Quarterly Report • Aug 16, 2019
Quarterly Report
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"We saw very good sales growth at the wholesale level in the Netherlands, 34 percent adjusted for currencies. Sweden and Germany also reported good growth," commented CEO Henrik Bunge.
| SEK million | April-June 2019 |
April-June 2018 |
January June 2019 |
January June 2018 |
July 2018- June 2019 |
Full-year 2018 |
|---|---|---|---|---|---|---|
| Net sales | 141.7 | 140.3 | 329.9 | 309.5 | 729.9 | 709.6 |
| Gross profit margin, % | 55.4 | 59.9 | 56.2 | 58.3 | 56.4 | 57.4 |
| Operating profit/loss | –1.7 | 2.9 | 16.9 | 18.0 | 69.9 | 71.0 |
| Operating margin, % | –1.2 | 2.1 | 5.1 | 5.8 | 9.6 | 10.0 |
| Profit/loss after tax | –2.3 | 1.5 | 14.6 | 16.3 | 58.2 | 59.9 |
| Earnings per share before dilution, SEK | –0.09 | 0.06 | 0.58 | 0.66 | 2.31 | 2.39 |
| Earnings per share after dilution, SEK | –0.09 | 0.06 | 0.58 | 0.66 | 2.31 | 2.39 |
| Brand sales* | 272 | 294 | 745 | 706 | 1,643 | 1,603 |
* Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported sales at the wholesale level.
Digitization is affecting not only our buying habits, but also our access to information and our ability to make contact with like-minded people in a global world. The opportunities that individuals have today to make an impact have never been greater, nor perhaps the desire. Concern about our environment and community, coupled with the desire of individuals to feel better, is playing an increasing role in our consumers' flows. Björn Borg is right for the times. We are highly focused on sustainability, and our mission is to spread our conviction that exercise makes everyone the best version of themselves. This remains the core of our brand.
Net sales in the quarter were SEK 141.7 million (140.3), an increase of 1.0 percent compared with the previous year. We saw very good sales growth at the wholesale level in the Netherlands, 34 percent adjusted for currencies. Sweden and Germany also reported good growth. In Finland we lost ground compared with the previous year after deciding to terminate our collaborations with several customers whose work has not aligned with the brand's future direction. Our comparable stores in Sweden and Finland grew 1 percent year-over-year, while our own comparable stores in the Netherlands and Belgium fell 1 percent. Our own e-commerce grew 8 percent in the quarter.
The gross profit margin fell to 55.4 percent (59.9), but adjusted for currency effects, with the krona weakening against both the EUR and USD, the margin would have been 57.9 percent. We increased expenses in the quarter as planned, by SEK 2.2 million. This is due to staff we have added in business development and IT. Slightly higher income, but with a lower gross profit margin and increased expenses, reduced our operating result to SEK -1.7 million (2.9).
My focus is still on e-tailers, our own e-commerce and marketplaces. During the quarter I visited several of our suppliers to ensure that they are meeting our stringent requirements in terms of sustainability and quality. I have also had individual talks with nearly everyone in our organization, and listening and talking to our employees is both inspiring and informative.
Lastly, I admit we had a weak quarter. The second quarter is historically our weakest quarter from a profit perspective and this year we also face positive exchange rate effects compared to last year. My aim is always that every quarter will be better than the same one in the previous year. That is not the case with this year's second quarter. We can do better!
Let's go!
Head coach Henrik Bunge
Brand sales are a calculation of the total sales value of Björn Borg products at the consumer level excluding VAT. In the second quarter brand sales declined. The decrease was primarily in sports apparel and footwear, while underwear saw a slight increase. In total, brand sales decreased 7 percent to SEK 272 million (294). Adjusted for currency effects, brand sales fell 9 percent in the quarter. In the first half-year brand sales increased to SEK 745 million (706), up 6 percent. Excluding currency effects, brand sales rose 3 percent.
Brand sales in the underwear product area improved 1 percent in the first half of 2019, while sports apparel rose 17 percent. Underwear accounted for 56 percent (59) of brand sales.
Brand sales of footwear increased 16 percent compared with the first half of 2019, while other licensed products dropped 15 percent, with bags accounting for most of the decrease. In total, brand sales of licensed products rose 11 percent in the first half-year.
Among large markets, the Netherlands and Norway saw strong growth. Sweden and Denmark are also growing, while
Belgium and Finland declined year-over-year. Smaller markets decreased overall by 7 percent.
As of June 30, 2019, the total number of Björn Borg stores was 35 (38), of which 30 (34) are Group-owned.
Sales increased in the second quarter, largely due to a stronger EUR, but also through growth at the wholesale level in the Netherlands and Sweden as well as e-commerce. The operating result declined year-over-year due to negative currency effects on the gross profit margin.
The Group's net sales amounted to SEK 141.7 million (140.3) in the second quarter, an increase of 1.0 percent. Currencies positively affected sales in the quarter. Adjusted for currency effects, sales fell 2.2 percent.
The positive sales trend compared with the second quarter of 2018 is largely due to increased net sales in the wholesale footwear business in the Netherlands and Belgium, which grew 40 percent. Adjusted for currency effects, sales in the Netherlands and Belgium rose 34 percent. The Swedish wholesale business is also gaining ground and reported growth of 6 percent compared with the second quarter of 2018. The Finnish wholesale business fell 63 percent in the quarter after deciding to terminate our collaborations with several customers whose work has not aligned with the brand's future direction. The German wholesale business continued to trend higher, growing 8 percent year-over-year. Growth was driven by higher sales mainly to sporting goods retailers.
Sales for the Swedish retail company increased 1 percent, while total sales fell 4 percent. E-commerce grew in the quarter by 8 percent, with the biggest year-over-year increases in website traffic and orders. The retail companies in the Netherlands and Belgium decreased compared with the
previous year, with comparable stores declining 1 percent, while total sales in the Netherlands and Belgium fell 7 percent. The retail company in Finland saw an increase of 9 percent for comparable stores, while total sales were in line with the previous year. The store in England grew 4 percent compared with the previous year.
The product company's external sales rose year-over-year, mainly driven by the Norwegian market's improved performance, although other markets also reported positive development.
External royalties decreased slightly in the quarter, driven by lower licensing revenue from footwear.
The Group's net sales for the first half of 2019 amounted to SEK 329.9 million (309.5), an increase of 6.6 percent. Excluding currency effects, sales rose 2.9 percent.
The positive sales compared with the first half of 2018 is largely due to increased net sales in the wholesale footwear business, which grew 5 percent. All markets except Finland saw growth, with the German market in particular reporting strong positive development and increasing 43 percent. The markets in the Netherlands and Belgium also grew, with combined growth of 16 percent. The Finnish market fell 26 percent.
Sales for the retail company in Sweden fell by 10 percent in total due to fewer stores. Sales for comparable stores were also down, losing 3 percent, mainly due to lower foot traffic. Net sales for the retail stores in the Netherlands and Belgium fell by 6 percent in total, also due to fewer stores year-overyear. For comparable stores, sales in the Netherlands and Belgium are at the same level as the previous year. Adjusted for currency effects, sales for comparable stores in the Netherlands and Belgium would have decreased 4 percent. The Finnish retail company saw a sales drop of 7 percent year-over-year, while sales for comparable stores rose 1 percent. Sales for the retail company in England increased 15 percent. E-commerce saw growth of 13 percent, with better conversion of website traffic than the previous year.
The product company's external sales increased year-over-year, driven mainly by a positive trend in the Norwegian market.
External royalties increased due to higher licensing revenue from footwear.
The gross profit margin for the second quarter decreased to 55.4 percent (59.9). A stronger USD, combined with a strong EUR, negatively affected margins. Adjusted for currency effects, the gross profit margin would have been 57.9 percent.
Other operating revenue amounted to SEK 5.3 million (2.1) and mainly refers to unrealized gains on accounts receivable in foreign currency, which positively affects profit.
| Operating revenue, SEK thousands January-June |
SEK thousands January-June |
Operating profit, | Operating margin, % January-June |
|||||
|---|---|---|---|---|---|---|---|---|
| Segment | Revenue source | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Wholesale | Products | 223,640 | 210,366 | 10,101 | 15,600 | 5 | 7 | |
| Consumer Direct | Products | 81,564 | 83,971 | –6,805 | –8,290 | –8 | –10 | |
| Distributors | Products | 220,381 | 203,507 | 6,282 | 4,163 | 3 | 2 | |
| Licensing | Royalties | 40,360 | 33,178 | 7,289 | 6,500 | 18 | 20 | |
| Less internal sales | –226,199 | –215,018 | ||||||
| Total | 339,746 | 316,004 | 16,867 | 17,973 | 5 | 6 |
Operating expenses rose SEK 2.2 million compared with the previous year mainly due to added staff. In connection with the introduction of IFRS 16, other external expenses decreased in the quarter by approximately SEK 10 million, while depreciation increased correspondingly. Interest expenses rose by approximately SEK 1 million.
The lower gross profit margin in connection with slightly higher operating expenses led to a decrease in operating profit to SEK 1.7 million, against a year-earlier increase of SEK 2.9 million. The operating margin was –1.2 percent (2.1).
Net financial items amounted to SEK –1.2 million (0.3). The decrease compared with 2018 is mainly due to the introduction of IFRS 16, which led to an increase in interest expenses in the quarter of SEK 0.9 million (0.0). The loss after tax for the period was SEK 2.3 million, against year-earlier profit of SEK 1.5 million.
The gross profit margin for the first half-year decreased to 56.2 percent (58.3). A stronger USD, combined with a strong EUR, negatively affected margins. Adjusted for currency effects, the gross profit margin would have been 59.1 percent.
Other operating revenue amounted to SEK 9.9 million (6.5) and mainly refers to unrealized gains on accounts receivable in foreign currency, which positively affects profit.
Operating expenses rose SEK 9.3 million, or 5.5 percent. Adjusted for currency effects, operating expenses would have increased SEK 7.1 million, or 4.2 percent.
The higher revenue, coupled with the lower gross profit margin and higher operating expenses than the previous year, led to a decrease in operating profit to SEK 16.9 million (18.0). The operating margin was 5.1 percent (5.8).
Net financial items amounted to SEK 0.3 million (4.3). The decrease compared with 2018 is mainly due to the introduction of IFRS 16, which led to an increase in interest expenses in the first half-year of SEK 1.9 million (0.0). Profit after tax decreased to SEK 14.6 million (16.3).
Björn Borg's segment reporting consists of the company's primary revenue sources, which are divided into: Licensing, Distributors, Wholesale and Consumer Direct, which is also how the business is monitored internally in the Group.
The segment consists of revenue and expenses associated with the Björn Borg Group's wholesale operations. The Group has wholesale businesses in Sweden, Finland, the Netherlands, Belgium and England for apparel and underwear as well as in Sweden, Finland and the Baltic countries for footwear.
The segment's operating revenue increased in the first half-year 2019 to SEK 223.6 million (210.4). External operating revenue amounted to SEK 221.6 million (209.3), an increase of 6 percent. One reason for the increase is that the company saw growth in all markets except Finland, with the Netherlands and Germany and the footwear business primarily in Sweden developing very strongly compared with the previous year. Finland lost ground year-over-year as a result of the decision to terminate our collaborations with several customers whose work has not aligned with the brand's future direction. Sales to e-tailers, which primarily sell online, are growing in all markets. Growth in the e-tail segment was 37 percent for the half-year and amounted to SEK 59.3 million (43.3).
Operating profit amounted to SEK 10.1 million (15.6) compared with the previous year. The decrease is due to lower gross profit margins, which were negatively affected by currencies with a weaker SEK compared with USD and EUR.
The segment consists of revenue and expenses associated with the Björn Borg Group's direct sales to consumers. The Björn Borg Group owns and operates a total of 30 stores and factory outlets in Sweden, Finland, the Netherlands, Belgium and England with sales of underwear, sports apparel, adjacent products and other licensed products. In addition, Björn Borg sells online through www.bjornborg.com.
Operating revenue in the Consumer Direct segment decreased in the first half of 2019 to SEK 81.6 million (84.0). External operating revenue in the first half-year decreased to SEK 81.5 million (84.0), down 3 percent. The decrease is mainly due to lower store traffic, which was offset by continued strength in e-commerce, which grew 13 percent compared with the previous year.
The Group's own stores in Sweden declined 10 percent year-over-year, while comparable stores dropped 3 percent. The stores in the Netherlands and Belgium were down 6 percent in total, while sales for comparable stores were in line with the previous year. The Finnish stores saw a year-over-year increase of 1 percent for comparable stores, but were down 7 percent due to fewer stores. The store in England grew 15 percent year-over year. In total, sales for comparable stores were in line with the previous year.
The operating loss for the first half of 2019 was SEK 6.8 million, against a year-earlier loss of SEK 8.3 million. The smaller loss is due to higher gross profit margins than the previous year. External operating expenses have decreased slightly from the previous year, primarily due to slightly lower e-commerce marketing expenses.
Brick-and-mortar stores play an important role in combination with a digital presence for consumers and to create a consistent brand image. We are consistently reassessing conditions and situations to optimize our retail holdings.
The Distributors segment mainly consists of revenue and expenses associated with sales to external distributors of product groups developed by the company.
The segment's operating revenue amounted to SEK 220.4 million (203.5) in the first half of 2019. External operating revenue rose to SEK 28.1 million (15.3), corresponding to an increase of 84 percent from the previous year. Year-over-year sales growth in both of our major distributor markets, Norway and Denmark, accounted for the increase, mainly driven by Norway, which saw strong growth.
Operating profit increased to SEK 6.3 million (4.2) due to the higher external sales in the segment.
The Licensing segment mainly consists of royalty revenue from licensees and expenses for the Group associated with the licensing operations.
The segment's operating revenue amounted to SEK 40.4 million (33.2) in the first half of 2019. External operating revenue rose to SEK 8.6 million (7.5). The increase is a result of higher brand sales of licensed products, with footwear accounting for most of the growth. Royalties as a percentage vary between product categories, because of which there is not always an exact correlation between royalties and brand sales.
Operating profit increased to SEK 7.3 million (6.5) for the half-year. The improvement is a result of the higher external sales in the segment.
Intra-Group sales for the first half of 2019 amounted to SEK 226.2 million (215.0).
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 20.6 million (17.7) in the first half of 2019. The improvement from the previous year primarily came from an improvement in working capital, primarily because short-term liabilities have increased.
Cash flow from investing activities was negative at SEK –5.0 million (–7.8). Large investments were made in an existing store and the e-commerce platform. Total investments in tangible and intangible non-current assets amounted to SEK 5.0 million (4.8) for the period.
Financing activities generated negative cash flow of SEK –50.3 million (–25.3). The negative flow mainly comes from the company's distribution to shareholders of SEK 50.3 million (50.3).
The Björn Borg Group's cash & cash equivalents and investments amounted to SEK 2.2 million (40.2) at the end of the period with interest-bearing liabilities of SEK 300.5 million (168.2). The liabilities have been affected by IFRS 16. Interest-bearing liabilities, excluding lease liabilities, amounted to SEK 147.8 million (127.9). Total lease liabilities amounted to SEK 132.3 million (0.0), of which SEK 92.9 million represents the long-term share and SEK 39.4 million the short-term share.
In addition to the revolving credit of SEK 150 million, Björn Borg has an overdraft facility of SEK 90 million from Danske Bank.
As a commitment for the overdraft facility and three-year revolving credit, the company has pledged to ensure that the ratio between the Group's net debt and rolling 12-month operating profit before depreciation and amortization does not exceed 3.00 on the last day of each quarter. Moreover, the Group will maintain an equity/assets ratio of at least 35 percent. The commitments will be updated during the year.
As of June 30, 2019 the ratio was 1.90 (1.67) and the equity/assets ratio was 35.2 percent (45.3). The equity/ assets ratio according to previous accounting principles would have been 43.5 percent.
No changes were otherwise made with regard to pledged assets and contingent liabilities compared with December 31, 2018.
The average number of employees in the Group was 213 (212) for the twelve-month period ending June 30, 2019, of whom 66 percent (67) are women.
There were no material transactions with related parties during the period.
In its operations the Björn Borg Group is exposed to risks and uncertainties. Information on the Group's risks and uncertainties can be found on pages 60-61 and in note 3 in the annual report for 2018.
Björn Borg AB (publ) is primarily engaged in intra-Group activities. As of June 30, 2019 the company owns 100 percent of the shares in Björn Borg Brands AB, Björn Borg Footwear AB, Björn Borg Inc., Björn Borg Services AB, Björn Borg UK, Baseline and Bjorn Borg Finland Oy. In addition, the company owns 75 percent of the shares in Bjorn Borg (China) Ltd.
The Parent Company's net sales for the first half-year amounted to SEK 51.2 million (53.4).
The loss before tax amounted to SEK 1.7 million for the first half-year, compared with year-earlier profit of SEK 6.0 million. Cash & cash equivalents amounted to SEK 2.5 million (5.5) as of June 30, 2019.
There are no significant events to report after the reporting period.
Björn Borg has 25,148,384 shares outstanding.
Björn Borg's long-term financial goals for the company, which were established in 2015 for the period 2015-2019, have been updated in 2019 and are as follows:
Sales growth is expected to mainly come from sports apparel, although other product groups are also expected to grow.
The Annual General Meeting held on May 14, 2019 approved a distribution of SEK 2.00 (2.00) per share for the financial year 2018. Christel Kinning, Fredrik Lövstedt, Mats H Nilsson, Heiner Olbrich, Göran Carlsson and Alessandra Cama were re-elected to the Board of Directors. Anette Klintfeldt was elected as a new Director. The total number of Directors is seven. The AGM resolved to re-elect Heiner Olbrich as Chairman of the Board.
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 2018 with the exception of IFRS 16, which is applied as of January 1, 2019. The accounting principles are described on page 56 in the annual report 2018.
As of January 1, 2019 the Group applies IFRS 16. The Group's leasing contracts largely relate to leases of properties and vehicles. The transition is recognized according to the modified retrospective approach, because of which comparative amounts are not restated. The cumulative effect of applying IFRS 16 is recognized on January 1, 2019; see note 4 for further information. Lease liabilities attributable to leases that were previously classified as operating leases according to IAS 17 are measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate as of January 1, 2019. Furthermore, the Group has elected to measure right-of-use assets at an amount corresponding to the lease liability
(adjusted for prepaid and accrued leasing fees). In addition to the above, the following exemptions have been applied in connection with review of leases in accordance with IFRS 16: short-term leases (which expire within 12 months of the application date) and assets of low value (less than SEK 50,000) are exempt from leasing. The Group has also elected not to separate non-lease components from lease components for property leases.
Björn Borg has determined that all leases within the Björn Borg Group are to be recognized as leases in accordance with IFRS 16. In cases where property leases within the Björn Borg Group have an extension option, a lease-by-lease assessment is made whether it is reasonably certain that the option will be exercised. This assessment considers all relevant facts and circumstances that create an economic incentive in, e.g., the lease terms for extension periods compared with market interest rates, significant leasehold improvements that have been made (or are expected to be made) during the lease term, costs that arise when the lease is terminated, e.g., negotiation costs and relocation costs, and the weight of the underlying asset in the business.
The Group as lessee (applies as of January 1, 2019) The Group determines whether a contract is or contains a lease at the contract's commencement. The Group recognizes a right-of-use asset and a corresponding lease liability for all leases in which the Group is the lessee. This does not apply, however, to short-term leases (with a term of 12 months or less) and leases where the underlying asset has a low value. For these leases the Group recognizes leasing fees as an operating expense on a straight-line basis over the lease term, unless another systematic approach better reflects how the economic benefits of the underlying asset are consumed by the lessee.
The lease liability is initially measured as the present value of leasing fees that have not been paid on the commencement date, discounted by the lease's implicit rate. If this interest rate cannot be easily determined, the Group uses the incremental borrowing rate. The incremental borrowing rate is the interest rate that a lessee would have to pay for debt financing for a corresponding period, and with corresponding collateral, for the right to use an asset in a similar economic environment.
The following leasing fees are included in the calculation of the lease liability:
The lease liability is presented on a separate line in the Group's statement of financial position.
After first-time adoption the lease liability is measured by increasing the carrying value to reflect the interest rate on the lease liability (applying the effective interest method) and by reducing the carrying value to reflect paid leasing fees.
The Group remeasures the lease liability (and makes a corresponding adjustment to the associated right-of-use asset) if:
On the acquisition date the right-of-use assets are recognized at the value of the corresponding lease liability, leasing fees paid on or before the commencement date and any initial direct costs. In subsequent periods they are measured at cost after deducting accumulated depreciation and impairment.
Right-of-use assets are depreciated over the estimated period of use or over the lease term, whichever is shorter. If a lease transfers ownership of the underlying asset at the end of the lease term or if the cost of the right-of-use asset reflects that the Group expects to exercise a call option, the underlying asset is depreciated over the period of use. Depreciation begins on the lease's commencement date.
Right-of-use assets are presented on a separate line in the consolidated statement of financial position.
The Group applies IAS 36 Impairment of Assets to test right-of-use assets for impairment and recognizes any impairment losses it identifies in accordance with the description in the section Impairment in the annual report 2018.
Variable leasing fees that are not linked to an index or price are not included in the measurement of the lease liability and right-of-use asset. Such leasing fees are expensed in the period when they arise and are included on the line Other external expenses in the consolidated income statement.
IFRS 16 allows, as a practical implication, a lessee not to separate non-lease components from lease components and instead recognize each lease component and associated nonlease components as s single lease component. The Group has elected to apply this exemption for property leases.
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 2019 |
April-June 2018 |
January June 2019 |
January June 2018 |
July 2018- June 2019 |
Full-year 2018 |
|---|---|---|---|---|---|---|---|
| Net sales | 1 | 141,705 | 140,341 | 329,860 | 309,545 | 729,891 | 709,576 |
| Other operating revenue | 5,269 | 2,080 | 9,886 | 6,459 | 10,633 | 7,205 | |
| Operating revenue | 146,974 | 142,421 | 339,746 | 316,004 | 740,524 | 716,781 | |
| Goods for resale | –63,225 | –56,326 | –144,574 | –128,982 | –318,147 | –302,555 | |
| Other external expenses | 2 | –29,607 | –42,307 | –70,079 | –90,163 | –172,077 | –192,161 |
| Staff costs | –38,063 | –36,705 | –77,095 | –71,797 | –142,059 | –136,761 | |
| Depreciation/amortization of tangible/ | |||||||
| intangible non-current assets | –12,912 | –2,431 | –25,713 | –4,512 | –30,078 | –8,877 | |
| Other operating expenses | –4,845 | –1,764 | –5,418 | –2,577 | –8,265 | –5,424 | |
| Operating profit | –1,678 | 2,888 | 16,867 | 17,973 | 69,898 | 71,003 | |
| Net financial items | –1,150 | 328 | 251 | 4,342 | –1,066 | 3,025 | |
| Profit before tax | –2,828 | 3,216 | 17,118 | 22,315 | 68,832 | 74,028 | |
| Tax | 567 | –1,742 | –2 499 | –5,982 | –10,660 | –14,142 | |
| Profit for the period | –2,261 | 1,474 | 14,619 | 16,333 | 58,172 | 59,886 | |
| Profit for the period attributable to | |||||||
| Parent Company's shareholders | –2,261 | 1,505 | 14,619 | 16,553 | 58,195 | 60,128 | |
| Non-controlling interests | – | –31 | – | –219 | –23 | –242 | |
| Earnings per share before dilution, SEK | –0.09 | 0.06 | 0.58 | 0.66 | 2.31 | 2.39 | |
| Earnings per share after dilution, SEK | –0.09 | 0.06 | 0.58 | 0.66 | 2.31 | 2.39 | |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| SEK thousands | Note | April-June 2019 |
April-June 2018 |
January June 2019 |
January June 2018 |
July 2018- June 2019 |
Full-year 2018 |
|---|---|---|---|---|---|---|---|
| Net profit for the period | –2,261 | 1,474 | 14,619 | 16,333 | 58,172 | 59,886 | |
| OTHER COMPREHENSIVE INCOME | |||||||
| Components that may be reclassified to profit or loss |
|||||||
| Translation difference for the period | –2,260 | –1,373 | –2,602 | 651 | –5,565 | –2,312 | |
| Total other comprehensive income for the period |
–2,261 | –1,373 | –2,602 | 651 | –5,565 | –2,312 | |
| Total comprehensive income for the period |
–4,521 | 101 | 12,017 | 16,984 | 52,607 | 57,574 | |
| Total comprehensive income attributable to |
|||||||
| Parent Company's shareholders Non-controlling interests |
–4,521 – |
431 –330 |
12,017 – |
17,593 –609 |
53,059 –452 |
58,635 –1 061 |
CONDENSED
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| SEK thousands Note |
2019 | 2018 | 2018 |
| Non-current assets | |||
| Goodwill | 35,347 | 35,146 | 34,746 |
| Trademarks | 187,532 | 187,532 | 187,532 |
| Other intangible assets | 10,650 | 6,248 | 9,956 |
| Tangible non-current assets | 14,941 | 15,129 | 15,390 |
| Deferred tax assets | 20,939 | 22,630 | 23,228 |
| Right-of-use assets 4 |
131,677 | – | – |
| Total non-current assets | 401,086 | 266,685 | 270,852 |
| Current assets | |||
| Inventory | 154,054 | 125,842 | 139,564 |
| Accounts receivable | 119,230 | 84,402 | 130,487 |
| Other current receivables | 15,395 | 15,639 | 13,625 |
| Investments 3 |
– | 500 | – |
| Cash & cash equivalents | 2,170 | 39,710 | 36,388 |
| Total current assets | 290,849 | 266,093 | 320,064 |
| Total assets | 691,935 | 532,778 | 590,916 |
| Equity and liabilities Equity |
243,425 | 241,115 | 281,705 |
| Deferred tax liabilities | 39,666 | 48,131 | 42,892 |
| Non-current liabilities credit institutions | 150,000 | 150,000 | 150,000 |
| Long-term lease liability 4 |
92,929 | – | – |
| Other non-current liabilities | – | 21,682 | 3,824 |
| Accounts payable | 53,097 | 27,695 | 37,646 |
| Short-term lease liability 4 |
39,400 | – | – |
| Other current liabilities | 73,418 | 44,155 | 74,849 |
| Total equity and liabilities | 691,935 | 532,778 | 590,916 |
| Equity attributable to Parent Company's |
Non-controlling | |||
|---|---|---|---|---|
| SEK thousands | Note | shareholders | interests | Total equity |
| Opening balance, January 1, 2018 | 276,907 | 491 | 277,398 | |
| Total comprehensive income for the period | 17,593 | –609 | 16,984 | |
| Distribution for 2017 | –50,297 | – | –50,297 | |
| Acquisition of non-controlling interest | –2,523 | –447 | –2,970 | |
| Closing balance, June 30, 2018 | 241,680 | –565 | 241,115 | |
| Opening balance, January 1, 2018 | 276,907 | 491 | 277,398 | |
| Total comprehensive income for the period | 58,635 | –1,061 | 57,574 | |
| Correction of minority share | 4,026 | –4,026 | – | |
| Distribution for 2017 | –50,297 | – | –50,297 | |
| Acquisition of non-controlling interest | –1,704 | –1,266 | –2,970 | |
| Closing balance, December 31, 2018 | 287,567 | –5,862 | 281,705 | |
| Opening balance, January 1, 2019 | 287,567 | –5,862 | 281,705 | |
| Total comprehensive income for the period | 12,034 | –17 | 12,017 | |
| Distribution for 2018 | –50,297 | – | –50,297 | |
| Closing balance, June 30, 2019 | 249,304 | –5,879 | 243,425 |
CONDENSED
| SEK thousands | April-June 2019 |
April-June 2018 |
January June 2019 |
January June 2018 |
Full-year 2018 |
|---|---|---|---|---|---|
| Cash flow from operating activities | |||||
| Before changes in working capital | –1,977 | 4,433 | 12,601 | 22,565 | 76,686 |
| Changes in working capital | 27,663 | –4,921 | 8,033 | –4,834 | –53,923 |
| Cash flow from operating activities | 25,686 | –488 | 20,634 | 17,731 | 22,763 |
| Acquisition of minority share | – | – | – | –2,970 | –2,970 |
| Investments in intangible non-current assets | –630 | –1,275 | –2,570 | –2,430 | –7,264 |
| Investments in tangible non-current assets | –1,489 | –474 | –2,429 | –2,389 | –6,486 |
| Investments/sale of investments | – | – | – | – | 1,112 |
| Cash flow from investing activities | –2,119 | –1,749 | –4,999 | –7,789 | –15,608 |
| Distribution | –50,297 | –50,297 | –50,297 | –50,297 | –50,297 |
| Amortization of loans | – | – | – | –25,000 | –25,000 |
| Newly raised loan | – | 50,000 | – | 50,000 | 50,000 |
| Cash flow from financing activities | –50,297 | –297 | –50,297 | –25,297 | –25,297 |
| Cash flow for the period | –26,730 | –2,534 | –34,662 | –15,355 | –18,142 |
| Cash & cash equivalents at beginning of year | 29,355 | 41,334 | 36,388 | 52,620 | 52,620 |
| Translation difference in cash & cash equivalents | –455 | 910 | 444 | 2,445 | 1,910 |
| Cash & cash equivalents at end of the period | 2,170 | 39,710 | 2,170 | 39,710 | 36,388 |
| GROUP | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | April-June 2019 |
April-June 2018 |
January June 2019 |
January June 2018 |
July 2018- June 2019 |
Full-year 2018 |
| Gross profit margin, % | 55.4 | 59.9 | 56.2 | 58.3 | 56.4 | 57.4 |
| Operating margin, % | –1.2 | 2.1 | 5.1 | 5.8 | 9.6 | 10.0 |
| Profit margin, % | –2.0 | 2.3 | 5.2 | 7.2 | 9.4 | 10.4 |
| Return on capital employed, % | 16.7 | 17.9 | 16.7 | 17.9 | 16.7 | 18.4 |
| Return on average equity, % | 24.0 | 21.4 | 24.0 | 21.4 | 24.0 | 21.5 |
| Profit attributable to Parent Company's | ||||||
| shareholders | –2,261 | 1,505 | 14,619 | 16,553 | 58,195 | 60,128 |
| Equity/assets ratio, % | 35.2 | 45.3 | 35.2 | 45.3 | 35.2 | 47.7 |
| Equity per share, SEK | 9.68 | 9.59 | 9.68 | 9.59 | 9.68 | 11.20 |
| Investments in intangible non-current assets | 630 | 1,275 | 2,570 | 2,430 | 7,404 | 7,264 |
| Investments in tangible non-current assets | 1,489 | 474 | 2,429 | 2,389 | 6,526 | 6,486 |
| Business acquisition | – | – | – | 2,970 | – | 2,970 |
| Depreciation, amortization and impairment | ||||||
| losses for the period | –12,912 | –2,431 | –25,713 | –4,512 | –30,078 | –8,877 |
| Average number of employees | 212 | 211 | 212 | 211 | 213 | 213 |
GROUP
| April-June | April-June | January | January | July 2018- | Full-year | |
|---|---|---|---|---|---|---|
| SEK thousands | 2019 | 2018 | June 2019 | June 2018 | June 2019 | 2018 |
| Operating revenue | ||||||
| Wholesale | ||||||
| External revenue | 83,099 | 85,262 | 221,595 | 209,250 | 478,830 | 466,485 |
| Internal revenue | 1,078 | 641 | 2,045 | 1,116 | 3,065 | 2,136 |
| 84,177 | 85,903 | 223,640 | 210,366 | 481,895 | 468,621 | |
| Consumer Direct | ||||||
| External revenue | 43,448 | 44,971 | 81,510 | 83,965 | 183,333 | 185,787 |
| Internal revenue | 24 | 7 | 54 | 7 | 61 | 13 |
| 43,472 | 44,978 | 81,564 | 83,971 | 183,394 | 185,800 | |
| Distributors | ||||||
| External revenue | 18,097 | 9,274 | 28,066 | 15,255 | 61,914 | 49,102 |
| Internal revenue | 81,036 | 60,890 | 192,315 | 188,253 | 448,970 | 444,908 |
| 99,133 | 70,164 | 220,381 | 203,507 | 510,884 | 494,010 | |
| Licensing | ||||||
| External revenue | 2,329 | 2,916 | 8,575 | 7,535 | 16,446 | 15,406 |
| Internal revenue | 13,436 | 9,674 | 31,785 | 25,643 | 74,505 | 68,363 |
| 15,765 | 12,590 | 40,360 | 33,178 | 90,951 | 83,769 | |
| Less internal sales | –95,573 | –71,214 | –226,199 | –215,018 | –526,600 | –515,419 |
| Operating revenue | 146,974 | 142,421 | 339,746 | 316,004 | 740,524 | 716,781 |
| Operating profit | ||||||
| Wholesale | –5,028 | –390 | 10,101 | 15,600 | 40,147 | 45,646 |
| Consumer Direct | –2,248 | –1,568 | –6,805 | –8,290 | –1,380 | –2,866 |
| Distributors | 3,633 | 2,376 | 6,282 | 4,163 | 16,916 | 14,797 |
| Licensing | 1,965 | 2,470 | 7,289 | 6,500 | 14,215 | 13,426 |
| Operating profit | –1,678 | 2,888 | 16,867 | 17,973 | 69,898 | 71,003 |
The difference between operating profit for segments for which information must be disclosed, SEK 1,678 thousand (2,888), and the result before tax, SEK –2,828 thousand (3,216), is net financial items, SEK –1,150 thousand (328).
| SEK thousands | Q2 2019 | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 141,705 | 188,155 | 196,898 | 203,132 | 140,341 | 169,204 | 170,269 | 205,712 |
| Gross profit margin, % | 55.4 | 56.8 | 55.5 | 57.7 | 59.9 | 57.1 | 58.3 | 56.3 |
| Operating profit/loss | –1,678 | 18,545 | 16,033 | 36,999 | 2,888 | 15,085 | 16,905 | 32,012 |
| Operating margin, % | –1.2 | 9.9 | 8.1 | 18.2 | 2.1 | 8.9 | 9.9 | 15.6 |
| Profit/loss after financial items | –2,828 | 19,946 | 16,081 | 35,633 | 3,216 | 19,099 | 15,683 | 31,028 |
| Profit margin, % | –2.0 | 10.6 | 8.2 | 17.5 | 2.3 | 11.3 | 9.2 | 15.1 |
| Earnings per share before dilution, SEK | –0.09 | 0.67 | 0.58 | 1.15 | 0.06 | 0.60 | 0.43 | 0.98 |
| Earnings per share after dilution, SEK | –0.09 | 0.67 | 0.58 | 1.15 | 0.06 | 0.60 | 0.43 | 0.98 |
| Number of Björn Borg stores | ||||||||
| at end of period | 35 | 35 | 36 | 37 | 38 | 39 | 41 | 40 |
| of which Group-owned | ||||||||
| Björn Borg stores | 30 | 30 | 31 | 32 | 34 | 34 | 35 | 34 |
| Brand sales | 272,185 | 473,112 | 453,784 | 443,527 | 294,022 | 411,661 | 359,775 | 474,201 |
CONDENSED
| SEK thousands | Note | April-June 2019 |
April-June 2018 |
January June 2019 |
January June 2018 |
July 2018- June 2019 |
Full-year 2018 |
|---|---|---|---|---|---|---|---|
| Net sales | 25,639 | 26,517 | 51,178 | 53,420 | 104,264 | 106,506 | |
| Other operating revenue | 945 | 93 | 1,539 | 631 | 1,964 | 815 | |
| Operating revenue | 26,584 | 26,610 | 52,717 | 54,051 | 106,228 | 107,321 | |
| Goods for resale | –1 | –1 | –2 | –3 | –4 | –5 | |
| Other external expenses | 2 | –10,585 | –11,899 | –28,360 | –25,588 | –65,043 | –62,271 |
| Staff costs | –10,839 | –10,866 | –21,969 | –20,031 | –37,413 | –35,475 | |
| Depreciation/amortization of tangible/ | |||||||
| intangible non-current assets | –595 | –454 | –1,013 | –908 | –1,846 | –1,741 | |
| Other operating expenses | –511 | –28 | –538 | –340 | –1,068 | –629 | |
| Operating profit | 4,053 | 3,362 | 835 | 7,181 | 854 | 7,200 | |
| Result from shares in subsidiaries | – | – | – | – | 50,300 | 50,300 | |
| Net financial items | –2,108 | –30 | –2,540 | –1,187 | –2,820 | –1,467 | |
| Profit after financial items | 1,945 | 3,332 | –1,705 | 5,994 | 48,334 | 56,033 | |
| Group contributions received | – | – | – | – | 58,458 | 58,458 | |
| Appropriations | – | – | – | – | –609 | –609 | |
| Profit before tax | 1,945 | 3,332 | –1,705 | 5,994 | 106,183 | 113,882 | |
| Tax | – | – | –293 | – | –13,700 | –13,407 | |
| Profit for the period | 1,945 | 3,332 | –1,998 | 5,994 | 92,483 | 100,475 | |
| Other comprehensive income | – | – | – | – | – | – | |
| Total comprehensive income | |||||||
| for the period | 1,945 | 3,332 | –1,998 | 5,994 | 92,483 | 100,475 |
| CONDENSED | ||||
|---|---|---|---|---|
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| SEK thousands Note |
2019 | 2018 | 2018 |
| Non-current assets | |||
| Intangible assets | 7,067 | 2,647 | 5,610 |
| Tangible non-current assets | 1,023 | 922 | 481 |
| Deferred tax | 16 | 316 | 16 |
| Shares in Group companies | 344,106 | 344,106 | 344,106 |
| Total non-current assets | 352,212 | 347,991 | 350,213 |
| Current assets | |||
| Receivables from Group companies | 705,570 | 583,111 | 684,330 |
| Current receivables | 6,861 | 3,972 | 5,794 |
| Investments 3 |
– | 500 | – |
| Cash & cash equivalents | 2,541 | 5,043 | 2,143 |
| Total current assets | 714,972 | 592,626 | 692,267 |
| Total assets | 1,067,184 | 940,617 | 1,042,480 |
| Equity and liabilities Equity |
148,993 | 106,807 | 201,288 |
| Untaxed reserves | 609 | – | 609 |
| Non-current liabilities credit institutions | 150,000 | 150,000 | 150,000 |
| Other non-current liabilities | – | 21,682 | 3,824 |
| Due to Group companies | 723,626 | 647,696 | 640,514 |
| Accounts payable | 6,739 | 2,349 | 8,570 |
| Other current liabilities | 37,217 | 12,083 | 37,675 |
| Total equity and liabilities | 1,067,184 | 940,617 | 1,042,480 |
| SEK thousands | January June 2019 |
January June 2018 |
Full-year 2018 |
|---|---|---|---|
| Opening balance | 201,288 | 151,110 | 151,110 |
| Distribution | –50,297 | –50,297 | –50,297 |
| Total comprehensive income for the period | –1,998 | 5,994 | 100,475 |
| Closing balance | 148,993 | 106,807 | 201,288 |
The Group's net sales consist of sales of products and royalties for usage of the company's brand. Transfers of goods/royalties are made at fixed points in time.
| Group | |||
|---|---|---|---|
| SEK thousands | Jan-Jun 2019 |
Jan-Jun 2018 |
|
| Sweden | 119,099 | 112,049 | |
| Netherlands | 91,420 | 79,200 | |
| Finland | 42,447 | 51,958 | |
| Other | 76,894 | 66,338 | |
| Total | 329,860 | 309,545 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Jan-Jun | Jan-Jun | Jan-Jun | Jan-Jun | |
| SEK thousands | 2019 | 2018 | 2019 | 2018 |
| Cost of premises | 23,354 | 24,924 | 5,242 | 5,188 |
| Selling expenses | 22,436 | 21,607 | 1,911 | 1,499 |
| Marketing expenses | 25,789 | 23,514 | 12,551 | 9,533 |
| Administrative | ||||
| expenses | 15,382 | 14,945 | 7,381 | 7,580 |
| Lease costs (IFRS 16) | –22,065 | – | – | – |
| Other | 5,183 | 5,173 | 1,275 | 1,788 |
| Total | 70,079 | 90,163 | 28,360 | 25,588 |
Securities relate to investments in corporate bonds listed 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. In 2018 the company divested the last holding in its corporate
bond portfolio.
| SEK thousands | Level 1 | Level 2 | Level 3 |
|---|---|---|---|
| Securities | – | – | – |
| Net | – | – | – |
| SEK thousands | Level 1 | Level 2 | Level 3 |
|---|---|---|---|
| Securities | 500 | – | – |
| Net | 500 | – | – |
| Recognized balance | Restated balance | ||
|---|---|---|---|
| SEK thousands | sheet items December 31, 2018 |
Restatement to IFRS 16 | sheet items January 1, 2019 |
| Assets | |||
| Intangible assets | 232,234 | – | 232,234 |
| Tangible non-current assets | 15,390 | – | 15,390 |
| Deferred tax assets | 23,228 | – | 22,228 |
| Right-of-use assets | – | 149,989 | 149,989 |
| Total non-current assets | 270,852 | 149,989 | 420,841 |
| Total current assets | 320,064 | – | 320,064 |
| Total assets | 590,916 | 149,989 | 740,905 |
| Equity and liabilities | |||
| Equity | 281,705 | – | 281,705 |
| Deferred tax liabilities | 42,892 | – | 42,892 |
| Liabilities to credit institutions | 153,824 | – | 153,824 |
| Long-term lease liability | – | 106,760 | 106,760 |
| Total non-current liabilities | 196,716 | 106,760 | 303,476 |
| Accounts payable | 37,646 | – | 37,646 |
| Other current liabilities | 74,849 | – | 74,849 |
| Short-term lease liability | – | 43, 229 | 43,229 |
| Total current liabilities | 112,495 | 43,229 | 155,724 |
| Total equity and liabilities | 590,916 | 149,989 | 740,905 |
The company presents certain financial measures in this interim report that are not defined according to IFRS. The company considers these measures to be valuable complementary information for investors and the company's management. Since not all companies calculate financial measures in the same way, they are not always comparable with measures used by other companies. Consequently, these measures should not be seen as a substitute for measures defined according to IFRS. For more on the calculation of these key financial ratios, see https://corporate.bjornborg.com/en/section/investors/ interim-reports/
Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales. Purpose: Shows the sales trend measured as retail value excluding VAT.
Total assets less non-interest-bearing liabilities and provisions.
Purpose: Capital employed measures capital use and efficiency.
Profit after tax in relation to the weighted average number of shares during the period.
Purpose: This indicator is used to assess an investment from an owner's perspective.
Earnings per share adjusted for any dilution effect. Purpose: This indicator is used to assess an investment from an owner's perspective.
Equity as a percentage of total assets. Purpose: This indicator shows financial risk, expressed as a share of total restricted equity financed by the owners.
Net sales less cost of goods sold divided by net sales. Purpose: Gross margin is used to measure operating profitability.
Net sales less cost of goods sold divided by net sales. Purpose: Gross margin before acquisitions is used to measure operating profitability adjusted for acquisition effects.
Liabilities less investments and cash & cash equivalents. Purpose: Net debt reflects the company's total debt situation.
Liabilities less investments and cash & cash equivalents divided by operating profit before depreciation/amortization. Purpose: This indicator shows the company's ability to pay debts.
Financial income less financial expenses. Purpose: Describes the company's financial activities.
Operating profit as a percentage of net sales. Purpose: The operating margin is used to measure operating profitability.
Profit before tax plus net financial items. Purpose: This indicator facilitates profitability comparisons regardless of the company's tax rate and independent of its financing structure.
Profit before tax as a percentage of net sales. Purpose: Profit margin shows the company's profit in relation to its sales.
Profit before tax (per rolling 12-month period) plus financial expenses as a percentage of average capital employed. Purpose: This indicator is the key measure to quantify the return on the capital used in operations.
Profit for the period/year attributable to the Parent Company's shareholders (for rolling 12 months) according to the income statement as a percentage of average equity. Average equity is calculated by adding equity at January 1 to equity at December 31 and dividing by two.
Purpose: This indicator is used to show, from an ownership perspective, the return generated on the owners' invested capital.
The Board of Directors and the CEO certify that the interim report provides a true and fair overview of the operations, financial position and results of the Parent Company and the Group and describes the material risks and uncertainties faced by the Parent Company and the companies in the Group.
Stockholm, August 16, 2019
Heiner Olbrich Chairman
Alessandra Cama Göran Carlson Christel Kinning Board member Board member Board member
Anette Klintfeldt Fredrik Lövstedt Mats H Nilsson Board member Board member Board member
Henrik Bunge CEO
The interim report for January-September 2019 will be released at 7:30 am (CET) on November 15, 2019.
The year-end report for 2019 will be released at 7:30 am (CET) on February 21, 2020.
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
Jens Nyström, 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 twenty 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 2018 amounted to about SEK 1.6 billion, excluding VAT, at the consumer level. Group net sales amounted to SEK 709.6 million in 2018, with an average of 213 employees. The Björn Borg share has been listed on Nasdaq Stockholm since 2007.
The images in the interim report are taken from Björn Borg's high summer 2019 collection.
Björn Borg AB Tulegatan 11 SE-113 53 Stockholm, Sweden www.bjornborg.com
Björn Borg is required to make public this information according to the EU's Market Abuse Regulation. The information was released for publication by the above-mentioned contacts on August 16, 2019 at 7:30 am (CET).
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