333 | 1,678 | 52,026 | 37,372 | |
| OTHER COMPREHENSIVE INCOME | |||||||
| Components that may be reclassified to profit or loss |
|||||||
| Translation difference for the period | –1,373 | 2,558 | 651 | 3,524 | –1,653 | 1,220 | |
| Total other comprehensive income for the period |
–1,373 | 2,558 | 651 | 3,524 | –1,653 | 1,220 | |
| Total comprehensive income for the period |
101 | –784 | 16,984 | 5,202 | 50,373 | 38,592 | |
| Total comprehensive income attributable to |
|||||||
| Parent Company's shareholders | 2,436 | –192 | 17,593 | 4,814 | 50,607 | 37,829 | |
| Non-controlling interests | –330 | –592 | –609 | 388 | –234 | 763 | |
CONDENSED
| SEK thousands Note |
June 30 2018 |
June 30 2017 |
Dec 31 2017 |
|---|---|---|---|
| Non-current assets | |||
| Goodwill | 35,146 | 35,766 | 35,755 |
| Trademarks | 187,532 | 187,532 | 187,532 |
| Other intangible assets | 6,248 | 5,016 | 5,066 |
| Tangible non-current assets | 15,129 | 12,026 | 15,392 |
| Deferred tax assets | 22,630 | 32,052 | 22,530 |
| Total non-current assets | 266,685 | 272,392 | 266,275 |
| Current assets | |||
| Inventory | 125,842 | 123,872 | 109,770 |
| Accounts receivable | 84,402 | 72,304 | 91,479 |
| Other current receivables | 15,639 | 24,114 | 20,055 |
| Investments | 3 500 |
1,605 | 500 |
| Cash & cash equivalents | 39,710 | 39,980 | 52,620 |
| Total current assets | 266,093 | 261,875 | 274,424 |
| Total assets | 532,778 | 534,267 | 540,699 |
| Equity and liabilities | |||
| Equity | 241,115 | 244,008 | 277,398 |
| Deferred tax liabilities | 48,131 | 46,194 | 42,949 |
| Non-current liabilities credit institutions | 150,000 | 150,000 | 125,000 |
| Other non-current liabilities | 21,682 | 17,273 | 22,925 |
| Accounts payable | 27,695 | 31,559 | 20,452 |
| Other current liabilities | 44,155 | 45,233 | 51,975 |
| Total equity and liabilities | 532,778 | 534,267 | 540,699 |
| Equity attributable totill | |||
|---|---|---|---|
| Parent Company's | Non-controlling | Total | |
| SEK thousands Note |
shareholders | interests | equity |
| Opening balance, January 1, 2017 | 289,375 | –272 | 289,103 |
| Total comprehensive income for the period | 4,814 | 388 | 5,202 |
| Distribution for 2016 | –50,297 | – | –50,297 |
| Closing balance, June 30, 2017 | 243,892 | 116 | 244,008 |
| Opening balance, January 1, 2017 | 289,375 | –272 | 289,103 |
| Total comprehensive income for the period | 37,829 | 763 | 38,592 |
| Distribution for 2016 | –50,297 | – | –50,297 |
| Closing balance, December 31, 2017 | 276,907 | 491 | 277,398 |
| Opening balance, January 1, 2018 | 276,907 | 491 | 277,398 |
| Total comprehensive income for the period | 17,593 | –609 | 16,984 |
| Distribution for 2017 | –50,297 | – | –50,297 |
| Acquisition of non-controlling interest | –2,523 | –447 | –2,970 |
| Closing balance, June 30, 2018 | 241,680 | –565 | 241,115 |
CONDENSED
| SEK thousands | April-June 2018 |
April-June 2018 |
January June 2018 |
January June 2017 |
Full-year 2017 |
|---|---|---|---|---|---|
| Cash flow from operating activities | |||||
| Before changes in working capital | 4,433 | 1,032 | 22,565 | 6,352 | 61,400 |
| Changes in working capital | –4,921 | 2,801 | –4,834 | 5,685 | –8,221 |
| Cash flow from operating activities | –488 | 3,833 | 17,731 | 12,037 | 53,179 |
| Acquisition of subsidiary, cash & cash equivalents | – | – | – | – | 2,868 |
| Acquisition of minority interest | – | – | –2,970 | – | – |
| Investments in intangible non-current assets | –1,275 | –2,453 | –2,430 | –2,821 | –4,921 |
| Investments in tangible non-current assets | –474 | –1,401 | –2,389 | –2,026 | –7,868 |
| Investments/sale of investments | – | 24,801 | – | 25,220 | 25,417 |
| Cash flow from investing activities | –1,749 | 20,947 | –7,789 | 20,373 | 15,496 |
| Distribution | –50,297 | –50,297 | –50,297 | –50,297 | –50,297 |
| Amortization of loans | – | – | –25,000 | –1,764 | –37,136 |
| Newly raised loan | 50,000 | 150,000 | 50,000 | 150,000 | 157,151 |
| Bond loan repurchases/repayment | – | –135,470 | – | –136,972 | –135,470 |
| Cash flow from financing activities | –297 | –35,767 | –28,267 | –39,033 | –65,752 |
| Cash flow for the period | –2,534 | –10,987 | –15,355 | –6,623 | 2,923 |
| Cash & cash equivalents at beginning of year | 41,334 | 52,216 | 52,620 | 48,948 | 48,948 |
| Translation difference in cash & cash equivalents | 910 | –1,249 | 2,445 | –2,345 | 749 |
| Cash & cash equivalents at end of the period | 39,710 | 39,980 | 39,710 | 39,980 | 52,620 |
GROUP
| SEK thousands | April-June 2018 |
April-June 2017 |
January June 2018 |
January June 2017 |
July 2017- June 2018 |
Full-year 2017 |
|---|---|---|---|---|---|---|
| Gross profit margin, % | 59.9 | 52.1 | 58.3 | 50.3 | 57.7 | 54.0 |
| Operating margin, % | 2.1 | –0.2 | 5.8 | 2.0 | 9.8 | 7.9 |
| Profit margin, % | 2.3 | –1.5 | 7.2 | 1.5 | 10.1 | 7.4 |
| Return on capital employed, % | 17.9 | 16.0 | 17.9 | 16.0 | 17.9 | 13.2 |
| Return on average equity, % | 21.4 | 16.2 | 21.4 | 16.2 | 21.4 | 13.1 |
| Profit attributable to Parent Company's | ||||||
| shareholders | 1,505 | –2,794 | 16,553 | 1,712 | 51,938 | 37,099 |
| Equity/assets ratio, % | 45.3 | 45.7 | 45.3 | 45.7 | 45.3 | 51.3 |
| Equity per share, SEK | 9.59 | 9.70 | 9.59 | 9.70 | 9.59 | 11.03 |
| Investments in intangible non-current assets | 1,275 | 2,453 | 2,430 | 2,821 | 4,530 | 4,921 |
| Investments in tangible non-current assets | 474 | 1,401 | 2,389 | 2,026 | 8,231 | 7,868 |
| Business acquisition | – | – | 2,970 | – | 2,970 | – |
| Depreciation, amortization and impairment | ||||||
| losses for the period | –2,431 | –2,222 | –4,512 | –4,487 | –9,931 | –9,906 |
| Average number of employees | 211 | 206 | 211 | 206 | 212 | 212 |
GROUP
| SEK thousands | April-June 2018 |
April-June 2017 |
January June 2018 |
January June 2017 |
July 2017- June 2018 |
Full-year 2017 |
|---|---|---|---|---|---|---|
| Operating revenue | ||||||
| Wholesale | ||||||
| External revenue | 85,262 | 74,896 | 209,250 | 207,693 | 442,971 | 441,414 |
| Internal revenue | 641 | 4,869 | 1,116 | 18,337 | 5,534 | 22,756 |
| 85,903 | 79,765 | 210,366 | 226,030 | 448,505 | 464,170 | |
| Consumer Direct | ||||||
| External revenue | 44,971 | 44,152 | 83,965 | 80,608 | 189,330 | 185,973 |
| Internal revenue | 7 | – | 7 | 2,185 | 15 | 2,194 |
| 44,978 | 44,152 | 83,971 | 82,793 | 189,345 | 188,167 | |
| Distributors | ||||||
| External revenue | 9,274 | 14,417 | 15,255 | 25,661 | 47,886 | 58,292 |
| Internal revenue | 60,890 | 90,639 | 188,253 | 192,860 | 411,251 | 415,859 |
| 70,164 | 105,056 | 203,507 | 218,521 | 459,137 | 474,151 | |
| Licensing External revenue |
2,916 | 7,118 | 7,535 | 11,290 | 14,820 | 18,575 |
| Internal revenue | 9,674 | 6,072 | 25,643 | 15,386 | 43,691 | 33,435 |
| 12,590 | 13,190 | 33,178 | 26,676 | 58,511 | 52,010 | |
| Less internal sales | –71,214 | –101,581 | –215,018 | –228,769 | –460,492 | –474,243 |
| Operating revenue | 142,421 | 140,582 | 316,004 | 325,252 | 695,007 | 704,255 |
| Operating profit | ||||||
| Wholesale Consumer Direct |
–390 –1,568 |
–5,634 –3,992 |
15,600 –8,290 |
3,280 –12,975 |
46,967 –9,156 |
34,647 –13,840 |
| Distributors | 2,376 | 3,225 | 4,163 | 6,358 | 16,071 | 18,266 |
| Licensing | 2,470 | 6,111 | 6,500 | 9,788 | 13,007 | 16,294 |
The difference in the second quarter between operating profit for segments for which information must be disclosed, SEK 2,888 thousand (–290), and profit before tax, SEK 3,216 thousand (–2,079), is net financial items, SEK 328 thousand (–1,789). The difference in the first half-year between operating profit for segments for which information must be disclosed, SEK 17,973 thousand, and profit before tax, SEK 22,315 thousand (4,686), is net financial items, SEK 4,342 thousand (–1,765).
| SEK thousands | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 | Q2 2017 | Q1 2017 | Q4 2016 | Q3 2016 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 140,341 | 169,204 | 170,269 | 205,712 | 134,844 | 185,657 | 171,410 | 179,977 |
| Gross profit margin, % | 59.9 | 57.1 | 58.3 | 56.3 | 52.1 | 48.9 | 48.0 | 50.4 |
| Operating profit/loss | 2,888 | 15,085 | 16,905 | 32,012 | –290 | 6,741 | 21,365 | 28,636 |
| Operating margin, % | 2.1 | 8.9 | 9.9 | 15.6 | –0.2 | 3.6 | 12.5 | 15.9 |
| Profit/loss after financial items | 3,216 | 19,099 | 15,683 | 31,028 | –2,079 | 6,765 | 25,413 | 28,493 |
| Profit margin, % | 2.3 | 11.3 | 9.2 | 15.1 | –1.5 | 3.6 | 14.8 | 15.8 |
| Earnings per share before dilution, SEK | 0.06 | 0.60 | 0.43 | 0.98 | –0.11 | 0.18 | 0.74 | 0.95 |
| Earnings per share after dilution, SEK | 0.06 | 0.60 | 0.43 | 0.98 | –0.11 | 0.18 | 0.74 | 0.95 |
| Number of Björn Borg stores at end of | ||||||||
| period | 38 | 39 | 41 | 40 | 39 | 39 | 40 | 39 |
| of which Group-owned Björn Borg | ||||||||
| stores | 34 | 34 | 35 | 34 | 33 | 33 | 20 | 20 |
| Brand sales | 294,022 | 411,661 | 359,775 | 474,201 | 270,824 | 436,957 | 371,960 | 479,109 |
CONDENSED
| SEK thousands Note |
April-June 2018 |
April-June 2017 |
January June 2018 |
January June 2017 |
July 2017- June 2018 |
Full-year 2017 |
|---|---|---|---|---|---|---|
| Net sales | 26,517 | 28,303 | 53,420 | 52,237 | 96,988 | 95,805 |
| Other operating revenue | 93 | 166 | 631 | 393 | 5,278 | 5,040 |
| Operating revenue | 26,610 | 28,469 | 54,051 | 52,630 | 102,266 | 100,845 |
| Goods for resale | –1 | –21 | –3 | –21 | –4 | –22 |
| Other external expenses 2 |
–11,899 | –11,853 | –25,588 | –22,975 | –57,106 | –54,493 |
| Staff costs | –10,866 | –9,651 | –20,031 | –18,477 | –37,274 | –35,718 |
| Depreciation/amortization of tangible/ | ||||||
| intangible non-current assets | –454 | –314 | –908 | –631 | –1,673 | –1,396 |
| Other operating expenses | –28 | 10 | –340 | –175 | –393 | –228 |
| Operating profit | 3,362 | 6,640 | 7,181 | 10,351 | 5,816 | 8,988 |
| Result from shares in subsidiaries | – | – | – | – | 48,452 | 48,452 |
| Net financial items | –30 | –3,286 | –1,187 | –6,556 | –12,400 | –17,771 |
| Profit after financial items | 3,332 | 3,354 | 5,994 | 3,795 | 41,868 | 39,669 |
| Group contributions received | – | – | – | – | 11,623 | 11,623 |
| Profit before tax | 3,332 | 3,354 | 5,994 | 3,795 | 53,491 | 51,292 |
| Tax | – | – | – | – | – | –572 |
| Profit for the period | 3,332 | 3,354 | 5,994 | 3,795 | –572 | 50,720 |
| Other comprehensive income | – | – | – | – | – | – |
| Total comprehensive income for | ||||||
| the period | 3,332 | 3,354 | 5,994 | 3,795 | 52,919 | 50,720 |
| SEK thousands Note |
June 30 2018 |
June 30 2017 |
Dec 31 2017 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 2,647 | 491 | 1,520 |
| Tangible non-current assets | 922 | 1,949 | 1,431 |
| Long-term receivables 3 |
– | 10,700 | – |
| Deferred tax | 316 | 131 | 316 |
| Shares in Group companies | 344,106 | 353,181 | 341,137 |
| Total non-current assets | 347,991 | 366,452 | 344,404 |
| Current assets | |||
| Receivables from Group companies | 583,111 | 528,169 | 557,280 |
| Current receivables | 3,972 | 8,430 | 4,236 |
| Investments 3 |
500 | 1,605 | 500 |
| Cash & cash equivalents | 5,043 | – | 10,267 |
| Total current assets | 592,626 | 538,204 | 572,283 |
| Total assets | 940,617 | 904,656 | 916,687 |
| Equity and liabilities | |||
| Equity | 106,807 | 104,185 | 151,110 |
| Non-current liabilities credit institutions | 150,000 | 150,000 | 125,000 |
| Other non-current liabilities | 21,682 | 17,273 | 22,925 |
| Due to Group companies | 647,696 | 563,161 | 601,130 |
| Overdraft facility | – | 52,789 | – |
| Accounts payable | 2,349 | 1,746 | 2,203 |
| Other current liabilities | 12,083 | 15,502 | 14,319 |
| Total equity and liabilities | 940,617 | 904,656 | 916,687 |
| SEK thousands | January June 2018 |
January June 2017 |
Full-year 2017 |
|---|---|---|---|
| Opening balance | 151,110 | 150,687 | 150,687 |
| Distribution | –50,297 | –50,297 | –50,297 |
| Total comprehensive income for the period | 5,994 | 3,795 | 50,720 |
| Closing balance | 106,807 | 104,185 | 151,110 |
NOTE 1 NET SALES
The Group's net sales consist of sales of products and royalties for usage of the brand. Sales of goods and/or royalties are accounted for at specific points in time and are not spread across time.
| Group | ||||
|---|---|---|---|---|
| SEK thousands | Jan-Jun 2018 |
Jan-Jun 2017 |
||
| Sweden | 112,049 | 92,272 | ||
| Netherlands | 79,200 | 82,022 | ||
| Finland | 51,958 | 58,286 | ||
| Other | 66,338 | 87,921 | ||
| Total | 309,545 | 320,501 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Jan-Jun | Jan-Jun | Jan-Jun | Jan-Jun | |
| SEK thousands | 2018 | 2017 | 2018 | 2017 |
| Cost of premises | 24,924 | 23,805 | 5,188 | 5,295 |
| Selling expenses | 21,607 | 16,672 | 1,499 | 1,237 |
| Marketing expenses | 23,514 | 19,672 | 9,533 | 8,858 |
| Administrative | ||||
| expenses | 14,945 | 15,887 | 7,580 | 6,316 |
| Other | 5,173 | 5,113 | 1,788 | 1,269 |
| Total | 90,163 | 81,149 | 25,588 | 22,975 |
Securities relate to investments in corporate bonds quoted on Nasdaq Stockholm and have been measured at their quoted prices. Forward exchange contracts are measured according to level 2 based on observable information as of the closing date with respect to exchange rates and market interest rates for the remaining maturities.
There were no net divestments during the quarter from the company's corporate bond portfolio of SEK 500 thousand.
| SEK thousands | Level 1 | Level 2 | Level 3 |
|---|---|---|---|
| Securities | 500 | – | – |
| Net | – | – |
The carrying amount of financial instruments recognized at amortized cost corresponds to fair value as of June 30, 2018.
| SEK thousands | Level 1 | Level 2 | Level 3 |
|---|---|---|---|
| Securities | 1,605 | – | – |
Net – –
The company presents certain financial measures in this interim report that are not defined according to IFRS. The company considers these measures to be valuable complementary information for investors and the company's management. Since not all companies calculate financial measures in the same way, they are not always comparable with measures used by other companies. Consequently, these measures should not be seen as a substitute for measures defined according to IFRS. For more on the calculation of these key financial ratios, see https://corporate.bjornborg.com/en/section/investors/ interim-reports/
Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales. Purpose: Shows the sales trend measured as retail value excluding VAT.
Total assets less non-interest-bearing liabilities and provisions.
Purpose: Capital employed measures capital use and efficiency.
Profit after tax in relation to the weighted average number of shares during the period.
Purpose: This indicator is used to assess an investment from an owner's perspective.
Earnings per share adjusted for any dilution effect. Purpose: This indicator is used to assess an investment from an owner's perspective.
Equity as a percentage of total assets. Purpose: Nyckeltalet används för att, ur ett ägarperspektiv, bedöma investeringens utveckling.
Net sales less cost of goods sold divided by net sales. Purpose: Gross margin is used to measure operating profitability.
Net sales less cost of goods sold divided by net sales. Purpose: Gross profit margin before acquisitions is used to measure operating profitability adjusted for acquisition effects.
Liabilities less investments and cash & cash equivalents. Purpose: Net debt reflects the company's total debt situation.
Liabilities less investments and cash & cash equivalents divided by operating profit before depreciation/amortization. Purpose: This indicator shows the company's ability to pay debts.
Financial income less financial expenses. Purpose: Describes the company's financial activities.
Operating profit as a percentage of net sales. Purpose: The operating margin is used to measure operating profitability.
Profit before tax plus net financial items. Purpose: This indicator facilitates profitability comparisons regardless of the company's tax rate and independent of its financing structure.
Profit before tax as a percentage of net sales. Purpose: Profit margin shows the company's profit in relation to its sales.
Profit before tax (per rolling 12-month period) plus financial expenses as a percentage of average capital employed. Purpose: This indicator is the key measure to quantify the return on the capital used in operations.
Profit for the period/year attributable to the Parent Company's shareholders (for rolling 12 months) 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.
Purpose: This indicator is used to show, from an ownership perspective, the return generated on the owners' invested capital.
The Board of Directors and the CEO certify that the interim 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, August 16, 2018
Heiner Olbrich Chairman
Alessandra Cama Göran Carlson Christel Kinning Board member Board member Board member
Fredrik Lövstedt Mats H Nilsson Board member Board member
Henrik Bunge CEO
The interim report for January-September 2018 will be released on November 16, 2018.
The interim report for 2018 will be released on February 22, 2019.
Financial reports can be downloaded from the company's website, www.bjornborg.com or ordered by telephone +46 8 506 33 700 or by e-mail [email protected].
Henrik Bunge, CEO E-mail: [email protected] Tel: +46 8 506 33 700
Daniel Grohman, CFO E-mail: [email protected] Tel: +46 8 506 33 700
The Group owns the Björn Borg trademark and its core business is sports apparel and underwear. It also offers footwear, bags and eyewear through licensees. Björn Borg products are sold in around thirty markets, of which Sweden and the Netherlands are the largest. The Björn Borg Group has operations at every level from branding to consumer sales in its own Björn Borg stores. Total sales of Björn Borg products in 2017 amounted to about SEK 1.5 billion, excluding VAT, at the consumer level. Group net sales amounted to SEK 696.5 million in 2017, with an average of 212 employees. The Björn Borg share has been listed on Nasdaq Stockholm since 2007.
The images in the interim report come from Björn Borg's high summer 2018 collection.
Björn Borg AB Tulegatan 11 SE-113 53 Stockholm, Sweden www.bjornborg.com
This information is information that Björn Borg AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above on August 17, 2018 at 7:30 am (CET).
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