Quarterly Report • Aug 19, 2016
Quarterly Report
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QUOTE FROM THE CEO "During the quarter we strengthened our position as planned in sports and sports apparel, especially in our male target market. In one of our consumer surveys, 25 percent of respondents said they would buy athletic apparel from us, and in both the Netherlands and Norway we ranked fourth among men. We succeeded at the same time in maintaining our strong position in men's underwear, where we remain number 1 in all our priority markets," said CEO Henrik Bunge.
| SEK million | April-June 2016 |
April-June 2015 |
January June 2016 |
January June 2015 |
July 2015- June 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| Net sales | 122.2 | 99.2 | 280.2 | 230.3 | 624.3 | 574.3 |
| Gross profit margin, % | 53.5 | 53.0 | 51.5 | 53.4 | 51.7 | 52.4 |
| Operating profit | 0.3 | –1.7 | 14.2 | 11.2 | 61.6 | 58.6 |
| Operating margin, % | 0.2 | neg | 5.1 | 4.8 | 9.9 | 10.2 |
| Profit after tax | –2.2 | –2.3 | 4.3 | 12.6 | 33.4 | 41.6 |
| Earnings per share before dilution, SEK |
–0.09 | –0.04 | 0.20 | 0.57 | 1.42 | 1.79 |
| Earnings per share after dilution, SEK |
–0.08 | –0.04 | 0.20 | 0.57 | 1.41 | 1.77 |
| Brand sales* | 281 | 246 | 700 | 640 | 1,503 | 1,443 |
*Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported sales at the wholesale level.
During the second quarter sales continued to trend higher, rising in total by 23.2 percent compared with the same quarter in 2015. Part of the increase was due to earlier shipments than the previous year, which is a result of a more efficient product flow, where we have shortened lead times. We are performing well in all our markets except Norway, where sales remain weak. The downtrend there mainly relates to inventory cuts by our Norwegian distributor in 2016, which resulted in lower purchases. Our e-commerce business grew by 15 percent, while our own stores posted a weaker quarter with lower year-on-year sales for comparable units. Fewer visitors and a smaller share of discounted sales are two main reasons why. Underwear and footwear continue to drive growth, while our sports apparel collection posted slightly lower sales than the previous year.
The gross profit margin for the second quarter was slightly better than the previous year at 53.5 percent (53.0), while operating expenses rose according to plan. The increase in expenses is due to the higher number of Group-owned stores and higher sales in our own markets, which raised distribution expenses compared with the previous year. Operating profit rose in the quarter to SEK 0.3 million after a year-earlier loss of SEK 1.7 million.
During the quarter we strengthened our position in sports and sports apparel, especially in our male target market. In one of our consumer surveys, 25 percent of
respondents said they would buy athletic apparel from us, and in both the Netherlands and Norway we ranked fourth among men. We succeeded at the same time in maintaining our strong position in men's underwear, where we remain number 1 in all our priority markets. To convert the strong interest in our athletic collection into actual sales, we focused during the quarter on better understanding current and potential consumers. We know that a continued emphasis on the store floor, virtual and physical, broader sports apparel distribution and product development are the right way forward. One example is how we celebrated Björn Borg's 60th birthday during the quarter with a unique tennis collection that was sold this summer in selected distribution. We also launched an ambassadors program to increase our presence in various social platforms. Lastly, in an effort to reduce our environmental impact, we lowered the use of air freight by 50 percent during the quarter as part of our sustainability work.
We have closed the books on another quarter in which we outperformed the previous year, putting us one more quarter closer to meeting the goals of our business plan, Northern Star.
Head coach Henrik Bunge
Sales improved in the second quarter, mainly of underwear, though footwear also performed well. As a result, brand sales (excluding VAT) rose by 14 percent to SEK 281 million (246). Adjusted for currency effects, brand sales increased by 16 percent for the quarter. For the first half of 2016 brand sales increased to SEK 700 million (640), up 9 percent. Excluding currency effects, sales rose by 11 percent.
Brand sales in the underwear product area improved by 17 percent in the first half of 2016. Underwear accounted for 61 percent (57) of brand sales.
Sports apparel saw a drop in brand sales of 6 percent in the first six months. Brand sales rose in the footwear product area, but fell for bags, eyewear and fragrances. In total, sales of licensed products rose by 1 percent in the first quarter.
Among large markets, every country except Norway reported growth. Sweden, the Netherlands and England noted the highest growth in the first half of 2016, though Denmark, Finland and Belgium also performed well. Smaller markets continue to decrease year-on-year.
One new Björn Borg was opened in Norway in the second quarter, while one closed in Belgium. As of June 30, 2016 there were a total of 40 (38) Björn Borg stores, of which 21 (17) are Group-owned.
Sales grew in the second quarter with higher operating profit than the same period in 2015.
The Group's net sales amounted to SEK 122.2 million (99.2) in the second quarter, an increase of 23.2 percent. Excluding currency effects, sales increased by 24.8 percent.
The positive sales trend compared with the same quarter of 2015 was partly due to strong Group sales to wholesalers, but also to earlier shipment of the fall/winter 2016 collection, a larger share of which was delivered in the second quarter than in 2015. The earlier shipment positively affected net sales by about SEK 7 million; adjusted for this shipment, net sales rose by 16 percent. Due to the earlier shipment, the product companies' external revenue rose compared with the same quarter in 2015. The increases in Sweden, Finland and England are mainly due to broader distribution of underwear through sporting goods retailers, but also to good growth from existing customers. The footwear wholesale company is growing partly thanks to the distribution rights for Denmark, which it has as of July 1, 2015, but also to growth in the Swedish market. The Swedish retail company had a poorer quarter in terms of store sales, while e-commerce reported continued good growth. External royalties decreased slightly as brand sales by external licensees fell during the quarter.
The Group's net sales amounted to SEK 280.2 million (230.3) in the first half of 2016, an increase of 21.7 percent. Excluding currency effects, sales rose by 22.4 percent.
The positive sales trend compared with the previous year was mainly driven by the Group's own sales at the wholesale and retail levels, but also to earlier shipment of the fall/winter 2016 collection by the product companies, more of which was delivered in the second quarter than in 2015. The earlier shipment positively affected net sales by about SEK 7 million; adjusted for this shipment, net sales rose by 18.7 percent. Despite the earlier shipment, the product companies' external revenue decreased due to lower sales to the Norwegian market, which performed weakly. All Group-owned wholesale and retail companies raised their sales significantly compared with the previous year. The increases in Sweden, Finland and England are mainly due to broader distribution of underwear through sporting goods retailers, but also to growth from existing customers. The footwear wholesale company is growing partly thanks to the new Danish distribution rights, but also to growth in Sweden. The Swedish retail company is growing most strongly in e-commerce, though also in brick-and-mortar sales. External royalties decreased as brand sales by external licensees fell in the first half of 2016.
The gross profit margin for the second quarter was slightly better than the previous year at 53.5 percent (53.0). Exchange rates had minimal impact on the margin.
The combination of higher revenue and consistent gross profit margins, but also higher operating expenses, led to an increase in operating profit to SEK 0.3 million (–1.7), with an operating margin of 0.2 percent (–1.7). Operating expenses excluding goods for resale rose by 16.4 percent to SEK 67.7 million (58.2). The increase is due to the higher number of Group-owned stores and increased logistics expenses as an effect of higher net sales in the Group's own channels.
Net financial items amounted to SEK –0.3 million (0.1). The realized and unrealized return on investments, less interest on the bond loan, negatively affected the Group's financial net by SEK –1.1 million (1.9). Net financial items were also positively affected by a revaluation of financial assets and liabilities in foreign currency. Profit before tax increased by SEK 1.6 million year-on-year (–1.6).
The gross profit margin for the first half of 2016 decreased to 51.5 percent (53.4). Exchange rates had minimal impact on the margin. The year-on-year decrease in the gross profit margin is due to increased price pressure in the market and a change in the distribution mix at the wholesale level. The product companies' margins were also affected by pressure on external distributors from lower realized margins in their markets.
The higher revenue, coupled with the lower gross profit margin and increased operating expenses, led to an increase in operating profit to SEK 14.2 million (11.2). The operating margin was 5.1 percent (4.8). Operating expenses excluding goods for resale rose by 11 percent year-on-year.
| Operating revenue, SEK thousands January-June |
SEK thousands January-June |
Operating profit, | Operating margin, % January-June |
||||
|---|---|---|---|---|---|---|---|
| Business segment | Revenue source | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| Brand | Royalties | 42,661 | 35,944 | 11,373 | 7,900 | 27 | 22 |
| Product development | Products | 215,665 | 168,118 | 14,984 | 12,456 | 7 | 7 |
| Wholesale | Wholesale revenue | 138,749 | 96,604 | –743 | –4,027 | –1 | –4 |
| Retail | Retailers | 59,367 | 45,080 | –11,419 | –5,163 | –19 | –11 |
| Less internal sales | –174,676 | –108,533 | |||||
| Total | 281,765 | 237,213 | 14,195 | 11,166 | 5 | 5 |
The increase is mainly due to the higher number of Groupowned stores and increased logistics expenses as an effect of higher net sales in the Group's own channels.
Net financial items amounted to SEK –4.6 million (5.0). The realized and unrealized return on investments, less interest on the bond loan, negatively affected the Group's financial net by SEK –2.7 million (2.9). The remaining decrease in net financial items compared with the previous year is mainly due to a revaluation of financial assets and liabilities in foreign currency, where the previous year had a strongly positive result while this year's result is negative. Profit before tax amounted to SEK 9.6 million (16.2).
The Group operates through nine companies 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.
The business segment's operating revenue amounted to SEK 42.7 million (35.9) in the first six months of 2016. External operating revenue decreased to SEK 16.0 million (18.2) as a result of lower brand sales by licensees and certain distributors. Royalty percentages vary by product category, due to which there is not always a precise correlation between royalties and brand sales.
Operating profit increased to SEK 11.4 million (7.9) for the first six months of 2016. The improved operating profit is due to higher revenue.
The Björn Borg Group has global responsibility for development, design and production of underwear, sports apparel and adjacent products.
The business segment's operating revenue amounted to SEK 215.7 million (168.1) in the first six months of 2016, an increase of 28 percent. The segment's external revenue amounted to SEK 91.3 million (96.5) and during the period was positively affected by SEK 7 million by earlier shipment of the fall/winter 2016 collection compared with the same period in 2015. Despite the positive impact of the shipment, external revenue fell by 5 percent; adjusted for the earlier shipment, the decrease is 13 percent. The decrease is mainly due to a weak Norwegian market and because distributors in smaller markets are reducing their purchases or have been terminated.
Operating profit increased to SEK 15.0 million (12.5) due to the higher total sales and slightly higher operating expenses.
The Björn Borg Group is the exclusive wholesaler of under wear, sports apparel and adjacent products in Sweden, Finland and England as well as footwear in Sweden, Finland, Denmark and the Baltic countries.
The business segment's operating revenue rose to SEK 138.7 million (96.6) in the first six months of 2016, up 44 percent. External operating revenue amounted to SEK 123.5 million (82.8). Growth in the segment is coming from all markets, mainly in underwear and footwear. In the case of underwear, growth is partly driven by broader distribution of underwear to sporting goods retailers, but also by existing customers. For footwear, growth is partly due to the distribution rights in Denmark, which apply as of July 1, 2015, but also because business from existing customers is also growing in the Swedish market.
The operating loss was reduced to SEK 0.7 million, against a year-earlier loss of SEK 4.0 million, thanks to the revenue increase, but with a lower gross profit margin as a result of price pressure and a change in the distribution mix.
The Björn Borg Group owns and operates a total of 21 stores and factory outlets in Sweden, Finland and England that sell underwear, sports apparel, adjacent products and other licensed products. Björn Borg also sells online through www.bjornborg.com.
Operating revenue in the Retail segment increased by 32 percent in the first six months of 2016 to SEK 59.4 million (45.1). External net sales rose by 28 percent to SEK 50.9 million (39.6). The increase is due to both e-commerce, which continues to grow, and the positive development by Groupowned stores during the period. E-commerce sales increased by 52.5 percent to SEK 22.1 million (14.5). Sales for compar able Björn Borg stores rose by 2 percent year-on-year.
The operating loss for the first half of 2016 was SEK 11.4 million, against a year-earlier loss of SEK 5.1 million. The larger loss is a result of lower gross profit margins due to price pressure in the market and higher operating expenses due to newly opened stores.
Intra-Group sales for the first six months of 2016 amounted to SEK 174.7 million (108.5).
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 was negative during the first half of 2016 and amounted to SEK –16.4 million (–12.1). The lower cash flow year-on-year is due to increased capital tied up in accounts receivable and inventory as an effect of the earlier fall/winter 2016 shipments and higher sales by the wholesale companies. The disposal of short-term investments of SEK 49.5 million (23.8), acquisition of the minority holding in the UK subsidiary of SEK –0.8 million, and purchases and sales of tangible and intangible non-current assets totaling SEK –1.5 million (–0.7) produced cash flow from investing activities of SEK 47.1 million (23.2). The negative cash flow from financing activities of SEK –58.9 million (–51.6) is largely due to the dividend to shareholders of SEK –50.2 million (–37.7). The Group's cash flow for the first six months was SEK –28.2 million (–40.5) and cash & cash equivalents amounted to SEK 22.5 million (45.8) at the end of the period.
The Björn Borg Group's cash & cash equivalents and invest ments amounted to SEK 51.0 million (156.8) at the end of the period, with interest-bearing liabilities (bond loan) of SEK 144.3 million (176.8).
In April 2012 the company issued a bond loan that is listed on Nasdaq Stockholm and carries an annual coupon rate corresponding to the 3-month STIBOR rate plus 3.25 percentage points, maturing in April 2017.
The surplus liquidity arising from the issuance of the bond loan and the convertible plan 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 June 30, 2016 investments had been made in bonds with a book value of SEK 28.5 million (111.1),
which represents the fair value on the same date. During the period bonds were repurchased for SEK 10 million.
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 June 30, 2016 the ratio was 1.68 (0.36) and the equity/assets ratio was 48.5 percent (46.2). A complete description of commit ments 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 other changes were made with regard to pledged assets and contingent liabilities compared with December 31, 2015.
The average number of employees in the Group was 133 (132) for the 12-month period ended June 30, 2016, of whom 70 percent (68) are women.
There were no 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 78-79 and in note 3 in the annual report 2015.
Björn Borg AB (publ) is primarily engaged in intra-Group activities. As of June 30, 2016 the company also owns 100 percent of the shares in Björn Borg Brands AB, Björn Borg Footwear AB, Björn Borg Sport BV, Björn Borg Inc., Björn Borg Services AB and Björn Borg UK. In addition, the company owns 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 16.5 million (13.0) for the second quarter and SEK 32.8 million (26.2) for the first half of 2016.
The loss before tax for the second quarter amounted to SEK 6.8 million, against a year-earlier loss of SEK 9.9 million, while the loss before tax for the first half of 2016 was SEK 14.0 million, against a loss of SEK 19.6 million a year earlier. Cash & cash equivalents and investments amounted to SEK 29.5 million (114.1) as of June 30, 2016. For the first six months of 2016 investments in tangible and intangible non-current assets amounted to SEK 1.2 million (0.3).
There are no significant events to report following the conclusion of 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 for operations:
The sales objective for 2019 corresponds to average annual organic growth of 14 percent. 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 19, 2016 resolved to distribute SEK 2.00 (1.50) per share to shareholders for the financial year 2015.
Directors Martin Bjäringer, Mats H Nilsson and Heiner Olbrich were re-elected with Fredrik Lövstedt as Chairman of the Board. Kerstin Hessius, Isabelle Ducellier and Nathalie Schuterman declined re-election. Lotta de Champs, Petra Stenqvist and Christel Kinning were elected as new 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 2015, as described on page 95 in the annual report 2015. The European Securities and Markets Authority's (ESMA) guidelines on Alternative Performance Measures are applied as of this interim report.
New or amended IFRS and IFRIC interpretations effective as of January 1, 2016 have not had a material effect or impact on the interim report or consolidated financial statements.
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 2016 |
April-June 2015 |
January June 2016 |
January June 2015 |
July 2015- June 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| Net sales | 122,165 | 99,199 | 280,229 | 230,280 | 624,277 | 574,328 |
| Other operating revenue | 2,690 | 3,954 | 1,536 | 6,933 | 4,774 | 10,170 |
| Operating revenue | 124,855 | 103,153 | 281,765 | 237,213 | 629,051 | 584,498 |
| Goods for resale | –56,818 | –46,603 | –135,790 | –107,372 | –301,543 | –273,126 |
| Other external expenses 1 |
–35,379 | –30,262 | –70,767 | –61,703 | –145,200 | –136,135 |
| Staff costs | –29,411 | –25,016 | –55,029 | –51,163 | –109,880 | –106,013 |
| Depreciation/amortization of tangible/ | ||||||
| intangible non-current assets | –1,738 | –1,706 | –3,363 | –3,567 | –6,388 | –6,592 |
| Other operating expenses | –1,203 | –1,228 | –2,620 | –2,242 | –4,418 | –4,040 |
| Operating profit | 305 | –1,662 | 14,195 | 11,166 | 61,622 | 58,592 |
| Net financial items | –321 | 77 | –4,633 | 5,030 | –10,395 | –1,032 |
| Profit before tax | –16 | –1,585 | 9,563 | 16,196 | 50,926 | 57,560 |
| Tax | –2,186 | –689 | –5,230 | –3,605 | –17,542 | –15,917 |
| Profit for the period | –2,202 | –2,274 | 4,332 | 12,591 | 33,384 | 41,643 |
| Profit for the period attributable to: | ||||||
| Parent Company's shareholders | –2,164 | –1,033 | 4,948 | 14,419 | 35,591 | 45,062 |
| Non-controlling interests | –38 | –1,241 | –616 | –1,828 | –2,207 | –3,419 |
| Earnings per share before dilution, SEK | –0.09 | –0.04 | 0.20 | 0.57 | 1.42 | 1.79 |
| Earnings per share after dilution, SEK | –0.08 | –0.04 | 0.20 | 0.57 | 1.41 | 1.77 |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25, 184,384 | 25,148,384 |
| SEK thousands Note |
April-June 2016 |
April-June 2015 |
January June 2016 |
January June 2015 |
July 2015- June 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| Net profit for the period | –2,202 | –2,274 | 4,332 | 12,591 | 33,384 | 41,643 |
| OTHER COMPREHENSIVE INCOME Components that may be reclassified to profit or loss |
||||||
| Translation difference for the period | –899 | 1,002 | 1,932 | –2,975 | 2,020 | –2,887 |
| Total other comprehensive income for the period |
–899 | 1,002 | 1,932 | –2,975 | 2,020 | –2,887 |
| Total comprehensive income for the period |
–3,101 | –1,272 | 6,265 | 9,616 | 35,404 | 38,756 |
| Total comprehensive income attributable to |
||||||
| Parent Company's shareholders | –3,030 | –182 | 6,390 | 12,028 | 36,785 | 42,423 |
| Non-controlling interests | –70 | –1,090 | –125 | –2,412 | –1,381 | –3,668 |
CONDENSED
| SEK thousands | Note | June 30 2016 |
June 30 2015 |
Dec 31 2015 |
|---|---|---|---|---|
| Non-current assets | ||||
| Goodwill | 19,213 | 19,108 | 19,064 | |
| Trademarks | 187,532 | 187,532 | 187,532 | |
| Other intangible assets | 2,162 | 3,373 | 2,740 | |
| Tangible non-current assets | 8,511 | 9,303 | 10,076 | |
| Long-term receivable | 2 | 8,000 | 8,900 | 8,900 |
| Deferred tax assets | 31,162 | 31,398 | 35,315 | |
| Total non-current assets | 256,580 | 259,614 | 263,627 | |
| Current assets | ||||
| Inventory | 84,820 | 55,845 | 75,851 | |
| Accounts receivable | 91,480 | 62,387 | 87,816 | |
| Other current receivables | 25,041 | 25,837 | 19,579 | |
| Investments | 2 | 28,499 | 111,061 | 80,909 |
| Cash & cash equivalents | 22,495 | 45,722 | 50,643 | |
| Total current assets | 252,335 | 300,852 | 314,799 | |
| Total assets | 508,915 | 560,466 | 578,425 | |
| Equity and liabilities | ||||
| Equity | 246,767 | 258,902 | 290,675 | |
| Deferred tax liabilities | 43,025 | 39,000 | 41,969 | |
| Other non-current liabilities | 21,247 | 9,443 | 20,294 | |
| Bond loan | 2 | 144,303 | 176,780 | 154,538 |
| Accounts payable | 14,227 | 31,664 | 21,019 | |
| Other current liabilities | 39,346 | 44,677 | 49,931 | |
| Total equity and liabilities | 508,915 | 560,466 | 578,425 |
| Equity attributable to | ||||
|---|---|---|---|---|
| SEK thousands | Note | Parent Company's shareholders |
Non-controlling interests |
Total equity |
| Opening balance, January 1, 2015 | 290,353 | –4,645 | 285,708 | |
| Total comprehensive income for the period | 12,028 | –2,412 | 9,616 | |
| Distribution for 2014 | –37,723 | – | –37,723 | |
| Issuance of warrants | 1,300 | – | 1,300 | |
| Closing balance, June 30, 2015 | 265,959 | –7,057 | 258,902 | |
| Opening balance, January 1, 2015 | 290,353 | –4,645 | 285,708 | |
| Total comprehensive income for the period | 42,423 | –3,668 | 38,755 | |
| Distribution for 2014 | –37,723 | – | –37,723 | |
| Shareholder contribution paid | – | 1,580 | 1,580 | |
| Issuance of warrants | 1,200 | – | 1,200 | |
| Warrant premium convertible | 1,154 | – | 1,154 | |
| Closing balance, December 31, 2015 | 297,408 | –6,733 | 290,675 | |
| Opening balance, January 1, 2016 | 297,408 | –6,733 | 290,675 | |
| Total comprehensive income for the period | 6,390 | –125 | 6,265 | |
| Distribution for 2015 | –50,297 | – | –50,297 | |
| Issuance of warrants | 68 | – | 68 | |
| Issuance of convertible | 55 | – | 55 | |
| Non-controlling interest arising through acquisition | –5,969 | 5,969 | 0 | |
| Closing balance, June 30, 2016 | 247,655 | –889 | 246,767 |
CONDENSED
| SEK thousands | April-June 2016 |
April-June 2015 |
January June 2016 |
January June 2015 |
Full-year 2015 |
|---|---|---|---|---|---|
| Cash flow from operating activities | |||||
| Before changes in working capital | –261 | –4,544 | 10,907 | 11,296 | 48,534 |
| Changes in working capital | –17,632 | –7,087 | –27,343 | –23,417 | –66,343 |
| Cash flow from operating activities | –17,893 | –11,630 | –16,436 | –12,120 | –17,809 |
| Investments in intangible non-current assets | –9 | – | –70 | –136 | –301 |
| Investments in tangible non-current assets | –861 | –427 | –1,451 | –619 | –4,746 |
| Sale of non-current assets | – | – | – | 74 | 129 |
| Investments /sale of investments | 43,953 | 23,929 | 49,481 | 23,844 | 47,657 |
| Acquisition of subsidiary | –842 | – | –842 | – | – |
| Cash flow from investing activities | 42,240 | 23,502 | 47,117 | 23,163 | 42,739 |
| Distribution | –50,297 | –37,723 | –50,297 | –37,723 | –37,723 |
| Acquisition of minority shares | – | – | – | – | – |
| Amortization of loans | – | –1,875 | – | –3,750 | –7,500 |
| Issue of warrants/convertibles | 1,007 | 1,200 | 1,007 | 1,200 | 18,510 |
| Repurchase of bond loan | –1,612 | –8,376 | –9,657 | –11,278 | –33,844 |
| Cash flow from financing activities | –50,835 | –46,774 | –58,880 | –51,551 | –60,557 |
| Cash flow for the period | –26,487 | –34,902 | –28,198 | –40,508 | –35,627 |
| Cash & cash equivalents at beginning of year | 49,517 | 81,615 | 50,643 | 85,080 | 85,080 |
| Translation difference in cash & cash equivalents | –535 | –991 | 50 | 1,150 | 1,190 |
| Cash & cash equivalents at end of the period | 22,495 | 45,722 | 22,495 | 45,722 | 50,643 |
| SEK thousands | April-June 2016 |
April-June 2015 |
January June 2016 |
January June 2015 |
July 2015- June 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| Gross profit margin, % | 53.5 | 53.0 | 51.5 | 53.4 | 51.7 | 52.4 |
| Operating margin, % | 0.2 | –1.7 | 5.1 | 4.8 | 9.9 | 10.2 |
| Profit margin, % | 0.0 | –1.6 | 3.4 | 7.0 | 8.2 | 10.0 |
| Return on capital employed, % | 14.8 | 14.8 | 14.8 | 14.8 | 14.8 | 14.8 |
| Return on average equity, % | 14.1 | 17.0 | 14.1 | 17.0 | 14.1 | 15.6 |
| Profit attributable to Parent Company's | ||||||
| shareholders | –2,164 | –1,033 | 4,948 | 14,419 | 35,591 | 45,062 |
| Equity/assets ratio, % | 48.5 | 46.2 | 48.5 | 46.2 | 48.5 | 50.3 |
| Equity per share, SEK | 9.81 | 10.29 | 9.81 | 10.29 | 9.81 | 11.56 |
| Investments in intangible non-current assets | 9 | – | 70 | 136 | 235 | 301 |
| Investments in tangible non-current assets | 861 | 427 | 1,451 | 619 | 5,578 | 4,746 |
| Depreciation, amortization and impairment | ||||||
| losses for the period | –1,738 | –1,706 | –3,363 | –3,567 | –6,388 | –6,592 |
| Average number of employees | – | – | – | – | 133 | 132 |
GROUP
| SEK thousands | April-June 2016 |
April-June 2015 |
January June 2016 |
January June 2015 |
July 2015- June 2016 |
Full-year 2015 |
|---|---|---|---|---|---|---|
| Operating revenue | ||||||
| Brand | ||||||
| External revenue | 6,675 | 6,727 | 16,014 | 18,222 | 32,540 | 34,747 |
| Internal revenue | 13,357 | 6,934 | 26,647 | 17,722 | 58,515 | 49,591 |
| 20,032 | 13,661 | 42,661 | 35,944 | 91,055 | 84,338 | |
| Product development | ||||||
| External revenue | 48,651 | 43,647 | 91,298 | 96,506 | 232,855 | 238,062 |
| Internal revenue | 78,137 | 27,663 | 124,366 | 71,612 | 276,824 | 224,071 |
| 126,788 | 71,310 | 215,665 | 168,118 | 509,679 | 462,133 | |
| Wholesale | ||||||
| External revenue | 46,569 | 31,150 | 123,546 | 82,844 | 247,834 | 207,131 |
| Internal revenue | 5,970 | 6,911 | 15,203 | 13,760 | 29,484 | 28,041 |
| 52,539 | 38,062 | 138,749 | 96,604 | 277,318 | 235,172 | |
| Retail | ||||||
| External revenue | 22,959 | 21,629 | 50,906 | 39,641 | 115,822 | 104,557 |
| Internal revenue | 4,047 | 2,909 | 8,461 | 5,438 | 14,054 | 11,031 |
| 27,006 | 24,538 | 59,367 | 45,080 | 129,876 | 115,589 | |
| Less internal sales | –101,510 | –44,417 | –174,677 | –108,533 | –378,877 | –312,734 |
| Operating revenue | 124,855 | 103,153 | 281,765 | 237,213 | 629,051 | 584,498 |
| Operating profit | ||||||
| Brand | 5,529 | 1,468 | 11,373 | 7,900 | 27,652 | 24,179 |
| Product development | 8,859 | 3,174 | 14,984 | 12,456 | 39,952 | 37,425 |
| Wholesale | –6,265 | –5,713 | –743 | –4,027 | –781 | –4,065 |
| Retail | –7,819 | –591 | –11,419 | –5,163 | –5,204 | 1,053 |
| Operating profit | 305 | –1,662 | 14,195 | 11,166 | 61,619 | 58,592 |
The difference in the first half of 2016 between operating profit for segments for which information must be disclosed, SEK 14,195 thousand (11,166), and profit before tax, SEK 9,563 thousand (16,196), is net financial items, SEK –4,633 thousand (5,030). The difference in the second quarter between operating profit for segments for which information must be disclosed, SEK 305 thousand (–1,662), and profit before tax, SEK –16 thousand (–1,585), is net financial items, SEK –321 thousand (77).
CONDENSED
| April-June | April-June | January | January | July 2015- | Full-year | |
|---|---|---|---|---|---|---|
| SEK thousands Note |
2016 | 2015 | June 2016 | June 2015 | June 2016 | 2015 |
| Net sales | 16,511 | 12,995 | 32,791 | 26,168 | 58,981 | 52,358 |
| Other operating revenue | 99 | 2,148 | 2,260 | 2,269 | 5,615 | 5,624 |
| Operating revenue | 16,610 | 15,143 | 35,051 | 28,437 | 64,596 | 57,982 |
| Goods for resale | –23 | – | –25 | – | –49 | –24 |
| Other external expenses 1 |
–13,768 | –12,412 | –25,302 | –22,987 | –53,583 | –51,268 |
| Staff costs | –10,409 | –10,039 | –18 ,445 | –20,792 | –39,805 | –42,152 |
| Depreciation/amortization of tangible/ | ||||||
| intangible non-current assets | –558 | –458 | –1,085 | –931 | –2,027 | –1,873 |
| Other operating expenses | –52 | –62 | –425 | –131 | –297 | –3 |
| Operating loss | –8,200 | –7,828 | –10,231 | –16,404 | –31,165 | –37,338 |
| Result from shares in subsidiaries | 6,470 | – | 6,470 | – | 50,239 | 43,769 |
| Net financial items | –5,054 | –1,133 | –10,265 | –3,243 | –22,456 | –15,434 |
| Loss after financial items | –6,784 | –8,961 | –14,026 | –19,647 | –3,382 | –9,003 |
| Group contributions received | – | – | – | – | 48,054 | 48,054 |
| Profit/loss before tax | –6,784 | –8,961 | –14,026 | –19,647 | 44,672 | 39,051 |
| Tax | – | – | – | – | 47 | 47 |
| Profit/loss for the period | –6,784 | –8,961 | –14,026 | –19,647 | 44,719 | 39,098 |
| Other comprehensive income | – | – | – | – | – | – |
| Total comprehensive income |
| SEK thousands Note |
June 30 2016 |
June 30 2015 |
Dec 31 2015 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 238 | 329 | 284 |
| Tangible non-current assets | 2,999 | 2,289 | 3,118 |
| Long-term receivable 2 |
8,000 | 8,900 | 8,900 |
| Deferred tax | 1,008 | 961 | 1,008 |
| Shares in Group companies | 354,724 | 335,331 | 353,882 |
| Total non-current assets | 366,969 | 347,810 | 367,192 |
| Current assets | |||
| Receivables from Group companies | 510,504 | 398,770 | 330,805 |
| Current receivables | 11,207 | 15,412 | 15,198 |
| Investments 2 |
28,499 | 111,061 | 80,909 |
| Cash & cash equivalents | 998 | 3,027 | 25,717 |
| Total current assets | 551,208 | 528,270 | 452,629 |
| Total assets | 918,177 | 876,080 | 819,821 |
| Equity and liabilities | |||
| Equity | 83,672 | 88,073 | 147,872 |
| Untaxed reserves | 1,014 | 1,014 | 1,014 |
| Bond loan 2 |
144,303 | 176,780 | 154,538 |
| Other non-current liabilities 2 |
4,138 | 5,792 | 20,294 |
| Due to Group companies | 649,526 | 582,375 | 480,250 |
| Accounts payable | 1,345 | 3,025 | 2,637 |
| Other current liabilities | 34,179 | 19,021 | 13,216 |
| Total equity and liabilities | 918,177 | 876,080 | 819,821 |
| SEK thousands | January June 2016 |
January June 2015 |
Full-year 2015 |
|---|---|---|---|
| Opening balance | 147,872 | 144,143 | 144,143 |
| Distribution | –50,297 | –37,723 | –37,723 |
| Issuance of warrants | 68 | 1,300 | 1,200 |
| Warrant premium convertible | 55 | – | 1,154 |
| Total comprehensive income for the period | –14,026 | –19,647 | 39,098 |
| Closing balance | 83,672 | 88,073 | 147,872 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Jan-June | Jan-June | JanJune | Jan-June | ||
| SEK thousands | 2016 | 2015 | 2016 | 2015 | |
| Cost of premises | 14,937 | 14,343 | 5,370 | 5,684 | |
| Selling expenses | 20,510 | 13,973 | 1,523 | 2,464 | |
| Marketing expenses | 16,631 | 18,367 | 8,874 | 8,487 | |
| Administrative | |||||
| expenses | 12,674 | 11,751 | 6,768 | 5,128 | |
| Other | 6,015 | 3,269 | 2,767 | 1,224 | |
| Total | 70,767 | 61,703 | 25,302 | 22,987 | |
Securities held for trading 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.
Net divestments in the company's portfolio of corporate bonds amounted to SEK 49,481 thousand during the quarter.
| SEK thousands | Level 1 | Level 2 | Level 3 |
|---|---|---|---|
| Securities held for trading | 28,313 | ||
| Derivatives held for trading | –130 | ||
| Contingent consideration (liability) | –4,138 | ||
| Net |
Björn Borg has recognized a liability for the contingent consideration to the sellers of the minority interest in Björn Borg Sport BV at fair value. The amount as of June 30, 2016 was SEK 4,138 thousand (5,792) and is included in level 3. The carrying amount of financial instruments recognized at amortized cost corresponds to the fair value as of June 30, 2016.
In 2013 the company granted the Dutch distributor an interest-bearing loan of SEK 17 million maturing on March 31, 2017 with quarterly amortizations of SEK 900,000 beginning on December 31, 2013.
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 19, 2016
Fredrik Lövstedt Martin Bjäringer Chairman Board member
Board member Board member Board member
Lotta de Champs Petra Stenqvist Mats H Nilsson
Heiner Olbrich Christel Kinning Board member Board member
Henrik Bunge CEO
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 http://corporate.bjornborg.com/sv/finansiell-information
Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales.
Total assets less non-interest-bearing liabilities and provisions.
Earnings in relation to the weighted average number of shares during the period.
Earnings per share adjusted for any dilution effect.
Equity as a percentage of total assets.
Net sales less cost of goods sold divided by net sales.
Liabilities less investments and cash & cash equivalents divided by operating profit before depreciation/amortization.
Financial income less financial expenses.
Profit after financial items plus financial expenses (per rolling 12-month period) as a percentage of average capital employed.
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.
Operating profit as a percentage of net sales.
Profit before tax plus net financial items.
Profit before tax as a percentage of net sales.
Net debt divided with operating profit before depreciations (12 months rolling).
Interim report January-September 2016 on November 14, 2016 Year-end report for 2016 on February 17, 2017
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 2015 amounted to about SEK 1.4 billion, excluding VAT, at the consumer level. Group net sales amounted to SEK 574 million in 2015, with an average of 132 employees. The Björn Borg share has been listed on Nasdaq Stockholm since 2007.
The images in the interim report are from Björn Borg's high summer 2016 collection.
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 August 19, 2016 at 7:30 am (CET).
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