Quarterly Report • May 17, 2013
Quarterly Report
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"In the first quarter 2013 we reported a decline in sales, partly as a result of continued weakness in our European retail markets. At the same time we still see a need to expand wisely for future growth. During the quarter we took an important step through the acquisition of the Finnish operations from the former distributor," said CEO Arthur Engel.
| SEK millions | January– March 2013 |
January– March 2012 |
April 2012– March 2013 |
Full-year 2012 |
|---|---|---|---|---|
| Net sales | 131.4 | 140.5 | 541.7 | 551.4 |
| Gross profit margin, % | 49.4 | 48.0 | 50.8 | 50.2 |
| Operating profit | 9.2 | 14.6 | 62.6 | 69.8 |
| Operating margin, % | 7.0 | 10.4 | 11.6 | 12.7 |
| Profit after tax | 6.0 | 9.3 | 42.5 | 47.2 |
| Earnings per share, SEK | 0.30 | 0.44 | 1.91 | 2.11 |
| Brand sales* | 432 | 448 | 1,582 | 1,598 |
*Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported sales at the wholesale level.
Economic concerns and weak demand continued to affect Björn Borg's markets and opportunities during the first quarter 2013, as was the case in 2012. As I have said before, these are the market conditions we are going to have to live with. One of the consequences we have seen is that the differences between quarters are generally becoming larger and that predictability is decreasing, in addition to the fact that we have to work even harder to reach where we want to be.
In the first quarter 2013 we reported lower sales and earnings. The sales decline was partly because a smaller share of the spring and summer underwear collections was delivered during the first quarter compared with the same quarter in 2012. On the positive side, we are seeing a higher gross profit margin at the retail level and continued strong growth in online sales.
At the beginning of the year we took another important step in our growth with the acquisition of the Finnish operations from the former distributor. Finland is our sixth largest market and has the potential to grow through additional stores and in more product areas. We have jumpstarted this work through our partner and the staff in Finland.
We are not pleased with how our operations in China work thus far and are evaluating various alternatives how to proceed in this large and challenging market.
In our British operations we are seeing continued progress in building a retailer network and higher sales. Two other markets that developed positively during the quarter were Belgium and Finland, which we now manage ourselves, while our large established markets saw sales declines. The majority of our European markets are experiencing weak retail sales, particularly the Dutch market. Our distributor in the Netherlands, which has a large network of its own stores in addition to wholesaling operations, has naturally been affected through lower sales and increased inventory, which has meant smaller purchases from the Group's product companies.
During the first quarter we opened a store in new shopping center in Stockholm's Hornstull area. We are continuously evaluating our stores in the country to find the right locations to serve our target group, with an aim is to open another couple of stores during the year.
Looking forward we have a hard time seeing a quick rebound in the weak retail market. We believe in our brand's strong potential, even in tough times, and will continue to invest on several fronts: in important branding activities, smart product development, growing online sales and our strategic markets.
Arthur Engel, Chief Executive Officer
Brand sales (excluding VAT) decreased by 4 percent to SEK 432 million (448) in the first quarter. A stronger krona negatively affected brand sales. Adjusted for currency effects, sales were approximately unchanged for the quarter.
Brand sales in the underwear product area fell by 8 percent in the first quarter, in line with a weak wholesale market in Europe. Underwear accounted for 54 percent (57) of brand sales during the period.
Sales in the sportswear and eyewear product areas noted solid increases during the quarter. The footwear product area saw a slight increase, while bags and fragrances reported declines. In total, sales of other products increased by 3 percent during the quarter.
Brand sales in smaller markets were largely unchanged and accounted for 12 percent (13) of total brand sales during the quarter. As of 2013 Finland is reported separately. Among larger markets, Belgium and Finland saw good growth, while Sweden, the Netherlands, Norway and Denmark decreased
between 5 and 10 percent. Among smaller markets, England and France had positive growth numbers.
During the quarter the Group closed its store on Kullagatan in Helsingborg. Two stores were closed in the Netherlands. As of March 31, 2013 there were a total of 57 (56) Björn Borg stores, of which 17 (14) are Group-owned. After the end of the quarter a new Group-owned store was opened in the Hornstull area of Stockholm.
During the first quarter Björn Borg acquired the distributor Fashion Case in Finland. The Finnish operations currently consist of wholesaling of underwear, sportswear and bags as well as one Björn Borg store. The brand is strongly positioned in Finland, which today is Björn Borg's sixth largest market, and the company sees the potential for continued growth. Björn Borg is the principal owner (75 percent), while an experienced local partner is a minority owner. The total purchase price is approximately SEK 9 million. Further information is provided in note 2 of this report.
Björn Borg expects the acquired Finnish operations to contribute positively to the Group's operating profit in 2013.
Björn Borg has been active in China since fall 2012 through a company with Björn Borg as principal owner (75 percent) and a local partner as minority owner. To date the operations have not developed as planned in China, and the company is evaluating various alternatives.
Sales and operating profit decreased during the first quarter.
Group sales during the first quarter amounted to SEK 131.4 million (140.5), a decrease of 6 percent. Excluding currency effects, sales fell by 4 percent. The biggest reason for the decline was that a smaller share of the spring and summer collections was delivered by the product companies in January 2013 compared with January 2012. The Swedish wholesaling operations for underwear and footwear reported slight declines, while the British operations saw solid growth. Retail sales as a whole decreased slightly. Growth in online sales was however continued strong. Royalties declined slightly in line with the lower brand sales. The Finnish subsidiary was consolidated during the first quarter after its acquisition and contributed to Group sales.
The gross profit margin for the first quarter increased to a more normalized level of 49.4 percent (48.0). The first quarter 2012 included temporarily higher discounts and customer refunds with higher discounted sales in the Swedish wholesaling operations, which adversely affected the gross profit margin.
Operating profit decreased during the quarter by 37 percent to SEK 9.2 million (14.6) with an operating margin of 7.0 percent (10.4). The investments in Björn Borg Sport, China and the British operations reduced operating profit by SEK 5.1
million (4.9). The lower operating profit is partly due to the Group's lower sales during the quarter, in spite of the higher gross profit margin, and partly to increased operating expen ses. In total, operating expenses rose by SEK 2.8 million during the quarter due to higher personnel expenses in China and additional expenses in the acquired Finnish subsidiary.
The net financial expense increased to SEK 2.1 million (1.9). The majority of the net expense is attributable to the revaluation of financial assets and liabilities in foreign currency. Profit before tax decreased to SEK 7.1 million (12.7).
The Group consists of a total of 14 companies, eleven of which operate under the Björn Borg brand on every level from product development to wholesaling and consumer sales in its own Björn Borg stores.
The Brand segment primarily consists of royalty revenue and expenses associated with the brand.
Net sales reached SEK 21.8 million (23.4) during the first quarter 2013, a decrease of 7 percent. External sales amounted to SEK 10.9 million (12.6) and are reasonable relative to the lower brand sales during the quarter. It should be noted that the royalties Björn Borg Sport receives from its customers are also reported in the Brand segment.
Operating profit amounted to SEK 4.6 million (5.8), a decrease of 21 percent for the period. The decline was mainly due to higher expenses for branding activities during the quarter.
The Björn Borg Group has global responsibility for development, design and production of underwear and adjacent products, as well as sportswear through Björn Borg Sport.
The business segment's net sales amounted to SEK 74.0 million (89.9) in the first quarter 2013, a decrease of 18 percent. External sales amounted to SEK 50.0 million (65.3), a decrease of 23 percent year-on-year. The decline is due to lower year-on-year shipment volumes during the first quarter. A stronger SEK has had a negative effect on sales for both product companies.
Operating profit decreased to SEK 5.8 million (8.7) due to the lower sales, with operating expenses largely unchanged from the same period in 2012. A weaker USD has also affected operating profit negatively.
| Sales, SEK thousands January–March |
Operating profit, SEK thousands January–March |
Operating margin January–March |
|||||
|---|---|---|---|---|---|---|---|
| Business segment | Revenue source | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 |
| Brand | Royalties | 21,772 | 23,437 | 4,582 | 5,789 | 21% | 25% |
| Product development | Products | 74,001 | 89,949 | 5,757 | 8,713 | 8% | 10% |
| Wholesale | Wholesale revenues | 71,800 | 63,537 | 5,659 | 3,353 | 8% | 5% |
| Retail | Retailerse | 14,805 | 15,210 | –6,773 | –3,224 | –46% | –21% |
| Less internal sales | –50,964 | –51,595 | – | – | – | – | |
| Total | 131,414 | 140,538 | 9,225 | 14,631 | 7% | 10% |
The Björn Borg Group is the exclusive wholesaler of underwear and adjacent products in Sweden, England and Finland as well as footwear in Sweden, Finland and the Baltic countries.
Net sales for the wholesaling operations increased by 13 percent to SEK 71.8 million (63.5) in the first quarter 2013. External sales amounted to SEK 58.0 million (49.8). The British operations reported good growth, while the Swedish wholesaling operations for footwear and underwear had a weaker quarter. Sales in Finland are consolidated as of the first quarter 2013.
Operating profit amounted to SEK 5.7 million (3.4). The increase was due to the higher sales, although operating expenses in Finland and England were higher than in the same quarter of 2012. A stronger SEK has positively affected gross profit and operating profit to a limited extent.
The Björn Borg Group owns and operates 15 stores in mainly the Swedish market that sell underwear, sportswear and other products. Additionally, Björn Borg manages two factory outlets and the e-commerce operations. This segment also includes the operations in China.
External net sales in the Retail segment decreased by 3 percent in the first quarter 2013 to SEK 12.5 million (12.9). The decrease was due to the fact that the company had fewer net stores in Sweden compared with the first quarter 2012 and to generally tough retail conditions. E-commerce has continued to report strong growth, however. Outlets and comparable Björn Borg stores reported a sales decline of 19 percent. This was partly due to an intentionally shorter discount period at the beginning of the year, which has had a positive effect on gross profit margins.
The operating loss for the quarter amounted to SEK 6.8 million, against a year-earlier loss of SEK 3.2 million, due to the operations in China, asset write-offs in connection with the closure of the store in Helsingborg and a stronger e-commerce organization.
Intra-Group sales amounted to SEK 51.0 million (51.6) for the period.
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.
Cash flow from operating activities in the Group amounted to SEK –11.7 million (–2.2) in the first quarter 2013. Tied-up working capital decreased slightly during the quarter compared with the same period in 2012. The lower cash flow was mainly due to lower operating profit and tax payments for 2011 during the quarter. The increased inventory was due to the operations in Finland, China and the Fragrances product area. The increase in accounts receivable primarily relates to receivables of the Dutch distributor.
Total investments in tangible and intangible non-current assets amounted to SEK 1.5 million (1.0) for the period, with the higher investments in 2013 largely due to the Swedish Group-owned stores.
The Björn Borg Group's cash & cash equivalents and investments amounted to SEK 258.2 million (154.0) at the end of the period. During the quarter cash & cash equivalents and investments decreased by SEK 22.0 million, compared
with a year-earlier decrease of SEK 4.0 million. The quarterly decrease was mainly due to an increase in tied-up working capital.
The bond loan is listed on NASDAQ OMX Stockholm and carries an annual coupon rate corresponding to the 3-month STIBOR rate +3.25 percentage points, maturing in April 2017. In 2012 the company repurchased corporate bonds with a nominal value of SEK 5 million, due to which the carrying amount of the bond loan after the repurchase and transaction expenses of about SEK 3 million amounted to SEK 192.4 million as of March 31 2013.
The surplus liquidity from the issuance of the bond loan was placed in interest-bearing financial instruments, highly liquid corporate bonds, within the framework of the financial policy laid down by the Board of Directors. As of March 31 investments had been made in bonds with a book value of SEK 169.0 million, which represents the fair value on the same date. As a rule, bonds in foreign currency are hedged.
As a commitment for the above-mentioned bond loan, the company has pledged to ensure that the ratio between the Group's net debt and operating profit before depreciation and amortization does not exceed 3.00 on the last day of each quarter and that the Group maintains an equity/assets ratio of at least 30 percent at any given time. As of March 31, 2013 the ratio was -0.54 (positive net cash) with an equity/assets ratio of 49.8 percent (72.8). A complete description of commitments and conditions of the bond loan is provided in the prospectus, which is available on the company's website and from the Swedish Financial Supervisory Authority.
No changes were otherwise made with regard to pledged assets and contingent liabilities compared with December 31, 2012.
The average number of employees in the Group was 151 (120) for the 12-month period ending March 31, 2013, of whom 64 percent (59) are women. The increase in the number of employees was mainly due to the new operations in China and Finland.
No transactions with related parties have been executed 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 46-47 and in note 3 in the annual report 2012.
There are no significant events to report following the conclusion of the report period.
Björn Borg AB (publ) is primarily engaged in intra-Group activities. The company also 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, 75 percent of the shares in Bjorn Borg (China) Ltd, 75 percent of the shares in Bjorn Borg Finland Oy and 51 percent of the shares in Björn Borg Sport BV.
The Parent Company's net sales for the first quarter amounted to SEK 12.7 million (12.1).
The loss before tax amounted to SEK 11.9 million for the first quarter, against a year-earlier loss of SEK 12.7 million. Cash & cash equivalents and short-term investments amounted to SEK 204.6 million (102.1) on March 31, 2013. Investments in tangible and intangible non-current assets amounted to SEK 0.4 million (0.5) for the period.
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 objectives will be achieved if established markets grow slightly below the average growth target and new markets contribute stronger growth.
The surplus liquidity generated while taking into account the new financial objectives will be distributed gradually during the forecast period.
Operating investments are estimated annually at 2–5 percent of net sales depending on whether any new Björn Borg stores are opened.
The Annual General Meeting on April 17, 2013 resolved to pay a distribution of SEK 3.00 (4.00) per share to the shareholders for the financial year 2012. Payment for redemption shares is expected to be issued around May 24, 2013.
Kerstin Hessius, Fredrik Lövstedt, Mats H Nilsson, Vilhelm Schottenius and Michael Storåkers were reelected to the Board of Directors with Fredrik Lövstedt as Chairman of the Board. Isabelle Ducellier was elected as a new member of the Board.
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. 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 2012, as described on page 56 in the annual report 2012, with the exception of the changes and new standard below.
The new standard IFRS 13 replaces the previous guidance in each standard on measurement at fair value. The standard is applicable to the measurement at fair value of both financial and non-financial items. Fair value is defined as the price that would be received from the sale of an asset or the consideration that would be paid to transfer a debt in a normal transaction between market players on the measurement date ("exit price"). IFRS 13 has been applied prospectively as of January 1, 2013. The introduction of IFRS 13 has not had a material effect on the measurement of financial instruments by the Group and Parent Company.
IFRS 13 requires several quantitative and qualitative disclosures on measurement at fair value in the annual report. As a result of the requirements in IFRS 13, IAS 34 Interim Reporting has also been updated to include a requirement that interim reports released as of 2013 must also contain specific disclosures with respect to financial reports at fair value. The revision to IAS 34 also requires the disclosure in the interim report of the fair value of financial instruments recognized at amortized cost. See note 1 for these disclosures in the interim report.
The amendments in IAS 1 Presentation of Financial Statements require additional disclosures in other comprehensive income so that items in other comprehensive income are grouped into categories: a) items that will not be reclassified to profit or loss and b) items that will be reclassified to profit or loss if certain criteria are met. Björn Borg's application of the amendments introduced in IAS 1 is indicated in the consolidated statement of comprehensive income. Because Björn Borg has no significant transactions related to items that will not be transferred to profit or loss, the introduction of the amendments to IAS 1 has not had a significant effect on the layout of the statement.
No new or revised IFRS standards and interpretations from IFRIC besides those mentioned above have been applied or have had a significant effect on the Group's or Parent Company's financial position, results or disclosures. Björn Borg has no significant defined-benefit pension plans, because of which the revised IAS 19 does not have any impact.
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 | January– March 2013 |
January– March 2012 |
April 2012– March 2013 |
Full-year 2012 |
| Net sales | 131,414 | 140,538 | 541,717 | 551,432 | |
| Cost of goods sold | –66,537 | –73,034 | –266,792 | –274,803 | |
| Gross profit | 64,877 | 67,504 | 274,925 | 276,628 | |
| Distribution expenses | –38,765 | –36,637 | –148,580 | –144,694 | |
| Administrative expenses | –14,065 | –13,256 | –52,495 | –51,016 | |
| Development expenses | –2,822 | –2,980 | –11,223 | –11,133 | |
| Operating profit | 9,225 | 14,631 | 62,627 | 69,786 | |
| Net financial items | –2,138 | –1,901 | –1,147 | –909 | |
| Profit before tax | 7,086 | 12,730 | 61,480 | 68,877 | |
| Tax | –1,079 | –3,409 | –18,934 | –21,650 | |
| Profit for the period | 6,007 | 9,321 | 42,546 | 47,227 | |
| Profit for the period attributable to: | |||||
| Parent Company's shareholders | 7,453 | 11,136 | 47,912 | 52,963 | |
| Non-controlling interests | –1,446 | –1,815 | –5,366 | –5,736 | |
| Earnings per share before and after dilution, SEK | 0.30 | 0.44 | 1.91 | 2.11 | |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| Condensed | |||||
|---|---|---|---|---|---|
| SEK thousands | January– March 2013 |
January– March 2012 |
April 2012– March 2013 |
Full-year 2012 |
|
| Net profit for the period | 6,007 | 9,321 | 42,546 | 47,227 | |
| OTHER COMPREHENSIVE INCOME | |||||
| Components that will be reclassified to net profit for the period | |||||
| Currency effect on translation of foreign operations | 608 | 294 | 1,206 | 892 | |
| Other comprehensive income for the period | 608 | 294 | 1,206 | 892 | |
| Total comprehensive income for the period | 6,615 | 9,615 | 43,751 | 48,119 | |
| Total comprehensive income attributable to | |||||
| Parent Company's shareholders | 8,061 | 11,430 | 49,118 | 53,855 | |
| Non-controlling interests | –1,446 | –1,815 | –5,366 | –5,736 |
Condensed
| SEK thousands | Note | 31 March 2013 |
31 March 2012 |
31 December 2012 |
|---|---|---|---|---|
| Non-current assets | ||||
| Goodwill | 18,348 | 13,944 | 13,944 | |
| Trademarks | 187,531 | 187,532 | 187,532 | |
| Other intangible assets | 4,868 | 5,919 | 4,572 | |
| Tangible non-current assets | 14,347 | 14,277 | 13,952 | |
| Deferred tax assets | 35,138 | 43,167 | 35,283 | |
| Total non-current assets | 260,232 | 264,839 | 255,283 | |
| Current assets | ||||
| Inventories, etc. | 40,939 | 31,552 | 35,688 | |
| Accounts receivable | 104,190 | 79,962 | 93,994 | |
| Other current receivables | 38,521 | 28,198 | 29,250 | |
| Investments | 1 | 168,983 | – | 163,979 |
| Cash & cash equivalents | 89,171 | 154,031 | 116,195 | |
| Total current assets | 441,804 | 293,743 | 439,106 | |
| Total assets | 702,036 | 558,582 | 694,389 | |
| Equity and liabilities | ||||
| Equity | 350,831 | 406,577 | 344,216 | |
| Deferred tax liabilities | 44,769 | 49,035 | 44,544 | |
| Other non-current liabilities | 28,755 | 27,088 | 30,985 | |
| Bond loan | 1 | 192,442 | – | 192,283 |
| Accounts payable | 31,067 | 19,946 | 32,780 | |
| Other current liabilities | 54,172 | 55,936 | 49,581 | |
| Total equity and liabilities | 702,036 | 558,582 | 694,389 |
| Condensed | ||||
|---|---|---|---|---|
| Equity attributable | Non- | |||
| to Parent Company's | controlling | Total | ||
| SEK thousands | shareholders | interests | equity | |
| Opening balance, January 1, 2012 | 400,815 | –3,854 | 396,962 | |
| Total comprehensive income for the period | 11,430 | –1,815 | 9,615 | |
| Closing balance, March 31, 2012 | 412,245 | –5,669 | 406,577 | |
| Opening balance, January 1, 2012 | 400,815 | –3,854 | 396,962 | |
| Total comprehensive income for the year | 53,855 | –5,736 | 48,119 | |
| Distribution for 2011 | –100,594 | – | –100,594 | |
| Acquisition of non-controlling interests | –26 | –79 | –105 | |
| Dividend to non-controlling interests | – | –168 | –168 | |
| Non-controlling interests that arose through formation of subsidiaries | – | 2 | 2 | |
| Closing balance, December 31, 2012 | 354,050 | –9,835 | 344,216 | |
| Opening balance, January 1, 2013 | 354,050 | –9,835 | 344,216 | |
| Total comprehensive income for the period | 8,061 | –1,446 | 6,615 | |
| Closing balance, March 31, 2013 | 362,111 | –11,281 | 350,831 |
| Condensed | ||||
|---|---|---|---|---|
| SEK thousands | Note | January– March 2013 |
January– March 2012 |
Full-year 2012 |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| Before changes in working capital | 1,939 | 15,288 | 62,460 | |
| Changes in working capital | –13,680 | –17,449 | –31,220 | |
| Cash flow from operating activities | –11,741 | –2,161 | 31,240 | |
| Investments in intangible non-current assets | –247 | –89 | –2,679 | |
| Investments in tangible non-current assets | –1,257 | –892 | –3,843 | |
| Business combinations | 2 | –6,547 | – | – |
| Investments | –5,553 | – | –161,211 | |
| Cash flow from investing activities | –13,604 | –955 | –167,734 | |
| Dividend/distribution | – | – | –100,594 | |
| Amortization of loans | –2,071 | –1,667 | –6,667 | |
| Change in long-term liabilities | – | – | 8,899 | |
| Issuance of bond loan | – | – | 196,778 | |
| Repurchase of bond loan | – | – | –4,950 | |
| Cash flow from financing activities | –2,071 | –1,667 | 93,466 | |
| Cash flow for the period | –27,416 | –4,809 | –43,028 | |
| Cash & cash equivalents at beginning of period | 116,195 | 158,042 | 158,042 | |
| Translation difference in cash & cash equivalents | 392 | 798 | 1,182 | |
| Cash & cash equivalents at end of period | 89,171 | 154,031 | 116,195 |
| Group | |||
|---|---|---|---|
| January– | January– | April 2012– | Full-year | |
|---|---|---|---|---|
| SEK thousands | March 2013 | March 2012 | March 2013 | 2012 |
| Gross profit margin, % | 49.4 | 48.0 | 50.8 | 50.2 |
| Operating margin, % | 7.0 | 10.4 | 11.6 | 12.7 |
| Profit margin, % | 5.4 | 9.1 | 11.3 | 12.5 |
| Return on capital employed, % | 12.6 | 15.6 | 12.3 | 15.9 |
| Return on average equity, % | 13.0 | 22.0 | 12.7 | 14.3 |
| Profit attributable to Parent Company's shareholders | 7,453 | 11,136 | 47,912 | 52,963 |
| Equity/assets ratio, % | 50.0 | 72.8 | 49.8 | 49.6 |
| Equity per share, SEK | 13.95 | 16.17 | 13.9 | 13.69 |
| Investments in intangible non-current assets | 247 | 89 | 2,761 | 2,679 |
| Investments in tangible non-current assets | 1,257 | 892 | 4,602 | 3,843 |
| Investments in financial non-current assets | 6,585 | – | 16 | – |
| Depreciation, amortization and impairment losses for the period | –1,557 | –1,776 | –6,219 | –6,438 |
| Average number of employees | – | – | 151 | 139 |
| Group | ||||
|---|---|---|---|---|
| SEK thousands | January– March 2013 |
January– March 2012 |
April 2012– March 2013 |
Full-year 2012 |
| Operating revenue | ||||
| Brand | ||||
| External revenue | 10,912 | 12,581 | 41,233 | 42,900 |
| Internal revenue | 10,860 | 10,856 | 38,396 | 38,392 |
| 21,772 | 23,437 | 79,629 | 81,292 | |
| Product development | ||||
| External revenue | 50,046 | 65,318 | 261,373 | 277,236 |
| Internal revenue | 23,955 | 24,631 | 107,431 | 108,107 |
| 74,001 | 89,949 | 368,804 | 385,343 | |
| Wholesale | ||||
| External revenue | 57,978 | 49,755 | 176,849 | 168,626 |
| Internal revenue | 13,822 | 13,782 | 52,741 | 52,701 |
| 71,800 | 63,537 | 229,589 | 221,327 | |
| Retail | ||||
| External revenue | 12,478 | 12,884 | 62,263 | 62,669 |
| Internal revenue | 2,327 | 2,326 | 10,297 | 10,296 |
| 14,805 | 15,210 | 72,560 | 72,965 | |
| Less internal sales | –50,964 | –51,595 | –208,865 | –209,495 |
| Operating revenue | 131,414 | 140,538 | 541,717 | 551,432 |
| Operating profit | ||||
| Brand | 4,582 | 5,789 | 16,434 | 16,281 |
| Product development | 5,757 | 8,713 | 43,769 | 48,589 |
| Wholesale | 5,659 | 3,353 | 16,189 | 14,636 |
| Retail | –6,773 | –3,224 | –13,765 | –9,720 |
| Operating profit | 9,225 | 14,631 | 541,717 | 69,786 |
| Group | ||||||||
|---|---|---|---|---|---|---|---|---|
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |
| SEK thousands | 2013 | 2012 | 2012 | 2012 | 2012 | 2011 | 2011 | 2011 |
| Net sales | 131,414 | 138,655 | 166,761 | 105,478 | 140,538 | 123,100 | 160,150 | 101,937 |
| Gross profit margin, % | 49.4 | 51.6 | 49.5 | 52.1 | 48.0 | 52.4 | 50.6 | 53.3 |
| Operating profit | 9,225 | 15,085 | 35,222 | 4,848 | 14,631 | 14,143 | 32,976 | 8,190 |
| Operating margin, % | 7.0 | 10.9 | 21.1 | 4.6 | 10.4 | 11.5 | 20.6 | 8.0 |
| Profit after financial items | 7,086 | 18,948 | 33,368 | 3,830 | 12,730 | 15,026 | 32,664 | 8,903 |
| Profit margin, % | 5.4 | 13.7 | 20.0 | 3.6 | 9.1 | 12.2 | 20.4 | 8.7 |
| Earnings per share before/after dilution, SEK 0.30 | 0.45 | 1.11 | 0.10 | 0.44 | 1.92 | 1.05 | 0.33 | |
| Number of Björn Borg stores at end of period | 57 | 60 | 59 | 57 | 56 | 56 | 54 | 54 |
| of which Group-owned Björn Borg stores | 17 | 17 | 13 | 13 | 14 | 15 | 13 | 12 |
| Brand sales | 431,815 | 376,244 | 484,938 | 288,360 | 447,640 | 384,133 | 551,267 | 314,967 |
| Condensed | |||||
|---|---|---|---|---|---|
| SEK thousands | Note | January– March 2013 |
January– March 2012 |
April 2012– March 2013 |
Full-year 2012 |
| Net sales | 12,720 | 12,063 | 50,325 | 49,667 | |
| Cost of goods sold | –350 | –433 | –657 | –740 | |
| Gross profit | 12,370 | 11,630 | 49,667 | 48,927 | |
| Distribution expenses | –12,597 | –13,423 | –50,217 | –49,304 | |
| Administrative expenses | –4,845 | –5,163 | –19,314 | –18,963 | |
| Development expenses | –1,937 | –2,065 | –7,726 | –7,585 | |
| Operating loss | –7,009 | –9,021 | –27,589 | –26,925 | |
| Dividend from subsidiary | – | – | 75,000 | 75,000 | |
| Group contributions received | – | – | 41,047 | 41,047 | |
| Net financial items | –4,872 | –3,708 | –13,358 | –12,194 | |
| Profit/loss before tax | –11,881 | –12,729 | 75,101 | 76,928 | |
| Appropriations | – | – | 355 | 355 | |
| Tax | 403 | – | –1,804 | –2,207 | |
| Profit for the period | –11,478 | –12,729 | 73,651 | 75,076 | |
| Other comprehensive income | – | – | – | – | |
| Total comprehensive income for the period | –11,478 | –12,729 | 73,651 | 75,076 |
| Condensed | ||||
|---|---|---|---|---|
| SEK thousands | 31 March 2013 |
31 March 2012 |
31 December 2012 |
|
| Non-current assets | ||||
| Intangible non-current assets | 637 | 1,103 | 753 | |
| Tangible non-current assets | 5,847 | 6,619 | 5,876 | |
| Shares in Group companies | 330,267 | 321,227 | 327,132 | |
| Total non-current assets | 336,751 | 328,949 | 333,761 | |
| Current assets | ||||
| Receivables from Group companies | 177,552 | 207,762 | 103,444 | |
| Current receivables | 5,398 | 6,674 | 5,399 | |
| Investments | 1 | 168,983 | – | 163,979 |
| Cash & cash equivalents | 30,654 | 102,114 | 86,172 | |
| Total current assets | 382,587 | 316,550 | 358,994 | |
| Total assets | 719,338 | 645,499 | 692,754 | |
| Equity and liabilities | ||||
| Equity | 127,306 | 151,573 | 138,784 | |
| Untaxed reserves | 2,183 | 2,538 | 2,183 | |
| Deferred tax | 609 | – | 609 | |
| Bond loan | 1 | 192,442 | – | 192,283 |
| Due to Group companies | 382,171 | 479,740 | 345,377 | |
| Accounts payable | 3,901 | 2,724 | 2,766 | |
| Other current liabilities | 10,726 | 8,924 | 10,752 | |
| Total equity and liabilities | 719,338 | 645,499 | 692,754 |
| Condensed | January– March 2012 |
Full-year 2012 |
|
|---|---|---|---|
| SEK thousands | January– March 2013 |
||
| Opening balance | 138,784 | 164,302 | 164,302 |
| Dividend/distribution | – | – | –100,594 |
| Total comprehensive income for the period | –11,478 | –12,729 | 75,076 |
| Closing balance | 127,306 | 151,573 | 138,784 |
Securities held for trading relate to investments in corporate bonds quoted on NASDAQ OMX and are 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.
In February 2013 Björn Borg AB acquired 75 percent of the shares in Fashion Case Retail Oy in Finland, previously owned by the Finnish distributor. An experienced local partner acquired the remaining 25 percent. The acquired company changed its name to Björn Borg Finland Oy in February 2013.
The Finnish operations currently consist of wholesaling of underwear, sportswear and bags as well as one Björn Borg store in Helsinki. The brand is strongly positioned in Finland, which today is Björn Borg's six largest market. The company sees the potential for continued growth.
During the first quarter the operations contributed SEK 6.5 million to the Group's sales and SEK 0.3 million to operating profit. The acquired operations are included in the Wholesale segment as of the acquisition date.
The total purchase price amounted to EUR 1,052,500 including the non-controlling interest, of which 75 percent (EUR 789,375, of which Björn Borg's share is EUR 592,031) was paid in cash on the acquisition date, with the remaining share payable in February 2014 (EUR 262,500, of which Björn Borg's share is EUR 196,875). The effect on cash flow was EUR 6,547 thousand, i.e., the total purchase price paid in cash of SEK 6,788 thousand less acquired cash & cash equivalents of SEK 239 thousand. There are no conditions associated with the purchase price. Acquisition expenses amounted to SEK 260 thousand and have been expensed in 2012 and 2013.
| Financial assets at fair value through profit or loss |
Level 1 |
Level 2 |
Level 3 |
|---|---|---|---|
| Securities held for trading | 167,400 | – | – |
| Derivatives held for trading | – | 1,583 | – |
| Total assets | 167,400 | 1,583 | – |
Björn Borg currently has no liabilities measured at fair value. The carrying amount of financial instruments at amortized cost coincides with their fair value as of March 31, 2013, with the exception of the bond loan, whose fair value amounted to SEK 189,150 thousand, compared with a carrying amount of SEK 192,442 thousand.
SEK thousands
| Non-current assets | |
|---|---|
| Customer relations | 1,209 |
| Other non-current assets | 524 |
| Current assets | |
| Inventories | 6,391 |
| Accounts receivable | 1,588 |
| Other current assets | 309 |
| Current liabilities | |
| Accounts payable | 3,971 |
| Other current liabilities | 1,592 |
| Identifiable assets and liabilities, net | 4,458 |
| Goodwill arising through acquisitions | |
| Transferred consideration including | |
| non-controlling interest | 8,862 |
| Minus: Fair value of acquired net assets | 4,458 |
| Goodwill upon acquisition | 4,404 |
The goodwill that arose in connection with the acquisition and recognized locally in the Finnish company is expected to be tax deductible.
Net sales less cost of goods sold divided by net sales.
Operating profit as a percentage of net sales.
Profit before tax as a percentage of net sales.
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 in relation to the weighted average number of shares during the period and earnings per share adjusted for any dilution effect.
Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported sales at the wholesale level.
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, May 17, 2013
Fredrik Lövstedt Chairman
Kerstin Hessius Board Member
Isabelle Ducellier Board Member
Mats H Nilsson Board Member
Vilhelm Schottenius Board Member
Michael Storåkers Board Member
Arthur Engel President and CEO
The interim report for January–June 2013 will be released on August 23, 2013. The interim report for January–September 2013 will be released on November 8, 2013. The year-end report for 2013 will be released on February 14, 2014.
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 Tulegatan 11 SE-113 53 Stockholm, Sweden www.bjornborg.com
Björn Borg is required to make public the information in this interim report in accordance with the Securities Market Act. The information was released for publication on May 17, 2013 at 7:30 am (CET).
The Group owns the Björn Borg trademark and its core business is underwear. It also offers sportswear and fragrances, and footwear, luggage & 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 2012 amounted to around SEK 1.6 billion, excluding VAT, at the consumer level. Group net sales amounted to SEK 551 million in 2012, with 139 employees. The Björn Borg share has been listed on NASDAQ OMX Nordic in Stockholm since 2007.
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