Earnings Release • Jan 31, 2019
Earnings Release
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Figures for the corresponding period of last year in brackets. The figures are unaudited. For non-IFRS figures (e.g adjusted figures), see page 21 for definitions.
| HIGHLIGHTS 2018 | 2 |
|---|---|
| KEY FIGURES | 3 |
| PERIOD REVIEW | 4 |
| FINANCIAL REVIEW | 7 |
|---|---|
| FINANCIAL STATEMENTS | 12 |
| ALTERNATIVE PERFORMANCE MEASURES |
21 |
| Figures are stated in NOK million | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| CHAIN KEY FIGURES | ||||
| Total retail sales | 1,951.6 | 1,773.2 | 6,166.7 | 5,856.9 |
| Growth (%) | 10.1% | 2.5% | 5.3% | 6.0% |
| Like-for-like sales growth (%) | 7.0% | (0.1%) | 2.2% | 3.1% |
| Total number of stores at end of period | 258 | 250 | 258 | 250 |
| - Directly operated stores | 221 | 205 | 221 | 205 |
| - Franchise stores | 37 | 45 | 37 | 45 |
| Q4 2018 | Q4 2017 | FY 2018 | FY 2017 | |
|---|---|---|---|---|
| GROUP KEY INCOME STATEMENT FIGURES | ||||
| Sales directly operated stores | 1,603.8 | 1,390.8 | 5,020.4 | 4,556.1 |
| Sales from wholesale to franchise stores | 211.2 | 209.2 | 717.8 | 773.4 |
| Franchise fees and other income | 23.7 | 28.6 | 78.8 | 93.1 |
| Group revenue | 1,838.7 | 1,628.6 | 5,817.0 | 5,422.5 |
| % growth | 12.9% | 1.5% | 7.3% | 6.6% |
| COGS excluding unrealised foreign exchange effects | 1,040.3 | 912.0 | 3,309.7 | 3,112.1 |
| Gross profit | 798.3 | 716.7 | 2,507.3 | 2,310.5 |
| % margin | 43.4% | 44.0% | 43.1% | 42.6% |
| Opex | 494.7 | 431.3 | 1,840.9 | 1,669.5 |
| Nonrecurring items | - | - | - | - |
| Opex excluding nonrecurring items | 494.7 | 431.3 | 1,840.9 | 1,669.5 |
| % of group revenue | 26.9% | 26.5% | 31.6% | 30.8% |
| Adjusted EBITDA | 303.6 | 285.4 | 666.4 | 641.0 |
| Adjusted EBIT | 278.4 | 264.2 | 575.6 | 558.3 |
| Adjusted profit before tax | 285.7 | 256.8 | 552.5 | 510.3 |
| Adjusted net profit | 223.6 | 195.1 | 429.1 | 389.8 |
| Adjusted earnings per share | 1.36 | 1.17 | 2.59 | 2.33 |
| GROUP KEY CASH FLOW AND BALANCE SHEET FIGURES | ||||
| Net change in working capital | 122.6 | 174.3 | (177.8) | 29.5 |
| Capital expenditure | 17.9 | 28.9 | 79.2 | 103.2 |
| Financial debt | 1,649.4 | 1,650.8 | ||
| Cash | 427.0 | 581.7 | ||
| Net debt | 1,222.5 | 1,069.1 |
Europris cemented its position as "champion of seasons" in the important fourth quarter with retail sales growth of 10.1 per cent. Sales campaigns for Black Friday and the Christmas season were well prepared and successfully implemented. Sales growth was fuelled by improved central control of volumes and spacing in the stores, resulting in high growth throughout the quarter.
Gross margin was affected by a deliberate increase in the campaign share of total sales, while the overall level of discounting remained unchanged. Volumes of campaign products have been increased, and the display and labelling of campaign products in the stores improved.
The large volumes in the quarter have resulted in capacity constraints and put pressure on extra operating expenses at the central warehouse. A high fill-rate at the warehouse led to increased use of third-party handling and extra rent of containers, amounting to about NOK 8 million.
Europris has a seasonal concept, and the fourth quarter is the most important sales season of the year. The first large sales event in the quarter was Black Friday in week 47. During this campaign, Europris had a detailed and focused plan to drive traffic to the stores.
Where the Christmas season was concerned, the product range of seasonal goods was improved, especially in outdoor seasonal lighting and artificial Christmas trees. The stores were well prepared for the peak season. Each store had a detailed plan for executing the season, and staff were trained and given dedicated areas of responsibility in the stores.
The execution challenges faced by Europris in 2017 related to performance in the low season and in the period building up to peak seasons have been addressed. Over the past year, the group has increased central control of volumes and spacing in the stores. The full effect of these initiatives was realised in the fourth quarter, and this was one of the key success factors underlying the high sales growth for the period. Inventory in the stores has been slightly increased as part of this initiative, while inventory at the central warehouse has been increased to secure better service to the stores.
During the quarter, Europris strengthened its focus on implementing the weekly sales campaigns. The volume of campaign products was increased to reduce sold-out conditions during the campaign periods, and display and labelling of campaign products in the stores were improved. As a result, sales of campaign products have increased. While this had a negative effect on gross margin, gross profit rose as the overall level of discounting remained unchanged. Europris believes that this initiative will increase customer satisfaction and shopping frequency over time, and that it will further reinforce the group's price leadership in the market.
According to Kvarud Analyse, the market was soft during the quarter with a total growth of only one per cent despite one more sales day compared with the same period of 2017. Europris outperformed the market significantly with a total growth of 10.1 per cent.
| Q4 | 2018 | ||
|---|---|---|---|
| Total growth Europris chain | 10.1% | 5.3% | |
| Total growth market1 | 1.0% | 1.3% | |
| LFL growth Europris | 7.0% | 2.2% | |
| LFL growth market1 | 0.4% | 0.8% |
With a strong end to a challenging year, Europris once again beat the market with a like-for-like performance of 2.2 per cent compared with market growth of 0.8 per cent in 2018.1 The market was soft in 2018, especially during the summer, when the warm weather had a
negative effect on store traffic. Together with online retail, the discount variety retail sector continued to win market share in 2018.
Europris continues to make progress with its concept and category development work. During the fourth quarter, this was demonstrated by an extended product range for outdoor Christmas lighting and artificial Christmas trees. These segments are growing, and Europris has taken a market lead in both categories.
The group has developed and introduced "design-to-price" products to capitalise on the customer focus on "value for money". This includes a stronger concentration on developing private label brands in selected categories, which will be pursued from now on in partnership with the discount variety retail sourcing partners, Tokmanni in Finland and ÖoB in Sweden.
Increasing central control of volumes and spacing in the stores will continue to attract attention and be further developed. The initiatives introduced so far have been successful and were a key contributor to sales growth in the fourth quarter. Better planning has made the ramp-up to new seasons more efficient and permitted improved utilisation of sales space during these periods. In addition, central spacing has ensured a more consistent implementation of the season across the store base.
The Europris e-commerce offering is still in its start-up phase, and performance is advancing as planned. Overall, e-commerce accounts for 0.5 per cent of the group's total retail sales. Click and collect accounts for most of the online sales.
During the fourth quarter, attention with e-commerce was concentrated on continued development of the technical solutions in order to improve the customer experience. In addition,
offering a wider range of artificial Christmas trees online than in the physical stores was tested. Sales results were positive, and the opportunity for providing an even wider product range online than in the physical stores will be further explored.
Where online customer relationship management (CRM) is concerned, the Christmas period was used to test unique daily deals for members of MER, the Europris customer club. Combined with the analysis of customer data, this represents the first step towards delivering relevant personalised marketing and offers to customers.
Europris opened two new stores in the fourth quarter, at Nannestad and Rjukan. This brought the total number of new store openings in 2018 to nine, which is in line with plans. One store, at Maura in Akershus, was closed in the fourth quarter, bringing net new stores for the year to eight.
| Month | Store | County |
|---|---|---|
| January | Lillehammer | Oppland |
| March | Digernes | Møre og Romsdal |
| May | Rykkinn | Akershus |
| May | Stokke | Vestfold |
| June | Ørnes | Nordland |
| June | Kjørbekk | Telemark |
| August | Lura | Rogaland |
| October | Nannestad | Akershus |
| December | Rjukan | Telemark |
The chain had 258 stores at 31 December, of which 221 were directly operated and 37 were franchises.
Construction of the group's new central warehouse in Moss is progressing as planned in terms of both schedule and costs. Europris plans to move into the low-rise part of the site in May 2019, while operations in the high-bay area will begin in 2020. During the 2019-20 transition
period, Europris will operate two central warehouses. This is in accordance with the original plan.
Europris has explored the possibility of further automating work processes at the central warehouse. The largest potential was identified in the picking area, and the decision was taken in the fourth quarter to invest in a shuttle solution covering 70 per cent of the stock-keeping units (SKUs). This is expected to increase picking efficiency by more than 300 per cent when fully operational. Development of the shuttle solution will run in parallel with the highbay automation project, and this is expected to be completed in late 2020. With the investment estimated at NOK 115 million, the supplier and financing are yet to be decided.
The additional automation in the new warehouse is expected to reduce the ratio of Opex to group revenue by 0.25 percentage points, assuming current volumes and the normal course of business. This brings the total savings potential from the new warehouse and
automation to 0.75-1.25 percentage points of group revenue. Further details were disclosed in the Europris capital markets day presentation held on 5 December 2018.
The first savings from the purchasing cooperation with ÖoB have been confirmed. Negotiations with six local partners were concluded during the fourth quarter. The emphasis was on harmonising contractual terms and prices, resulting in total annual savings of about NOK 13 million split fairly evenly between the companies. These savings are expected to materialise in 2019. Joint supplier visits and sourcing initiatives in the Far East have started. Owing to longer lead times, however, these savings are not expected to take effect until late 2019 and beyond.
In total, more than 115 opportunities have been identified so far and the cooperation is working well. Synergies will partly be re-invested to ensure a competitive market position and to fulfil the price strategy.
New central warehouse in Moss
Group revenue in the fourth quarter amounted to NOK 1,839 million (NOK 1,629 million), up by 12.9 per cent. The key drivers behind revenue growth were the seven per cent increase in the chain's like-for-like sales as well as new store openings and franchise takeovers. There was one more sales day during the quarter.
Gross profit for the group was NOK 798 million (NOK 717 million). The gross margin was 43.4 per cent (44 per cent). The margin reduction reflected increased campaign sales following the group's focus on better campaign implementation.
Operating expenditure (opex) excluding nonrecurring items came to NOK 495 million (NOK 431 million) in the fourth quarter, an increase of 14.7 per cent. Opex was affected by the rise in the number of directly operated stores from 205 to 221. This increased Opex by NOK 25 million. In addition, logistical costs rose by NOK 8 million owing to the high fill-rate at the central warehouse.
Opex in 2017 fell by NOK 19.6 million as a result of supplier marketing support (NOK 9.5 million) and a decrease in performance-based employee remuneration (NOK 10.1 million).
Operating expenses amounted to 26.9 per cent (26.5 per cent) of group revenue.
Adjusted EBITDA was NOK 304 million (NOK 285 million), up by 6.4 per cent. The adjusted EBITDA margin was 16.5 per cent (17.5 per cent).
Adjusted profit before tax was NOK 286 million (NOK 257 million), up by 11.3 per cent. Depreciation increased by NOK 4 million. Interest expense rose by the same amount. The group recorded an unrealised gain of NOK 17 million on hedging contracts and accounts payable (net currency gain of NOK 4 million).
The group recorded an estimated profit of NOK 6.4 million from its 20 per cent stake in Runsvengruppen AB (ÖoB). This is based on preliminary and non-audited figures from the associated company.
Adjusted net profit for the fourth quarter of 2018 was NOK 224 million (NOK 195 million).
Group revenue for 2018 as a whole amounted to NOK 5,817 million (NOK 5,423 million), up by 7.3 per cent. The key drivers for revenue growth were the like-for-like performance of 2.2 per cent, the opening of eight new stores net and the takeover of eight franchise stores.
Gross profit for the full year for the group came to NOK 2,507 million (NOK 2,311 million). The gross margin was 43.1 per cent (42.6 per
cent), up from the year before owing to franchise takeovers and a more balanced campaign offering in the first half.
Opex excluding nonrecurring items for the full year came to NOK 1,841 million (NOK 1,670 million), an increase of 10.3 per cent. Operating expenses amounted to 31.6 per cent (30.8 per cent) of group revenues. Opex was affected by the 7.8 per cent increase in the number of directly operated stores.
In addition, Opex was affected by additional freight costs of NOK 14 million (of which NOK 8 million related to 2017) as the result of a timing effect in accounting for the cost of freight to the stores.
Adjusted EBITDA came to NOK 666 million in 2018 (NOK 641 million), up by NOK 25 million. The adjusted EBITDA margin was 11.5 per cent (11.8 per cent).
Adjusted net profit for the full year was NOK 429 million (NOK 390 million).
Net change in working capital in 2018 was negative at NOK 178 million (positive at NOK 30 million). Net working capital was affected by an increase in inventory levels. This reflected both increased inventory at the central warehouse and somewhat higher inventory in the stores. In addition, the underlying development in net working capital was affected by a decrease in accounts payable owing to the maturity of payments.
Capital expenditure was NOK 79.2 million (NOK 103 million). The decrease from the year before reflected the investment of NOK 18 million in land adjacent to the new warehouse in Moss during the first half of 2017, and fewer new and refurbished stores in 2018.
Financial debt at 31 December 2018 was NOK 1,649 million (NOK 1,651 million).
Net debt at 31 December 2018 was NOK 1,223 million (NOK 1,069 million).
Cash for the group at 31 December 2018 amounted to NOK 427 million (NOK 582 million). The group's liquidity reserves were unused at the end of 2018. These facilities amounted to NOK 429 million. Total available liquidity amounts to NOK 856 million.
The group completed three share buy-back programmes totalling 5,500,000 shares during 2018. A total of 5,370,000 treasury shares were registered in the Norwegian Central Securities Depository (VPS) at 31 December 2018, and 130,000 shares were registered in January 2019. Cash outflow related to the 5,370,000 treasury shares amounted to NOK 121 million in 2018.
The board of Europris ASA will propose an ordinary dividend for 2018 of NOK 1.85 per share to the general meeting, up by 8.8 per cent from the ordinary dividend of NOK 1.70 for 2017. The proposed dividend amounts to a total of NOK 309 million for all shares. The total cash outflow for dividend will be reduced by the amount due to treasury shares. Dividend for the 5,500,000 treasury shares amounts to NOK 10 million.
While retail is changing, discount variety retail is thriving. Global trends push retailers to improve their offering continuously. The greater attention paid by consumers to price, good accessibility
and trust in private labels favour discount variety retailers, as is evident from the rapid growth being experienced by the segment. Europris is well positioned to capitalise on these trends, as the leading discount variety retailer in Norway with the best price perception and brand recognition. Combined with the group's unique offering and strategy, management therefore expects continued growth in revenue and profits.
Europris gave a strategic update at the group's capital markets day on 5 December 2018. Attention is focused on the key strategic initiatives:
Through the partnership with ÖoB, Europris has strengthened its competitive position in a changing retail landscape. Increased purchasing power will support the low price profile, and the international footprint provides a basis for continued growth.
The launch of the group's e-commerce solution positions Europris as an omni-channel retailer with online shopping as both a channel for new sales and a tool to drive traffic to the physical stores. While the physical stores will continue to be the main sales channel for the foreseeable future, e-commerce will enable Europris to expand its product offering, provide access to new customer
groups and increase visibility through a new channel.
Europris opened eight new stores net in 2018, and continues to have a healthy pipeline of new stores. The board has approved an additional 12 stores for 2019 and beyond, five of which are subject to planning permission.
The group took over eight franchise stores in 2018. Two more were taken over on 1 January 2019, with an estimated negative one-off effect on gross margin of about NOK 1.9 million. Europris expects an additional two-three takeovers in 2019, with corresponding accounting effects.
The long-term financial and operational ambitions of Europris are to:
| Figures are stated in NOK 1,000 | Notes | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Audited | ||
| Total operating income (group revenue) | 1,838,679 | 1,628,638 | 5,816,984 | 5,422,530 | |
| Cost of goods sold (COGS) | 1,023,488 | 908,097 | 3,298,296 | 3,118,345 | |
| Employee benefits expense | 250,024 | 226,603 | 898,504 | 826,847 | |
| Depreciation | 5 | 25,231 | 21,169 | 90,743 | 82,690 |
| Other operating expenses | 244,689 | 204,662 | 942,369 | 842,641 | |
| Operating profit | 295,247 | 268,107 | 587,074 | 552,007 | |
| Net financial income (expense) | (15,957) | (11,347) | (40,942) | (41,682) | |
| Profit/loss from associated companies | 7 | 6,400 | - | 6,400 | - |
| Profit before tax | 285,690 | 256,760 | 552,532 | 510,325 | |
| Income tax expense | 62,052 | 61,622 | 123,425 | 120,526 | |
| Profit for the period | 223,638 | 195,137 | 429,107 | 389,799 | |
| Attributable to the equity holders of the parent | 223,638 | 195,137 | 429,107 | 389,799 | |
| Interim condensed consolidated statement of comprehensive income |
|||||
| Profit for the period | 223,638 | 195,137 | 429,107 | 192,711 | |
| Total comprehensive income | 223,638 | 195,137 | 429,107 | 192,711 | |
| Attributable to the equity holders of the parent | 223,638 | 195,137 | 429,107 | 192,711 |
| Figures are stated in NOK 1,000 | Notes | 31 Dec 2018 | 31 Dec 2017 |
|---|---|---|---|
| Unaudited | Audited | ||
| ASSETS | |||
| Total intangible assets | 5 | 2,038,298 | 2,029,297 |
| Total fixed assets | 5 | 264,453 | 272,540 |
| Total financial assets | 6, 7 | 166,952 | 25,175 |
| Total non-current assets | 2,469,702 | 2,327,012 | |
| Inventories | 1,573,233 | 1,368,361 | |
| Trade receivables | 185,712 | 207,755 | |
| Other receivables | 6 | 101,722 | 63,586 |
| Cash | 426,967 | 581,663 | |
| Total current assets | 2,287,634 | 2,221,366 | |
| Total assets | 4,757,337 | 4,548,378 | |
| EQUITY AND LIABILITIES | |||
| Total paid-in capital | 8 | 213,251 | 502,468 |
| Total retained equity | 1,575,652 | 1,261,765 | |
| Total shareholders' equity | 1,788,903 | 1,764,233 | |
| Provisions | 46,111 | 48,250 | |
| Borrowings | 6 | 1,649,428 | 1,648,567 |
| Other non-current liabilities | 6 | - | 2,213 |
| Total non-current liabilities | 1,695,539 | 1,699,030 | |
| Accounts payable | 553,643 | 580,795 | |
| Tax payable | 123,200 | 116,767 | |
| Public duties payable | 251,539 | 205,279 | |
| Other current liabilities | 6, 7 | 344,512 | 182,275 |
| Total current liabilities | 1,272 894 | 1,085,116 | |
| Total liabilities | 2,968,434 | 2,784,145 | |
| Total equity and liabilities | 4,757,337 | 4,548,378 |
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
| Figures are stated in NOK 1,000 | Attributed to equity holders of the parent | |||||
|---|---|---|---|---|---|---|
| Share capital | Treasury shares | Share premium | Retained earnings | Total equity | ||
| At 1 January 2018 | 166 969 | - | 335 499 | 1 261 765 | 1 764 233 | |
| Profit for the period | - | - | - | 429,107 | 429,107 | |
| Dividend | - | - | (283,847) | - | (283,847) | |
| Net purchase of treasury shares | - | (5,370) | - | (115,220) | (120,590) | |
| Other comprehensive income | - | - | - | - | - | |
| At 31 December 2018 | 166,969 | (5,370) | 51,652 | 1,575,652 | 1,788,903 | |
| (unaudited) |
| Attributed to equity holders of the parent | ||||||
|---|---|---|---|---|---|---|
| Share capital | Treasury shares | Share premium | Retained earnings | Total equity | ||
| At 1 January 2017 | 166,969 | - | 669,437 | 871,966 | 1,708,372 | |
| Profit for the period | - | - | - | 389,799 | 389,799 | |
| Dividend | - | - | (333,938) | (333,938) | ||
| Other comprehensive income | - | - | - | - | - | |
| At 31 December 2017 | 166,969 | - | 335,499 | 1,261,765 | 1,764,233 |
(unaudited)
14
| INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
|---|---|---|---|---|---|---|---|
| Figures are stated in NOK 1,000 | Notes | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 | ||
| Unaudited | Unaudited | Unaudited | Audited | ||||
| Cash flows from operating activities | |||||||
| Profit before income tax | 285,690 | 256,760 | 552,532 | 510,326 | |||
| Adjusted for: | |||||||
| Depreciation of fixed and intangible assets | 5 | 25,231 | 21,169 | 90,743 | 82,690 | ||
| Changes in net working capital | 122,619 | 174,288 | (177,777) | 29,527 | |||
| Income tax paid | (1,892) | (44,678) | (117,069) | (145,832) | |||
| Net cash generated from operating activities | 431,648 | 407,539 | 348,429 | 476,710 | |||
| Cash flows from investing activities | |||||||
| Purchases of fixed and intangible assets | 5 | (17,904) | (28,878) | (79,152) | (103,196) | ||
| Acquisition of franchise stores | (1,531) | - | (10 907) | (28,403) | |||
| Net cash used in investing activities | (19,435) | (28,878) | (90,059) | (131,599) | |||
| Cash flows from financing activities | |||||||
| Repayment of debt to financial institutions | (498) | (1,302) | (8,629) | (6,475) | |||
| Dividend | - | - | (283,847) | (333,938) | |||
| Buy-back of treasury shares | (77,317) | - | (120,590) | - | |||
| Net cash from financing activities | (77,815) | (1,302) | (413,067) | (340,413) | |||
| Net increase/(decrease) in cash | 334,398 | 377,359 | (154,697) | 4,699 | |||
| Cash at beginning of period | 92,569 | 204,304 | 581,663 | 576,964 | |||
| Cash at end of period | 426,967 | 581,663 | 426,967 | 581,663 |
The interim condensed consolidated financial statements of Europris ASA and its subsidiaries (collectively, the group) for the fourth quarter and the period ended 31 December 2018 were authorised for issue by the board on 30 January 2019.
Europris ASA is domiciled in Norway. The group is a discount variety retailer with stores across Norway.
These condensed interim financial statements have not been audited.
The interim condensed consolidated financial statements for the fourth quarter and the period ended 31 December 2018 have been prepared in accordance with IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the group's annual financial statements at 31 December 2017.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the group's annual consolidated financial statements for the year ended 31 December 2017. New standards and interpretations effective at 1 January 2018 do not impact the annual consolidated financial statements of the group or the interim condensed consolidated financial statements of the group.
The new IFRS 16 Leases standard requires that discounted right-of-use leases are capitalised as an asset. The preliminary implementation effect on the group balance sheet indicates a capitalisation of around NOK 1.9 billion. Reference is made to note 1 in the 2017 Annual Report for further description of the implementation effect. IFRS 16 Leases will be implemented with effect from 1 January 2019. The group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.
The preparation of interim condensed financial statements requires management to make accounting judgements and estimates that impact how accounting policies are applied and the reported amounts for assets, liabilities, income and expenses. Actual results may differ from these estimates. The critical accounting estimates and judgements are consistent with those in the consolidated financial statements for 2017.
The group management is the group's chief operating decision-maker. Reporting to the group management, which is responsible for evaluating profitability and achivements, is on a consolidated basis that forms the basis for the group management's assessment of profitability at a strategic level. The group as a whole is therefore defined and identified as one segment.
| Figures are stated in NOK 1,000 | Fixtures and fittings |
Land | Software | Trademarks | Goodwill | Total |
|---|---|---|---|---|---|---|
| Carrying amount 1 January 2018 | 252,060 | 20,481 | 42,617 | 387,573 | 1,599,106 | 2,301,837 |
| Acquisition of subsidiaries | 5,470 | - | - | - | 6,841 | 12,311 |
| Additions | 57,117 | 2,175 | 20,053 | - | - | 79 345 |
| Disposals | - | - | - | - | - | - |
| Depreciation | (72,850) | - | (17,893) | - | - | (90,743) |
| Carrying amount 31 December 2018 | 241,797 | 22,656 | 44,777 | 387,573 | 1,605,947 | 2,302,751 |
| Figures are stated in NOK 1,000 | Fixtures and fittings |
Land | Software | Trademarks | Goodwill | Total |
|---|---|---|---|---|---|---|
| Carrying amount 1 January 2017 | 246,377 | - | 39,929 | 387,573 | 1,589,402 | 2,263,281 |
| Acquisition of subsidiaries | 4,680 | - | - | - | 9,704 | 14,384 |
| Additions | 67,065 | 20,481 | 19,316 | - | - | 106,861 |
| Disposals | - | - | - | - | - | - |
| Depreciation | (66,061) | - | (16,629) | - | - | (82,690) |
| Carrying amount 31 December 2017 | 252,060 | 20,481 | 42,617 | 387,573 | 1,599,106 | 2,301,836 |
Set out below is a comparison of the carrying amounts and fair values of financial assets and liabilities at 31 December 2017 and 31 December 2016:
| Figures are stated in NOK 1,000 | 31 December 2018 | 31 December 2017 | |||
|---|---|---|---|---|---|
| Financial assets | Carrying amount | Fair value | Carrying amount | Fair value | |
| Loans and receivables | |||||
| Non-current receivables | 24,073 | 24,073 | 24,008 | 24,008 | |
| Total | 24,073 | 24,073 | 24,008 | 24,008 | |
| Financial liabilities | |||||
| Other financial liabilities | |||||
| Borrowings | 1,649,428 | 1,649,428 | 1,648,567 | 1,648 567 | |
| Total | 1,649,428 | 1,649,428 | 1,648,567 | 1,648,567 | |
| Financial instruments measured at fair value through profit and loss | |||||
| Derivatives - asset | |||||
| Interest rate swaps | 237 | 237 | 794 | 794 | |
| Foreign exchange forward contracts | 13,829 | 13,829 | 2,243 | 2,243 | |
| Total | 14,066 | 14,066 | 3,037 | 3,037 | |
| Derivatives - liabilities | |||||
| Interest rate swaps | - | - | 2,213 | 2,213 | |
| Foreign exchange forward contracts | - | - | 2,712 | 2,712 | |
| Total | - | - | 4,925 | 4,925 |
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:
For assets and liabilities that are recognised at fair value on a recurring basis, the group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
All the group's financial instruments measured at fair value are classified as level 2.
Specific valuation methods being used to value financial instruments include:
In June 2018, the group acquired 20 per cent of Runsvengruppen AB (ÖoB). Based on equity value, using a fixed multiple of 7.7 on adjusted EBITDA for ÖoB in 2018, the purchase price is calculated to be NOK 134 million. NOK 2 million in transaction expenses has also been recognised as part of the acquisition cost, bringing the total investment to NOK 136 million. In addition, the group recorded an estimated profit of NOK 6.4 million from its 20 per cent stake in 2018. All calculations and estimates are based on preliminary and non-audited figures from ÖoB.
A vendor note was issued when closing the deal. This will be converted to Europris shares following agreement on the adjusted 2018 EBITDA for ÖoB.
The number of treasury shares held by Europris ASA changed as follows in the period from 1 January to 31 December 2018.
| Change in number of treasury shares: | |
|---|---|
| Treasury shares 1 January 2018 | - |
| Buy-back of treasury shares | 5,370,000 |
| Sale of shares | - |
| Treasury shares 30 December 2018 | 5,370,000 |
Average cost price for treasury shares are NOK 22.47.
Europris ASA has completed share buy-back programmes of total 5,5 million shares in 2018, of which 130,000 shares was registered in the Norwegian Central Securities Depository (VPS) in January 2019.
The condensed interim report contains forward-looking statements, based on various assumptions. These forward-looking statements reflect current views about future events and are, by their nature, subject to significant risk and uncertainties because they relate to events and depend on circumstances which will occur in the future. Although Europris believes that these assumptions were reasonable when made, it cannot provide assurances that its future results, level of activity or performances will meet these expectations.
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APMs are used by Europris for annual and periodic financial reporting in order to provide a better understanding of the group´s financial performance and are also used by management to measure operating performance. APMs are adjusted IFRS figures defined, calculated and used in a consistent and transparent manner.
• Adjusted earnings per share is Adjusted net profit divided by the current number of shares, adjusted by the monthly average of treasury shares.
• Working capital is the sum of inventories, trade receivables and other receivables less the sum of accounts payable and other current liabilities.
| Figures are stated in NOK 1,000 | Q4 2018 | Q4 2017 | YTD 2018 | FY 2017 |
|---|---|---|---|---|
| Group revenue | 1,838.7 | 1,628.6 | 5,817.0 | 5,422.5 |
| Cost of goods sold (COGS) | 1,023.5 | 908.1 | 3,298.3 | 3,118.3 |
| Unrealised foreign exchange effects | 16.9 | 3.9 | 11.4 | (6.3) |
| Gross profit | 798.3 | 716.7 | 2,507.3 | 2,310.5 |
| % margin | 43.4% | 44.0% | 43.1% | 42.6% |
| Employee benefits expense | 250.0 | 226.6 | 898.5 | 826.8 |
| Other operating expenses | 244.7 | 204.7 | 942.4 | 842.6 |
| Opex | 494.7 | 431.3 | 1,840.9 | 1,669.5 |
| Nonrecurring items | - | - | - | - |
| Opex excluding nonrecurring items | 494.7 | 431.3 | 1,840.9 | 1,669.5 |
| % of group revenue | 26.9% | 26.5% | 31.6% | 30.8% |
| Adjusted EBITDA | 303.6 | 285.4 | 666,4 | 641,0 |
| Depreciation | 25.2 | 21.2 | 90.7 | 82.7 |
| Adjusted EBIT | 278.4 | 264.2 | 575.6 | 558.3 |
| Net financial income (expense) | (16.0) | (11.3) | (40.9) | (41.7) |
| Unrealised foreign exchange effects | 16.9 | 3.9 | 11.4 | -6.3 |
| Adjusted profit before tax | 279.3 | 256.8 | 546.1 | 510.3 |
| Adjusted net profit | 215.1 | 195.1 | 420.5 | 389.8 |
| Adjusted earnings per share (167 million shares) | 1.31 | 1.17 | 2.54 | 2.33 |
| GROUP KEY CASH FLOW AND BALANCE SHEET FIGURES | ||||
| Net change in working capital | 129.0 | 174.3 | (171.4) | 29.5 |
| Purchases of fixed assets | 15.7 | 23.4 | 59.1 | 83.9 |
| Purchases of intangible assets | 2.2 | 5.5 | 20.1 | 19.3 |
| Capital expenditure | 17.9 | 28.9 | 79.2 | 103.2 |
| Financial debt | 1,649.4 | 1,650.8 | ||
| Cash | 427.0 | 581.7 | ||
| Net debt | 1,222.5 | 1,069.1 |
Unrealised foreign exchange effects are the only adjustment to IFRS figures.
Europris ASA Hjalmar Bjørges vei 105, P O Box 1421 NO-1602 Fredrikstad
switchboard: +47 971 39 000 email: [email protected]
www.europris.no
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