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Hagar — Interim / Quarterly Report 2016
Oct 27, 2016
2196_rns_2016-10-27_93316bc7-2128-4f43-96bd-860787d4a049.pdf
Interim / Quarterly Report
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Hagar hf.
Condensed Consolidated Interim Financial Statements
1 March - 31 August 2016
ISK
Hagar hf.
Hagasmári 1
201 Kópavogur
Iceland
Reg. no. 670203-2120
Contents
Endorsement and Signatures of the Board of Directors and the CEO ... 3
Independent Auditors' Review Report ... 4
Consolidated Statement of Comprehensive Income ... 5
Consolidated Balance Sheet ... 6
Consolidated Statement of Changes in Equity ... 7
Consolidated Statement of Cash Flows ... 8
Notes to the Consolidated Interim Financial Statements ... 9
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Endorsement and Signatures of the Board of Directors and the CEO
The condensed consolidated interim financial statements of Hagar hf. ("the Company") for the period 1 March to 31 August 2016 have been prepared in accordance with International Financial Reporting Standards (IFRSs) for interim financial statements (IAS 34). The interim financial statements comprise the consolidated interim financial statements of Hagar hf. and its subsidiaries, together referred to as the "Group".
According to the statement of comprehensive income, profit of the Group for the period amounted to ISK 2,161 million. According to the balance sheet, equity at the end of the period amounted to ISK 16,537 million.
In June 2016, the Company paid dividends to shareholders in the amount of ISK 1,992 million (ISK 1.70 per share).
The Company's share capital amounted to ISK 1,172 million at the end of the period. The share capital is divided into shares of ISK 1, all in one class with equal rights.
Shareholders were 960 at the beginning of the period and 1,190 at the end of the period.
Statement by the Board of Directors and CEO
To the best of our knowledge the condensed consolidated interim financial statements give a true and fair view of the consolidated financial performance of the Company for the six month period ended 31 August 2016, its assets, liabilities and consolidated financial position as at 31 August 2016 and its consolidated cash flow for the period then ended in accordance with International Financial Reporting Standards (IFRSs) for interim financial statements (IAS 34).
The Board of Directors and the CEO have today discussed the condensed consolidated interim financial statements of Hagar hf. for the period 1 March to 31 August 2016 and confirm them by means of their signatures.
Kópavogur, 27 October 2016
The Board of Directors:
Kristín Friðgeirsdóttir
Erna Gísladóttir
Salvör Nordal
Sigurður Arnar Sigurðsson
Stefán Árni Auðólfsson
CEO:
Finnur Árnason
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Independent Auditors' Review Report
To the Board of Directors of Hagar hf.
We have reviewed the accompanying condensed consolidated balance sheet of Hagar hf. as at 31 August 2016, the condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six-month period then ended and notes to the interim financial information.
The Board of Directors and CEO are responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting.
Reykjavik, 27 October 2016
KPMG ehf.
Símon Á. Gunnarsson
Margrét Flóvenz
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Consolidated Statement of Comprehensive Income for the six months ended 31 August 2016
| Note | Second quarter | First half | |||
|---|---|---|---|---|---|
| Q2 2016 | |||||
| 1.6.-31.8. * | Q2 2015 | ||||
| 1.6.-31.8. * | 2016 | ||||
| 1.3.-31.8. | 2015 | ||||
| 1.3.-31.8. | |||||
| Sales | 20.731 | 19.722 | 40.712 | 38.390 | |
| Cost of goods sold | (15.608) | (14.875) | (30.677) | (29.058) | |
| Gross profit | 5.123 | 4.847 | 10.035 | 9.332 | |
| Other operating income | 55 | 42 | 109 | 87 | |
| Salaries and related expenses | (1.814) | (1.667) | (3.754) | (3.364) | |
| Other operating expenses | (1.557) | (1.566) | (3.210) | (3.187) | |
| Profit from operating activities before depreciation and amortisation | 1.807 | 1.656 | 3.180 | 2.868 | |
| Depreciation and amortisation | 7 | (271) | (162) | (462) | (333) |
| Profit from operating activities | 1.536 | 1.494 | 2.718 | 2.535 | |
| Finance income | 71 | 59 | 153 | 107 | |
| Finance expenses | (91) | (85) | (170) | (160) | |
| Net finance expense | 8 | (20) | (26) | (17) | (53) |
| Profit before income tax | 1.516 | 1.468 | 2.701 | 2.482 | |
| Income tax | (303) | (293) | (540) | (496) | |
| Comprehensive income for the period | 1.213 | 1.175 | 2.161 | 1.986 | |
| Earnings per share: | |||||
| Basic and diluted earnings per share of ISK 1 | 0,95 | 1,00 | 1,70 | 1,69 |
*Quarterly financial information has not been reviewed by the Company's auditors. The notes on pages 9 to 12 are an integral part of these interim financial statements.
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million
Consolidated Balance Sheet as at 31 August 2016
| Note | 31.8.2016 | 29.2.2016 | |
|---|---|---|---|
| Assets | |||
| Operating assets | 9.025 | 8.956 | |
| Intangible assets | 7.720 | 7.728 | |
| Total non-current assets | 16.745 | 16.684 | |
| Inventories | 9 | 4.885 | 4.756 |
| Trade and other receivables | 649 | 660 | |
| Trade receivable - customers' credit cards | 4.625 | 3.795 | |
| Cash and cash equivalents | 3.316 | 3.810 | |
| Total current assets | 13.475 | 13.021 | |
| Total assets | 30.220 | 29.705 | |
| Equity | |||
| Share capital | 1.172 | 1.172 | |
| Share premium | 1.272 | 1.272 | |
| Restricted reserve | 10 | 2.166 | 0 |
| Retained earnings | 11.927 | 13.924 | |
| Total equity | 16.537 | 16.368 | |
| Liabilities | |||
| Loans and borrowings | 11 | 3.358 | 3.748 |
| Deferred income tax liabilities | 485 | 509 | |
| Total non-current liabilities | 3.843 | 4.257 | |
| Loans and borrowings | 11 | 779 | 763 |
| Trade and other payables | 12 | 7.689 | 7.018 |
| Current tax liabilities | 959 | 874 | |
| Provisions | 413 | 425 | |
| Total current liabilities | 9.840 | 9.080 | |
| Total liabilities | 13.683 | 13.337 | |
| Total equity and liabilities | 30.220 | 29.705 |
The notes on pages 9 to 12 are an integral part of these interim financial statements.
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million
Consolidated Statement of Changes in Equity for the six months ended 31 August 2016
| Share capital | Share premium | Restricted reserve | Retained earnings | Total equity | |
|---|---|---|---|---|---|
| Changes in equity from 1 March to 31 August 2015: | |||||
| Equity at 1 March 2015 | 1.172 | 1.272 | 0 | 12.320 | 14.764 |
| Dividends paid, 1.70 ISK per share | ( 1.992 ) | ( 1.992 ) | |||
| Comprehensive income for the period | 1.986 | 1.986 | |||
| Equity at 31 August 2015 | 1.172 | 1.272 | 0 | 12.314 | 14.758 |
| Changes in equity from 1 March to 31 August 2016: | |||||
| Equity at 1 March 2016 | 1.172 | 1.272 | 0 | 13.924 | 16.368 |
| Dividends paid, 1.70 ISK per share | ( 1.992 ) | ( 1.992 ) | |||
| Comprehensive income for the period | 2.161 | 2.161 | |||
| Transferred to reserves | 2.166 | ( 2.166 ) | 0 | ||
| Equity at 31 August 2016 | 1.172 | 1.272 | 2.166 | 11.927 | 16.537 |
The notes on pages 9 to 12 are an integral part of these interim financial statements.
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million
Consolidated Statement of Cash Flows for the six months ended 31 August 2016
| Note | Second quarter | First half | |||
|---|---|---|---|---|---|
| Q2 2016 | |||||
| 1.6.-31.8. * | Q2 2015 | ||||
| 1.6.-31.8. * | 2016 | ||||
| 1.3.-31.8. | 2015 | ||||
| 1.3.-31.8. | |||||
| Cash flows from operating activities: | |||||
| Profit for the period | 1.213 | 1.175 | 2.161 | 1.986 | |
| Adjustments for: | |||||
| Gain on sale of assets | ( 1) | ( 5) | ( 2) | ( 8) | |
| Incentives from operating lease | ( 11) | ( 10) | ( 21) | ( 21) | |
| Depreciation and amortisation | 7 | 271 | 162 | 462 | 333 |
| Net finance expense | 8 | 20 | 26 | 17 | 53 |
| Income tax | 303 | 293 | 540 | 496 | |
| Working capital provided by operating activities | 1.795 | 1.641 | 3.157 | 2.839 | |
| Change in current assets | 15 | ( 427) | ( 946) | ( 243) | |
| Change in current liabilities | ( 505) | ( 314) | 679 | 793 | |
| Cash from operations before interest and taxes | 1.305 | 900 | 2.890 | 3.389 | |
| Interest income received | 71 | 54 | 151 | 105 | |
| Interest expenses paid | ( 89) | ( 78) | ( 165) | ( 154) | |
| Income taxes paid | ( 239) | ( 264) | ( 478) | ( 525) | |
| Net cash provided by operating activities | 1.048 | 612 | 2.398 | 2.815 | |
| Cash flows used in investing activities: | |||||
| Acquisition of real estate | ( 9) | ( 491) | ( 33) | ( 722) | |
| Acquisition of fixtures and equipment | ( 282) | ( 291) | ( 509) | ( 621) | |
| Proceeds from the sale of operating assets | 9 | 13 | 21 | 24 | |
| Net cash used in investing activities | ( 282) | ( 769) | ( 521) | ( 1.319) | |
| Cash flows used in financing activities: | |||||
| Repayment of loans and borrowings | ( 191) | ( 187) | ( 379) | ( 374) | |
| Dividends paid | ( 1.992) | ( 1.992) | ( 1.992) | ( 1.992) | |
| Net cash used in financing activities | ( 2.183) | ( 2.179) | ( 2.371) | ( 2.366) | |
| Net decrease in cash and cash equivalents | ( 1.417) | ( 2.336) | ( 494) | ( 870) | |
| Cash and cash equivalents at beginning of the period | 4.733 | 4.814 | 3.810 | 3.348 | |
| Cash and cash equivalents at 31 August | 3.316 | 2.478 | 3.316 | 2.478 |
*Quarterly financial information has not been reviewed by the Company's auditors.
The notes on pages 9 to 12 are an integral part of these interim financial statements.
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million
Notes to the Consolidated Interim Financial Statements
1. Reporting entity
Hagar hf. (the "Company") is a limited liability company incorporated and domiciled in Iceland. The address of the Company's registered office is Hagasmári 1, Kópavogur, Iceland. The condensed consolidated interim financial statements of the Company as at and for the six months ended 31 August 2016 comprise the Company and its subsidiaries, together referred to as the "Group" and individually as "Group entities". The main activity of the Group is retail.
2. Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.
They do not include all of the information required for a complete set of consolidated annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended 29 February 2016. The annual financial statement can be obtained from the Company or its website, www.hagar.is and on the website of OMX Nordic Exchange in Iceland.
The condensed consolidated interim financial statements were approved by the Board of Directors on 27 October 2016.
3. Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 29 February 2016.
These consolidated financial statements are presented in Icelandic kronas (ISK), which is the Company's functional currency. All financial information presented in Icelandic kronas has been rounded to the nearest million.
Changes in accounting policies
The Group has adopted all new standards and amendments to standards, including any consequential amendments to other standards as they have been endorsed by the EU, with a date of initial application of 1 January 2016. The adoption does not have any effect on the Group's financial statements.
4. Estimates
The preparation of interim financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 29 February 2016.
5. Segment reporting
The Group does not present business segments as its operation is only in retail and in Iceland.
6. Goodwill
Impairment tests
There was no indication of impairment at 31 August 2016 and therefore goodwill was not tested for impairment.
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million
Notes, contd.:
- Depreciation and amortisation
Depreciation and amortisation is specified as follows:
| 2016 | 2015 | |
|---|---|---|
| 1.3.-31.8. | 1.3-31.8 | |
| Depreciation of operating assets | 454 | 326 |
| Amortisation of intangible assets | 8 | 7 |
| Total depreciation and amortisation | 462 | 333 |
- Finance income and expense
Finance income and finance expense are specified as follows:
| Interest income | 153 | 103 |
|---|---|---|
| Net foreign exchange gain | 0 | 4 |
| Total finance income | 153 | 107 |
| Interest expenses and indexation | ( 170) | ( 160) |
| Total finance expense | ( 170) | ( 160) |
| Net finance expense | ( 17) | ( 53) |
-
Inventories
Inventories are specified as follows:
| | 31.8.2016 | 29.2.2016 |
| --- | --- | --- |
| Groceries | 3.464 | 3.213 |
| Non food goods | 1.071 | 1.242 |
| Goods in transit | 350 | 301 |
| Total inventories | 4.885 | 4.756 |
| Inventory write-down at the end of the period | 105 | 103 | -
Restricted equity
According to recently accepted amendments on the Icelandic Financial Statements Act valid from 1 January 2016, share in profit or loss of subsidiaries, which exceeds the dividends received or the dividend declared by the subsidiaries, should be transferred from retained earnings to a restricted reserve account among equity. There is uncertainty regarding the implementation, scope and application of the new laws. -
Loans and borrowings
Loans and borrowings are specified as follows:
| 31.8.2016 | 29.2.2016 | |
|---|---|---|
| Non-current loans and borrowings | ||
| Secured bank loans | 3.227 | 3.605 |
| Finance lease liability | 131 | 143 |
| Total loans and borrowings | 3.358 | 3.748 |
| Current loans and borrowings | ||
| Current portion of secured bank loans | 753 | 739 |
| Current portion of finance lease liability | 26 | 24 |
| Total loans and borrowings | 779 | 763 |
| Total interest bearing loans and borrowings | 4.137 | 4.511 |
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million
Notes, contd.:
11. Loans and borrowings, contd.:
Terms and conditions of outstanding loans were as follows:
| Weighted average interest rate | Carrying amount | |||
|---|---|---|---|---|
| 31.8.2016 | 29.2.2016 | 31.8.2016 | 29.2.2016 | |
| Debt in ISK, non-indexed | 7,15% | 7,15% | 3.980 | 4.344 |
| Debt in ISK, indexed | 10,50% | 10,50% | 157 | 167 |
| Non-current loans and borrowing, incl. current portion | 4.137 | 4.511 | ||
| Current portion of non-current loans and borrowings | (779) | (763) | ||
| Total non-current loans and borrowings | 3.358 | 3.748 |
Contractual repayments of loans and borrowings are specified as follows:
Repayments in 1 year or less 779 763
Repayments in 1 - 2 years 783 767
Repayments in 2 - 3 years 789 771
Repayments in 3 - 4 years 1.759 2.165
Repayments in 4 - 5 years 27 45
Total 4.137 4.511
The fair value of financial assets and liabilities is equal to the carrying amount.
12. Trade and other payables
Trade and other payables are specified as follows:
Trade payables 5.479 4.979
Other payables 2.210 2.039
Total trade and other payables 7.689 7.018
13. Related parties
Identity of related parties
The Company has a related party relationship with its directors and executive officers. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
There were no significant transactions with related parties during the period.
14. Group entities
At 31 August 2016 the Company's subsidiaries were six. The subsidiaries included in the condensed consolidated interim financial statements are the following:
| Place of registration and operation | Ownership interest | ||
|---|---|---|---|
| 31.8.2016 | 29.2.2016 | ||
| Hagar verslanir ehf. | Iceland | 100% | 100% |
| Bananar ehf. | Iceland | 100% | 100% |
| Ferskar kjötvörur ehf. | Iceland | 100% | 100% |
| Noron ehf. | Iceland | 100% | 100% |
| Íshöfn ehf. | Iceland | 100% | 100% |
| Eignarhaldsfélagið Dagar ehf. | Iceland | 100% | 100% |
| Gargon ehf. | Iceland | 100% |
The Parent Company has pledged all its shares in the subsidiaries as collateral for loans and borrowings.
At 1 March 2016 the subsidiary, Gargon ehf, merged with the parent company.
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million
Notes, contd.:
15. Financial Ratios
The Group's primary financial ratios are as follows:
| Balance Sheet: | 31.8.2016 | 29.2.2016 |
|---|---|---|
| Current ratio - Current assets/current liabilities | 1,37 | 1,43 |
| Equity ratio - equity/total capital | 54,7% | 55,1% |
| Internal value of share capital | 14,11 | 13,97 |
Condensed Interim Financial Statements of Hagar hf. 31 August 2016
Amounts are in ISK million