Quarterly Report • Nov 17, 2014
Quarterly Report
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"The highlights of the third quarter were our participation in Fashion Week Stockholm, solid profitability growth and good growth in our e-commerce," said Henrik Bunge, CEO of Björn Borg.
| SEK million | July–Sep 2014 |
July–Sep 2013 |
Jan–Sep 2014 |
Jan–Sep 2013 |
Oct 2013– Sep 2014 |
Full-year 2013 |
|---|---|---|---|---|---|---|
| Net sales | 163.7 | 160.2 | 403.5 | 396.8 | 502.8 | 496.0 |
| Gross profit margin, % | 52.4 | 51.8 | 52.6 | 51.3 | 52.5 | 51.5 |
| Operating profit | 32.8 | 23.6 | 52.4 | 33.7 | 39.9 | 21.2 |
| Operating margin, % | 20.0 | 14.7 | 13.0 | 8.5 | 7.9 | 4.3 |
| Profit after tax | 24.0 | 15.5 | 41.7 | 24.9 | 30.6 | 13.9 |
| Earnings per share, SEK | 1.00 | 0.74 | 1.76 | 1.26 | 1.36 | 0.86 |
| Brand sales* | 452.4 | 482.3 | 1,088.5 | 1,189.5 | 1,420.4 | 1,521.1 |
* Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported sales at the wholesale level.
** As of 2014 the company has changed its income statement format based on type of cost instead of function as done before. As net sales and cost of goods sold are defined with the new format, net sales and the gross profit margin for comparative periods in 2013 may deviate slightly from reported values in 2013.
"This show increases the status of Fashion Week as a whole." "This is not what I expected of Björn Borg." "The best show I have ever seen at Fashion Week Stockholm." "This is a show I will never forget." "Björn Borg gave Fashion Week star quality." These were a few of the media comments on Björn Borg's SS15 show during Fashion Week Stockholm in August 2014.
The show, which took place in an underground rock chamber on Skeppsholmen island in Stockholm, attracted over 400 influential people from Swedish and international fashion circles. The acclaimed show director was Bea Åkerlund, stylist to stars such as Madonna, Lady Gaga, Beyoncé and Britney Spears. Seated in the front row were Swedish and foreign celebrities, fashion directors and representatives of the media, including from Vogue, New York Times, Nylon, V Magazine, Style.com and Harper's Bazaar, as well as buyers from fashion retailers around the world. Celebrity diva Conchita Wurst, who was flown in specially for the occasion, generated great interest on site and in social media. As a whole the show was the highlight of the quarter and the year, with an estimated PR value of SEK 15–20 million, many times greater than the cost of the event.
During the third quarter we saw continued tough conditions, mainly in our largest markets. This is evident in a further decline in brand sales and a negative trend in Group-owned Swedish stores compared with the previous year. The Group's total sales are increasing, however, mainly thanks to a larger Christmas collection shipped by our underwear product company compared with the previous year, good growth in our e-commerce and continued growth in Finland and England. To sum up, net sales for the quarter ended up meeting our expectations but were not quite as high as we had hoped. Cost control, coupled with our discontinued operations in China and a higher gross profit margin, produced acceptable profitability growth for Q3.
My personal focus during the quarter was to listen. I have met with end-consumers, customers, employees, distributors, licensees and shareholders, which has given me a clear picture of where we stand. The work we are doing to shape a long-term business plan and set a clear goal for the company has come far and is expected to be completed in Q4. As part of our ongoing efforts, we anticipate an increased focus on Sports Fashion within the Group. As a direct result of the work on our business plan, we have already decided to strengthen the organization with expertise in HR, design, creativity and sales. The retail organization is being restructured as a result of poor profitability and sales growth since 2010.
If I were to describe my first 100 days with two words, it would be long-term potential.
Head coach Henrik Bunge
Distributors and licensees reported weak sales in the footwear, bags and sportswear product areas during the third quarter. The largest product area, underwear, was unchanged, however. As a result, brand sales (excluding VAT) decreased by 6 percent to SEK 452 million (482) for the third quarter and by 8 percent to SEK 1,088 million (1,189) for the first nine months of the year. Adjusted for currency effects, brand sales were down 11 percent for the quarter and 12 percent for the first nine months of the year.
Brand sales in the underwear product area fell by 8 percent in the first nine months. Underwear accounted for 56 percent (56) of brand sales.
Sportswear saw a decline in brand sales of 15 percent. Sales also decreased in the eyewear, bags and footwear product areas, while sales of fragrances were relatively unchanged. In total, sales of licensed products fell by 9 percent during the first nine months.
Among large markets, Belgium and Finland saw good growth, while the Netherlands, Sweden and Norway reported declines. Denmark was relatively unchanged during the period. Among Björn Borg's smaller markets, England posted good growth numbers.
No new Björn Borg stores were opened during the third quarter. As of September 30, 2014 there were a total of 38 (54) Björn Borg stores, of which 17 (16) are Groupowned. The smaller number of stores year-on-year is due to the previously announced retail reconstruction by the Dutch distributor, which has closed 17 stores since September 30, 2013.
To address a continued tough situation in several of our markets, Björn Borg has continuously reviewed its operating expenses during the summer and fall. In total, the Group has reduced operating expenses year-on-year by SEK 3.2 million for the quarter and by SEK 9.1 million for the first nine months, which has had a corresponding positive effect on operating profit. The cost reduction obviously includes the discontinued operations in China.
Sales were higher during the third quarter with an improved operating profit compared with the same period in 2013.
The Group's net sales amounted to SEK 163.7 million (160.2) during the third quarter, an increase of 2 percent. Excluding currency effects, sales were unchanged. The main reason for the sales increase is that the underwear product company shipped a larger Christmas collection during the third quarter compared with the same period in 2013. The Swedish whole sale companies for underwear and footwear experienced another unfavorable quarter with slightly lower shipments of the fall/winter collection. The British and Finnish wholesaling operations continued to perform positively. The Group-owned retail operations reported another decline during the third quarter, while e-commerce continued to develop strongly. Total royalties decreased slightly as a result of lower brand sales during the quarter.
The Group's net sales amounted to SEK 403.5 million (396.8) during the first nine months of the year, an increase of 2 percent. Excluding currency effects, sales were unchanged.
Previously announced shipment delays at the turn of the year in the underwear and sportswear product companies have increased sales for 2014 by about SEK 25 million. The Christmas collection during the third quarter also contributed to the increase in net sales, while declines for the two previous collections for summer and fall/winter contributed negatively to sales for the period. The decline primarily in the large fall/winter underwear collection is partly due to the previously announced developments in the Netherlands, but also because Norway and Denmark reduced their preorders of this collection. For the first nine months as a whole, revenue in the two product companies rose compared with the same period in 2013, but mainly as a result of the previously announced shipment delays. The British and Finnish wholesaling operations continued to perform positively during the first nine months of the year. Sales for the Swedish wholesale companies for underwear and footwear decreased during the period, with tough market conditions leading to declining collections primarily in fall 2014. Group-owned retail sales saw a decline, while e-commerce continued to perform strongly. Royalties decreased as a result of lower brand sales during the period.
The gross profit margin for the third quarter improved slightly to 52.4 percent (51.8). Excluding currency effects, the margin would have still been 52.4 percent.
A slightly higher gross profit in combination with lower operating expenses during the quarter led to an increase in operating profit to SEK 32.8 million (23.6). The operating margin was 20.0 percent (14.7). Operating expenses excluding goods for resale were SEK 3.2 million lower year-on-year. The discontinued operations in China contributed to the decrease. At the same time the growing e-commerce operations led to an increase in volume-related expenses within these operations.
Net financial items amounted to SEK 1.0 million (–0.9). The increase is mainly due to exchange rate fluctuations on receivables in foreign currency. The realized and unrealized return on investments, less interest on the bond loan, negatively affected the Group's net financial items by SEK 0.7 million (+1.0). Profit before tax was SEK 33.8 million (22.7).
The gross profit margin for the first nine months increased to 52.6 percent (51.3). Excluding currency effects, the margin would have still been 52.6 percent.
The sales increase and improved gross profit margin during the first nine months, coupled with lower operating expenses, explains the improvement in operating profit, which rose to SEK 52.4 million (33.7). The operating margin was 13.0 percent (8.5). Operating expenses excluding goods for resale decreased by SEK 9.1 million compared with the same period in 2013. The discontinued operations in China have contributed to the decrease. At the same time the growing e-commerce operations led to an increase in volume-related expenses within these operations, while new Group-owned stores also added to expenses.
Net financial items amounted to SEK 5.1 million (0.6). The increase is mainly due to exchange rate fluctuations on receivables in foreign currency. The realized and unrealized return on investments, less interest on the bond loan, positively affected the Group's net financial items by SEK 1.5 million (1.3). Profit before tax increased to SEK 57.5 million (34.2).
The Group consists of a total of 13 companies, nine 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.
| Operating revenue, SEK thousands January–September |
Operating profit, SEK thousands January–September |
Operating margin January–September |
|||||
|---|---|---|---|---|---|---|---|
| Business segment | Revenue source | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 |
| Brand | Royalties | 60,857 | 62,030 | 15,709 | 13,378 | 26% | 22% |
| Product development | Products | 270,668 | 250,003 | 35,462 | 15,510 | 13% | 6% |
| Wholesale | Wholesale revenues | 172,614 | 202,281 | 7,247 | 17,413 | 4% | 9% |
| Retail | Retailers | 62,589 | 55,296 | –6,027 | –12,607 | –10% | –23% |
| Less internal sales | –159,858 | –170,634 | – | – | – | – | |
| Total | 406,870 | 398,976 | 52,391 | 33,694 | 13% | 8% |
The Brand segment primarily consists of royalty revenue and expenses associated with the brand.
The business segment's operating revenue amounted to SEK 60.9 million (62.0) during the first nine months of 2014. External operating revenue decreased to SEK 28.6 million (30.2) as a result of the quarter's lower brand sales. 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 15.7 million (13.4), an increase of 17 percent for the period. The improved operating result is due to lower net operating expenses for branding activities during the first nine months.
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 operating revenue amounted to SEK 270.7 million (250.0) during the first nine months of 2014, an increase of 8 percent. External operating revenue amounted to SEK 172.6 million (160.7). The increase compared with the first nine months of 2013 is due to the previously announced shipment delays in both product companies at the turn of the year compared with the same period a year earlier. The reason why the increase is this segment wasn't bigger was the decline in sales of the large fall/ winter underwear collection during the period.
Operating profit increased to SEK 35.5 million (15.5) due to the higher sales as well as an improved gross profit margin in this segment, not least in sportswear. A stronger USD also affected both sales and operating profit positively. Operating expenses in the segment were in line with the first nine months 2013.
The Björn Borg Group is the exclusive wholesaler of underwear and adjacent products in Sweden, Finland and England as well as footwear in Sweden, Finland and the Baltic countries.
The business segment's operating revenue decreased by 15 percent to SEK 172.6 million (202.3) during the first nine months of 2014. External operating revenue decreased to SEK 151.9 million (161.1). The British and Finnish operations saw sales growth, while Swedish underwear and footwear wholesaling had a weaker result compared with the same period in 2013.
Operating profit amounted to SEK 7.2 million (17.4) as a result of lower sales and higher operating expenses. A slightly positive currency effect was mainly due to a stronger EUR and GBP during the period.
The Björn Borg Group owns and operates a total of 17 stores and factory outlets in Sweden, Finland and England that sell underwear, adjacent products, sportswear and other licensed products. Björn Borg also sells online through www.bjornborg.com.
As of January 1, 2014 revenue and expenses attributable to the Group-owned stores in Finland and England are also reported in this segment. These items previously were not reported separately from the wholesaling operations above due to the insignificant amounts.
Operating revenue in the Retail segment increased by 14 percent during the first nine months of 2014 to SEK 62.6 million (55.3). External net sales rose by 14 percent during the period to SEK 53.7 million (47.0). The increase is due to continued strong performance in e-commerce in 2014. Swedish retail revenue declined during the period. Sales for outlets and comparable Björn Borg stores in Sweden were down 9 percent year-on-year.
The operating loss for the first nine months of 2014 improved to SEK 6.0 million, against a year-earlier loss of SEK 12.6 million. The result is no longer charged with the operations in China.
Intra-Group sales for the period amounted to SEK 159.9 million (170.6).
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 –0.7 million (1.0) during the first nine months of 2014. An improved operating result year-on-year was accompanied by increased tied-up working capital during the first nine months. Previously announced shipment delays at the turn of the year resulted in unusually low accounts receivable and inventories as of December 31, 2013, due to which tied-up capital was higher during the first nine months of 2013.
Total investments in tangible and intangible non-current assets amounted to SEK 0.9 million (4.8) for the period.
The Björn Borg Group's cash & cash equivalents and investments amounted to SEK 168.5 million (189.5) at the end of the period. During the first nine months of the year cash & cash equivalents and investments decreased by SEK 50.3 million (90.6). The decrease in 2014 is mainly due to the year's distribution of SEK 37.7 million (75.4).
In April 2012 the company issued a bond loan on NASDAQ OMX Stockholm that carries an annual coupon rate corresponding to the 3-month STIBOR rate +3.25 percentage points, maturing in April 2017. After transaction expenses of about SEK 1.5 million for the bond loan and the repurchase of corporate bonds with a nominal value of SEK 10 million, the carrying amount of the bond loan amounted to SEK 188.5 million as of September 30, 2014.
The surplus liquidity from the issuance of the bond loan is 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 September 30 investments had been made in bonds with a book value of SEK 139.2 million, which represents the fair value on the same date, compared with SEK 136.5 million on December 31, 2013. 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 September 30, 2014 the ratio was 0.42 (0.06) and the equity/assets ratio was 49.4 percent (46.3). 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, 2013.
The average number of employees in the Group was 136 (154) for the 12-month period ended September 30, 2014, of whom 63 percent (61) are women.
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 42–43 and in note 3 in the annual report 2013. The company's assessment of these risks and uncertainties has not changed since the assessment made in connection with the publication of the annual report for 2013.
There are no significant events to report following the conclusion of the reporting period.
In accordance with the resolution of the Annual General Meeting, Björn Borg's Nomination Committee for the 2015 AGM will be appointed by having the Chairman of the Board contact the company's four largest shareholders based on voting rights as of August 31, 2014, each of which appoints one member. Björn Borg's Nomination Committee for the 2015 AGM has the following composition:
The Annual General Meeting for the financial year 2014 will be held in Stockholm on May 11, 2015.
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. In addition, the company owns 80 percent of the shares in Björn Borg UK, 50.05 percent of the shares in Björn Borg Sport BV, 75 percent of the shares in Bjorn Borg (China) Ltd and 75 percent of the shares in Bjorn Borg Finland Oy.
The Parent Company's net sales amounted to SEK 15.6 million (12.5) during the third quarter and SEK 45.3 million (37.1) during the first nine months of the year.
The loss before tax amounted to SEK 8.3 million for the third quarter, against a year-earlier loss of SEK 27.1 million, while the loss before tax for the first nine months was SEK 19.5 million, against a year-earlier loss of SEK 44.7 million. The lower pretax loss is partly because net financial items for the third quarter of 2013 were charged with writedowns of holdings in subsidiaries, mainly related to China, of approximately SEK 13.5 million. Cash & cash equivalents and investments amounted to SEK 135.0 million (148.1) as of September 30, 2014. For the first nine months of the year investments in tangible and intangible non-current assets amounted to SEK 0.1 million (0.5).
The Parent Company participated in the issuance of shares to set off claims on Björn Borg Sport during the third quarter, as a result of which approximately SEK 9 million of the company's outstanding claims was converted to shares in the company. Björn Borg's ownership interest essentially
remained unchanged after the issue, which did not have a significant effect either on the company's cash flow or financial position. Because the minority shareholder also participated in the issue, the Group's interest-bearing debt was reduced by approximately SEK 9 million.
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 new business plan that the company currently works with will be approved by the Board of Directors in connection with the year-end report on February 19, 2015, at which time the company will present financial objectives for operations for the period 2015-2019.
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 2013, as described on page 54 in the annual report 2013, with the exceptions detailed below.
New or amended IFRS and IFRIC interpretations effective as of January 1, 2014 have not had a significant effect on the interim report or consolidated financial statements. For further information, see the annual report 2013.
During the winter and spring 2013-2014, in connection with the implementation of a new enterprise system, Björn Borg conducted a review of its external financial statements. Against this backdrop, management has determined that an income statement format based on type of cost instead of function as done before creates a more relevant and reliable income statement for users of Björn Borg's financial reports. Comparative figures in this interim report have been restated in accordance with the revised classification by cost.
This interim report has been reviewed by the company's auditors. The review report can be found on page 13.
As a policy, the company does not issue earnings forecasts.
| Condensed | |
|---|---|
| ----------- | -- |
| SEK thousands Note |
July–Sep 2014 |
July–Sep 2013 |
Jan–Sep 2014 |
Jan–Sep 2013 |
Oct 2013– Sep 2014 |
Full-year 2013 |
|---|---|---|---|---|---|---|
| Net sales | 163,723 | 160,228 | 403,475 | 396,773 | 502,751 | 496,048 |
| Other operating revenue | 2,782 | –437 | 3,395 | 2,203 | 4,389 | 3,198 |
| Operating revenue | 166,505 | 159,791 | 406,870 | 398,976 | 507,140 | 499,246 |
| Goods for resale | –77,964 | –77,230 | –191,417 | –193,157 | –238,833 | –240,574 |
| Other external expenses | 1 –31,816 |
–34,168 | –85,911 | –90,455 | –119,839 | –124,381 |
| Staff costs | –22,166 | –22,657 | –70,801 | –71,103 | –100,117 | –100,419 |
| Depreciation/amortization of tangible/ intangible non-current assets |
–1,870 | –1,849 | –5,718 | –5,162 | –7,384 | –6,828 |
| Other operating expenses | 131 | –277 | –633 | –5,406 | –1,111 | –5,884 |
| Operating profit | 32,820 | 23,610 | 52,391 | 33,694 | 39,857 | 21,160 |
| Net financial items | 1,014 | –915 | 5,145 | 553 | 8,281 | 3,689 |
| Profit before tax | 33,834 | 22,695 | 57,536 | 34,247 | 48,138 | 24,849 |
| Tax | –9,791 | –7,167 | –15,870 | –9,298 | –17,514 | –10,943 |
| Profit for the period | 24,043 | 15,527 | 41,666 | 24,949 | 30,624 | 13,906 |
| Profit for the period attributable to: | ||||||
| Parent Company's shareholders | 25,190 | 18,523 | 44,362 | 31,701 | 34,275 | 21,613 |
| Non-controlling interests | –1,147 | –2,995 | –2,696 | –6,752 | –3,651 | –7,707 |
| Earnings per share before and after dilution, SEK | 1.00 | 0.74 | 1.76 | 1.26 | 1.36 | 0.86 |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| Condensed | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | July–Sep 2014 |
July–Sep 2013 |
Jan–Sep 2014 |
Jan–Sep 2013 |
Oct 2013– Sep 2014 |
Full-year 2013 |
| Net profit for the period | 24,043 | 15,527 | 41,666 | 24,949 | 30,624 | 13,906 |
| OTHER COMPREHENSIVE INCOME | ||||||
| Components that may be reclassified to profit or loss | ||||||
| Translation difference for the period | –2,525 | 249 | –4,776 | –736 | –6,063 | –2,035 |
| Accumulated translation difference reclassified to profit or loss for discontinued operations |
12 | |||||
| Total other comprehensive income for the period | –2,525 | 249 | –4,776 | –736 | –6,063 | –2,023 |
| Total comprehensive income for the period | 21,518 | 15,776 | 36,890 | 24,213 | 24,561 | 11,883 |
| Total other comprehensive income for the period attributable to |
||||||
| Parent Company's shareholders | 23,376 | 18,772 | 40,864 | 30,965 | 29,490 | 19,590 |
| Non-controlling interests | –1,858 | –2,995 | –3,974 | –6,752 | –4,929 | –7,707 |
| Condensed | Sep 30 | Sep 30 | Dec 31 | |
|---|---|---|---|---|
| SEK thousands | Note | 2014 | 2013 | 2013 |
| Non-current assets | ||||
| Goodwill | 19,089 | 18,526 | 18,966 | |
| Trademarks | 187,532 | 187,532 | 187,532 | |
| Other intangible assets | 3,506 | 4,446 | 4,748 | |
| Tangible non-current assets | 13,258 | 13,982 | 16,519 | |
| Long-term receivable | 2 | 10,700 | 12,750 | 13,400 |
| Deferred tax assets | 29,399 | 35,314 | 31,126 | |
| Total non-current assets | 263,483 | 272,550 | 272,291 | |
| Current assets | ||||
| Inventories, etc. | 45,095 | 44,462 | 39,031 | |
| Accounts receivable | 79,322 | 85,318 | 52,321 | |
| Other current receivables | 29,503 | 40,964 | 34,104 | |
| Investments | 2 | 139,154 | 145,067 | 136,519 |
| Cash & cash equivalents | 29,383 | 44,481 | 82,304 | |
| Total current assets | 322,457 | 360,292 | 344,279 | |
| Total assets | 585,940 | 632,842 | 616,570 | |
| Equity and liabilities | ||||
| Equity | 289,703 | 292,991 | 280,650 | |
| Deferred tax liabilities | 41,481 | 44,258 | 39,694 | |
| Other non-current liabilities | 9,303 | 25,637 | 24,115 | |
| Bond loan | 2 | 188,539 | 192,765 | 192,927 |
| Accounts payable | 12,935 | 22,536 | 26,549 | |
| Other current liabilities | 43,979 | 54,656 | 52,635 | |
| Total equity and liabilities | 585,940 | 632,842 | 616,570 |
| Condensed | |||
|---|---|---|---|
| Equity attributable | Non- | ||
| SEK thousands | to Parent Company's shareholders |
controlling interests |
Total equity |
| Opening balance, January 1, 2013 | 354,050 | –9,835 | 344, 216 |
| Total comprehensive income for the period | 30,965 | –6,752 | 24,213 |
| Distribution for 2012 | –75,444 | – | –75,444 |
| Non-controlling interests that arose through acquisition | – | 6 | 6 |
| Closing balance, September 30, 2013 | 309,571 | –16,581 | 292,991 |
| Opening balance, January 1, 2013 | 354,050 | –9,835 | 344,216 |
| Total comprehensive income for the year | 19,590 | –7,707 | 11,883 |
| Distribution for 2012 | –75,444 | – | –75,444 |
| Non-controlling interests that arose through acquisition | – | 6 | 6 |
| Translation difference | –12 | – | –12 |
| Discontinued business | –4,003 | 4,003 | – |
| Closing balance, December 31, 2013 | 294,180 | –13,533 | 280,650 |
| Opening balance, January 1, 2014 | 294,180 | –13,533 | 280,650 |
| Total comprehensive income for the period | 40,864 | –3,974 | 36,890 |
| Distribution for 2013 | –37,723 | – | –37,723 |
| Translation difference | – | 420 | 420 |
| Issuance of shares for debt settlement | – | 9,466 | 9,466 |
| Closing balance, September 30, 2014 | 297,323 | –7,621 | 289,703 |
| Condensed | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | Note | July–Sep 2014 |
July–Sep 2013 |
Jan–Sep 2014 |
Jan–Sep 2013 |
Full-year 2013 |
| Cash flow from operating activities | ||||||
| Before changes in working capital | 32,328 | 18,219 | 53,283 | 17,701 | 13,382 | |
| Changes in working capital | –37,641 | –14,730 | –53,951 | –16,700 | 24,617 | |
| Cash flow from operating activities | –5,313 | 3,489 | –668 | 1,001 | 37,999 | |
| Investments in intangible non-current assets | –4 | –328 | –134 | –694 | –1,533 | |
| Investments in tangible non-current assets | –136 | –1,380 | –791 | –4,075 | –8,088 | |
| Business combinations | 2 | – | – | – | –6,547 | –6,547 |
| Disposal of subsidiaries | – | – | – | – | –2,369 | |
| Investments/divestments | 9,380 | 10,175 | –1,510 | 18,532 | 28,886 | |
| Cash flow from investing activities | 9,240 | 8,467 | –2,435 | 7,216 | 10,349 | |
| Distribution | – | – | –37,723 | –75,444 | –75,444 | |
| Amortization of loans | –1,814 | –1,790 | –5,574 | –5,001 | –7,207 | |
| Repurchase of bond loan | – | – | –4,870 | – | – | |
| Cash flow from financing activities | –1,814 | –1,790 | –48,166 | –80,445 | –82,652 | |
| Cash flow for the period | 2,113 | 10,166 | –51,270 | –72,228 | –34,304 | |
| Cash & cash equivalents at beginning of period | 28,052 | 33,768 | 82,304 | 116,195 | 116,195 | |
| Translation difference in cash & cash equivalents | –783 | 547 | –1,652 | 514 | 413 | |
| Cash & cash equivalents at end of period | 29,383 | 44,481 | 29,383 | 44,481 | 82,304 |
| Group | ||
|---|---|---|
| July–Sep | July–Sep | Jan–Sep | Jan–Sep | Oct 2013– | Full-year | ||
|---|---|---|---|---|---|---|---|
| SEK thousands | 2014 | 2013 | 2014 | 2013 | Sep 2014 | 2013 | |
| Gross profit margin, % | 52.4 | 51.8 | 52.6 | 51.3 | 52.5 | 51.5 | |
| Operating margin, % | 20.0 | 14.7 | 13.0 | 8.5 | 7.9 | 4.3 | |
| Profit margin, % | 20.7 | 14.2 | 14.3 | 8.6 | 9.8 | 5.0 | |
| Return on capital employed, % | 11.8 | 12.5 | 11.8 | 12.5 | 11.8 | 7.0 | |
| Return on average equity, % | 12.1 | 13.8 | 12.1 | 13.8 | 12.1 | 6.9 | |
| Profit attributable to Parent Company's shareholders | 25,190 | 18,523 | 44,362 | 31,701 | 34,275 | 21,613 | |
| Equity/assets ratio, % | 49.4 | 46.3 | 49.4 | 46.3 | 49.4 | 45.5 | |
| Equity per share, SEK | 11.52 | 11.65 | 11.52 | 11.65 | 11.52 | 11.16 | |
| Investments in intangible non-current assets | 4 | 328 | 134 | 694 | 973 | 1,533 | |
| Investments in tangible non-current assets | 136 | 1,380 | 791 | 4,075 | 4,804 | 8,088 | |
| Business combinations | – | – | – | 6,547 | – | 6,547 | |
| Depreciation, amortization and | |||||||
| impairment losses for the period | –1,870 | –1,945 | –5,718 | –5,006 | –7,540 | –6,828 | |
| Average number of employees | – | – | – | – | 136 | 159 |
| Group | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | July–Sep 2014 |
July–Sep 2013 |
Jan–Sep 2014 |
Jan–Sep 2013 |
Oct 2013– Sep 2014 |
Full-year 2013 |
| Operating revenue | ||||||
| Brand | ||||||
| External revenue | 12,351 | 12,844 | 28,633 | 30,191 | 36,813 | 38,371 |
| Internal revenue | 12,875 | 12,900 | 32,224 | 31,839 | 39,513 | 39,128 |
| 25,226 | 25,744 | 60,857 | 62,030 | 76,326 | 77,499 | |
| Product development | ||||||
| External revenue | 67,979 | 64,047 | 172,617 | 160,673 | 199,034 | 187,090 |
| Internal revenue | 36,613 | 37,030 | 98,051 | 89,330 | 115,779 | 107,058 |
| 104,592 | 101,077 | 270,668 | 250,003 | 314,813 | 294,148 | |
| Wholesale | ||||||
| External revenue | 64,433 | 63,427 | 151,879 | 161,136 | 195,129 | 204,386 |
| Internal revenue | 7,342 | 17,568 | 20,735 | 41,145 | 31,590 | 52,000 |
| 71,775 | 80,995 | 172,614 | 202,281 | 226,720 | 256,386 | |
| Retail | ||||||
| External revenue | 21,743 | 19,473 | 53,741 | 46,977 | 76,162 | 69,399 |
| Internal revenue | 3,011 | 2,822 | 8,848 | 8,319 | 11,611 | 11,081 |
| 24,754 | 22,295 | 62,589 | 55,296 | 87,773 | 80,480 | |
| Less internal sales | –59,842 | –70,320 | –159,858 | –170,634 | –198,491 | –209,267 |
| Operating revenue | 166,505 | 159,791 | 406,870 | 398,976 | 507,140 | 499,246 |
| Operating profit | ||||||
| Brand | 7,424 | 6,995 | 15,709 | 13,378 | 17,028 | 14,697 |
| Product development | 14,737 | 5,517 | 35,462 | 15,510 | 23,995 | 4,043 |
| Wholesale | 9,389 | 12,893 | 7,247 | 17,413 | 5,360 | 15,526 |
| Retail | 1,270 | –1,795 | –6,027 | –12,607 | –6,526 | –13,106 |
| Operating profit | 32,820 | 23,610 | 52,391 | 33,694 | 39,857 | 21,160 |
The difference between operating profit for segments for which information must be disclosed, SEK 52,391 thousand (33,694), and profit before tax, SEK 57,536 thousand (34,247), is net financial items, SEK 5,145 thousand (553).
| Group | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Q3 2014 |
Q2 2014 |
Q1 2014 |
Q4 2013 |
Q3 2013 |
Q2 2013 |
Q1 2013 |
Q4 2012 |
| Net sales | 163,723 | 96,969 | 142,783 | 99,275 | 160,228 | 105,759 | 130,786 | 138,735 |
| Gross profit margin, % | 52.4 | 52.5 | 52.8 | 52.1 | 51.8 | 52.1 | 50.1 | 51.9 |
| Operating profit/loss | 32,821 | 522 | 19,048 | –12,534 | 23, 610 | 860 | 9,225 | 15,085 |
| Operating margin, % | 20.0 | 0.5 | 13.3 | neg | 14.7 | 0.8 | 7.1 | 10.9 |
| Profit/loss after financial items | 33,834 | 3,939 | 19,987 | –9,399 | 22,695 | 4,467 | 7,086 | 18,948 |
| Profit margin, % | 20.7 | 4.1 | 14.0 | neg | 14.2 | 4.2 | 5.4 | 13.7 |
| Earnings per share before/ after dilution, SEK |
1.00 | 0.15 | 0.62 | –0.40 | 0.74 | 0.23 | 0.30 | 0.45 |
| Number of Björn Borg stores | ||||||||
| at end of period | 38 | 38 | 38 | 38 | 54 | 57 | 57 | 60 |
| of which Group-owned Björn Borg stores | 17 | 17 | 17 | 17 | 16 | 17 | 17 | 17 |
| Brand sales | 452,422 | 253,976 | 382,081 | 331,665 | 482,268 | 275,379 | 431,815 | 376,244 |
| Condensed | |||||||
|---|---|---|---|---|---|---|---|
| SEK thousands | Note | July–Sep 2014 |
July–Sep 2013 |
Jan–Sep 2014 |
Jan–Sep 2013 |
Oct 2013– Sep 2014 |
Full-year 2013 |
| Net sales | 15,591 | 12,530 | 45,330 | 37,144 | 58,163 | 49,977 | |
| Other operating revenue | 1,395 | 10 | 217 | 90 | 325 | 198 | |
| Operating revenue | 16,986 | 12,540 | 45,547 | 37,234 | 58,488 | 50,175 | |
| Goods for resale | – | –61 | –2 | –179 | –65 | –242 | |
| Other external expenses | 1 | –14,406 | –14,420 | –35,957 | –34,191 | –48,764 | –46,997 |
| Staff costs | –6,763 | –8,085 | –21,762 | –23,650 | –29,536 | –31,425 | |
| Depreciation/amortization of tangible/ | |||||||
| intangible non-current assets | –514 | –389 | –1,621 | –1,535 | –2,189 | –2,103 | |
| Other operating expenses | –696 | –136 | –834 | –503 | –1,023 | –692 | |
| Rörelseresultat | –5,393 | –10,551 | –14,629 | –22,824 | –23,089 | –31,284 | |
| Result from shares in subsidiaries | – | – | – | – | 50,725 | 50,725 | |
| Group contributions received | – | – | – | – | 43,755 | 43,755 | |
| Net financial items | –2,949 | –16,572 | –4,903 | –21,903 | 7,761 | –9,239 | |
| Profit/loss before tax | –8,342 | –27,123 | –19,532 | –44,727 | 79,152 | 53,957 | |
| Appropriations | – | – | – | – | 295 | 295 | |
| Tax | – | – | – | 403 | –108 | 296 | |
| Profit/loss for the period | –8,342 | –27,123 | –19,532 | –44,324 | 79,340 | 54,548 | |
| Other comprehensive income | -– | – | – | – | – | – | |
| Total comprehensive income for the period | –8,342 | –27,123 | –19,532 | –44,324 | 79,340 | 54,548 |
| Condensed | Sep 30 | Sep 30 | Dec 31 | |
|---|---|---|---|---|
| SEK thousands | Note | 2014 | 2013 | 2013 |
| Non-current assets | ||||
| Intangible non-current assets | 447 | 403 | 595 | |
| Tangible non-current assets | 3,290 | 4,988 | 4,627 | |
| Long-term receivable | 2 | 10,700 | 12,750 | 13,400 |
| Shares in Group companies | 330,734 | 321,243 | 321,243 | |
| Total non-current assets | 345,171 | 339,384 | 339,865 | |
| Current assets | ||||
| Receivables from Group companies | 190,446 | 178,345 | 182,141 | |
| Current receivables | 15,151 | 7,128 | 10,749 | |
| Investments | 2 | 139,154 | 145,067 | 136,519 |
| Cash & cash equivalents | – | 3,017 | 41,559 | |
| Total current assets | 344,751 | 333,557 | 370,968 | |
| Total assets | 689,922 | 672,941 | 710,833 | |
| Equity and liabilities | ||||
| Equity | 60,632 | 19,014 | 117,887 | |
| Untaxed reserves | 1,888 | 2,183 | 1,888 | |
| Deferred tax | 314 | 609 | 314 | |
| Bond loan | 2 | 188,539 | 192,765 | 192,927 |
| Due to Group companies | 413,786 | 438,798 | 382,447 | |
| Bank overdraft facility | 4,132 | – | – | |
| Accounts payable | 1,878 | 4,699 | 5,407 | |
| Other current liabilities | 18,753 | 14,873 | 9,963 | |
| Total equity and liabilities | 689,922 | 672,941 | 710,833 |
| Condensed | Jan-Sep | Jan-Sep | Full-year 2013 |
|---|---|---|---|
| SEK thousands | 2014 | 2013 | |
| Opening balance | 117,887 | 138,784 | 138,784 |
| Distribution | –37,723 | –75,444 | –75,444 |
| Total comprehensive income for the period | –19,532 | –44,324 | 54,548 |
| Closing balance | 60,632 | 19,014 | 117,887 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Jan–Sep 2014 | Jan–Sep 2013 | Jan–Sep 2014 | Jan–Sep 2013 | ||
| Cost of premises | 19,696 | 17,733 | 6,711 | 6,324 | |
| Selling expenses | 16,327 | 21,932 | 1,835 | 5,207 | |
| Marketing expenses | 26,614 | 24,481 | 14,619 | 11,778 | |
| Administrative expenses | 16,736 | 18,950 | 9,584 | 10,424 | |
| Other | 6,538 | 7,359 | 3,208 | 458 | |
| Total | 85,911 | 90,455 | 35,957 | 34,191 |
Securities held for trading relate to investments in corporate bonds quoted on NASDAQ OMX 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.
Net investments in the company's portfolio of corporate bonds amounted to SEK 1,760 thousand during the first nine months of the year.
| through profit or loss | Level 1 Level 2 Level 3 | ||
|---|---|---|---|
| Securities held for trading | 139,521 | – | – |
| Derivatives held for trading | – | –367 | – |
| Total assets | 139,521 | –367 | – |
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 September 30, 2014, with the exception of the bond loan, whose fair value amounted to SEK 184,775 thousand, compared with a carrying amount of SEK 188,539 thousand.
In 2013 the company granted an interest-bearing, SEK 17 million collateralized loan to the Dutch distributor expiring on March 31, 2017 with quarterly amortizations of SEK 900 thousand starting December 31, 2013.
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.
Earnings in relation to the weighted average number of shares during the period and earnings per share adjusted for any dilution effect.
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.
Equity as a percentage of total assets.
All operating expenses excluding Goods for resale, hence Other external expenses, Staff costs, Depreciation/amortization and other operating expenses.
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, November 17, 2014
Fredrik Lövstedt Chairman
Martin Bjäringer Board Member
Isabelle Ducellier Board Member
Kerstin Hessius Board Member
Mats H Nilsson Board Member
Nathalie Schuterman Board Member
Anders Slettengren Board Member
Henrik Bunge President and CEO
We have reviewed the interim report for Björn Borg AB (publ) for the period January 1 to September 30, 2013. The Board of Directors and the President are responsible for the preparation and presentation of this interim 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 International Standard on Review Engagements (ISRE) 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 the International Standards of Auditing (ISA) 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 interim 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, November 17, 2014 Deloitte AB
Fredrik Walméus Authorized Public Accountant
The Group owns the Björn Borg trademark and its core business is underwear. It also offers sportswear and fragrances as well as 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 2013 amounted to around SEK 1.5 billion, excluding VAT, at the consumer level. Group net sales amounted to SEK 496 million in 2013, with an average of 159 employees. The Björn Borg share has been listed on NASDAQ OMX Nordic in Stockholm since 2007.
The year-end report for 2014 will be released on February 19, 2015. The annual report will be published in April 2015. The Annual General Meeting for 2014 will be held on May 11, 2015.
Henrik Bunge, 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 November 17, 2014 at 7:30 am (CET).
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