Quarterly Report • Oct 17, 2018
Quarterly Report
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It is gratifying to be able to present a strong quarter with underlying organic growth of 16 percent. We experienced strong demand from existing as well as new customer projects during the period and we see growing volumes in most of the markets where Nilörn is represented.
The gross margin reached 46.9 percent during the quarter and despite some pricing pressure in some markets, we raised the margin by about 1.4 percentage points compared to the second quarter.
We are selling more products to existing customers and we are especially registering increases in Nilörn's unique care-label approach, where we customize the procedure, which makes the production process simpler and more efficient for the customers.
We began deliveries of a major RFID project during the quarter. The project is on track and I am convinced that there will many more projects in this area going forward.
Our efforts in sustainability are continuing and this is now one of our most important competitive advantages, allowing us to offer ever more sustainable labelling to our customers.
Nilörn is growing at a greater rate than the underlying fashion and textile market, where we are continuing to capture market shares. This speaks well for the strength of our offer and the added value we deliver.
The future continues to look exciting and even if certain segments are experiencing a tougher market, there are several European brands that show strength. Brand profiling is becoming increasingly important for the brand owners, which means good prospects for continued growth by helping existing as well as new exciting customers.
Given our strong development over the past several years, and the fact that we continue to generate strong organic growth and enjoy a strong position in the market, I am optimistic about our future opportunities.
My associates and I will be working hard to deliver another good year.
Claes af Wetterstedt President & CEO
Order bookings increased by 11 percent amounting to MSEK 191 (172). Adjusted for currency effects, order bookings amounted to MSEK 189 (172), equivalent to underlying organic growth of 10 percent.
Revenue in SEK increased by 19 percent to MSEK 177 (149). Adjusted for currency effects, revenue amounted to MSEK 173 (149), equivalent to underlying organic growth of 16 percent.
The gross margin was 46.9 (48.8) percent.
External costs increased to MSEK 27.4 (24.1) and personnel costs increased to MSEK 35.1 (31.6). The increase in personnel costs is a reflection of an increase in the number of employees to meet growing volumes and for future expansion. Sales resources have been added in Netherlands, Spain, Germany and elsewhere and support staff in the form of a packaging manager at the group level has been hired. There were also investments in sustainability and RIS/RFID.
Operating profit amounted to MSEK 19.1 (15.3), resulting in an operating margin of 10.8 (10.3) percent.
The net of finance items of MSEK –1.2 (–0.2) is essentially attributable to a negative exchange rate difference. Taxes amounted to MSEK 4.1 (3.8) and profit after taxes amounted to MSEK 13.8 (11.3).
Cash flow from operating activities amounted to MSEK 14.4 (11.2).
Cash flow from capital investment activities amounted to MSEK –4.2 (–0.8) MSEK –1.2 thereof is attributable to investment in a new enterprise system. Net liabilities amounted to MSEK 12 (15).
Order bookings increased by 5 percent amounting to MSEK 556 (529). Adjusted for currency effects, order bookings amounted to MSEK 565 (529), equivalent to underlying organic growth of 7 percent.
Revenue increased by 8 percent to MSEK 541 (501). Net revenue adjusted for currency effects amounted to MSEK 549 (501), equivalent to underlying organic growth of 10 percent. The gross margin was 46.0 (46.0) percent.
The average TRY/SEK exchange rate weakened by 21 percent compared to the equivalent year-ago period. The effect thereof on revenue was relatively large as approximately 11 percent of revenue emanates in Turkey. The average HKD/SEK exchange rate has for the period January - September weakened by 1.1 percent after recover in Q3. The Group's revenue and costs in each respective currency are well matched, which reduces the effect on profitability.
External costs increased to MSEK 76.7 (71.7) and personnel costs increased to MSEK 108.5 (98.3).
Operating profit amounted to MSEK 59.8 (57.1), for an operating margin of 11.0 (11.4) percent.
Taxes paid amounted to MSEK 13.4 (13.4), making for a total tax expense of 23.2 (23.7) percent. Profit after taxes amounted to MSEK 44.4 (43.0).
Cash flow, capital investments, financing and liquidity Cash flow from operating activities amounted to MSEK 33.6 (40.7).
Cash flow from capital investment activities amounted to MSEK –9.1 (–20.1). MSEK 5.0 thereof is attributable to investment in a new enterprise system. Last year intangible non-current assets were acquired for MSEK 11.4 relating to investment in a new enterprise system and the purchase of customer relationships from HC Etiketter in Denmark.
In order to meet demand in the English market it has been decided to construct a new building with more efficient production space, sufficient office space and a facility better suited to our sales and design operations. The investment is estimated to amount to MSEK 24, with occupancy during the second quarter of 2019. A down-payment of 10 percent has been made. The balance falls due for payment upon completion.
Demand in our Portuguese operations has increased as production moves back from Asia to Europe at the same time as new customers have been added in our Portuguese operations. Nilörn has therefore decided to invest in four new looms worth approximately MSEK 8, with estimated delivery during the fourth quarter of 2018.
Consolidated equity amounts to MSEK 151.7, for a decline by MSEK 2.2 during the period. The decline is attributable to the period's profit during the period in the amount of MSEK 44.4, the period's translation difference of MSEK –1.0 and a dividend paid in the amount of MSEK –45.6. The translation difference is the net effect of restating equity in non-Swedish subsidiaries to SEK affected by a weaker Swedish krona and was negatively affected by the weak Turkish currency.
The average number of employees in the Group was 478 (446), 196 (209) of whom were women (compared to the situation at
the beginning of the year). Of the total number of employees, 236 persons, or 49 percent, are engaged in production and storage.
Nilörngruppen sold services during the period for TSEK 95 (109) to the principal owner, AB Traction with subsidiaries. No transactions occurred during the period under review that had an effect on The Group's profit and financial position. The Parent Company's transactions with subsidiaries refer to design, product development, IT and other services.
The Parent Company's operations largely consist of handling group-wide functions, such as branding and design, product development, finances, administration, information and IT. The average number of employees was 21 (21).
Net revenue for the period January – September amounted to MSEK 16.4 (13.4). The operating result was MSEK –0.9 (–7.4) and the result after taxes was MSEK 9.7 (–4.6).
There are no significant events after the closing date to report.
Given its international operations, Nilörngruppen is always subject to a variety of financial risks. The significant risks and uncertainty factors facing Nilörngruppen are currency risks, political risks in individual countries, credit risks and IT security as described in Nilörngruppen's 2016 Annual Report,
note 2. The risks reported are deemed to be essentially unchanged.
Nilörngruppen does not have an appointed election committee since the ownership structure is clear since Traction AB owns a majority of the votes. However, shareholders are always welcome to submit comments and/or suggestions with respect to the composition of the Board of Directors to the Chairman of the Board of Director, Petter Stillström, telephone +46-8-506 289 00.
This report has been subject to review by the Company's auditors. Refer to the review report on page 5.
The information herein is such that Nilörngruppen is under obligation to publish in accordance with the EU Market Abuse Regulation. The information herein was provided by the contact persons named below for publication at 8:00 a.m., 17 October 2018.
The President hereby confirm that this interim report provides a fair overview of the operations of the Company's and the Group's operations, financial position and results, and describes significant risks and factors of uncertainty facing the Company and the companies in the Group.
BORÅS, 17 October 2018 NILÖRNGRUPPEN AB (PUBL)
Claes af Wetterstedt President & CEO
FOR FURTHER INFORMATION CONTACT:
Claes af Wetterstedt, President & CEO Krister Magnusson, CFO Telephone: +46-33-700 88 30 Telephone: +46-33-700 88 52 Mobile: +33-706 96 29 50 Mobile: +46-704 85 21 14 E-mail: [email protected] E-mail: [email protected]
Nilörngruppen AB Box 499 SE-503 13 Borås SWEDEN www.nilorn.com
Nilörngruppen AB (publ) Corporate ID number 556322-3782
We have reviewed the summary financial interim information (Interim Report) of Nilörngruppen AB (publ) as of 30 September 2018 and the nine-month period ending on that date. The Board of Directors and the President is responsible for the preparation and fair presentation of this Interim Report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this Interim Report based on our review.
We have conducted our review in accordance with International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information 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. The conclusion expressed based on our review does therefore not have not have the certainty that a conclusion expressed based on an audit has.
Based on our review, nothing has come to our attention that causes us to believe the Interim Report in all material respects is not prepared for the group in accordance with IAS 34 and the Swedish Annual Accounts Act and for the parent company in accordance with the Swedish Annual Accounts Act.
Borås, 17 October 2018
KPMG AB
Thomas Bohlin Authorised Public Accountant
| 3 months | 9 months | |||
|---|---|---|---|---|
| July - September | January - September | |||
| Amounts in SEK thousand | 2018 | 2017 | 2018 | 2017 |
| Net revenue | 177,009 | 149,225 | 541,246 | 500,924 |
| Raw materials, supplies and goods for resale | –94,045 | –76,407 | –292,241 | –270,698 |
| Gross profit | 82,964 | 72,818 | 249,005 | 230,226 |
| Other operating revenue | 1,986 | 464 | 5,042 | 3,812 |
| Other external costs | –27,438 | –24,052 | –76,677 | –71,712 |
| Personnel costs | –35,121 | –31,581 | –108,528 | –98,273 |
| Depreciation, amortisation and impairment charges | –2,076 | –1,685 | –5,822 | –4,503 |
| Other operating costs | –1,221 | –642 | –3,223 | –2,462 |
| Operating profit | 19,094 | 15,322 | 59,797 | 57,088 |
| Net finance items | –1,154 | –229 | –1,923 | –750 |
| Profit before taxes | 17,940 | 15,093 | 57,874 | 56,338 |
| Taxes | –4,104 | –3,835 | –13,427 | –13,375 |
| Net profit for the period | 13,836 | 11,258 | 44,447 | 42,963 |
| Average number of shares outstanding (thousands) | 11,402 | 11,402 | 11,402 | 11,402 |
| Average number of shares outstanding after dilution (thousands) | 11,402 | 11,402 | 11,402 | 11,402 |
| Earnings per share, SEK | 1.21 | 0.99 | 3.90 | 3.77 |
| Earnings per share, SEK after dilution | 1.21 | 0.99 | 3.90 | 3.77 |
| Amounts in SEK thousand | January - March | January - September | ||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| Net profit for the period | 13,836 | 11,258 | 44,447 | 42,963 |
| Other comprehensive result that may be reposted to net profit for the period |
||||
| Translation differences | –7,525 | –4,478 | –1,027 | -10,264 |
| Items that cannot be reposted to net profit for the period | ||||
| Total profit for the period | 6,311 | 6,780 | 43,420 | 32,699 |
| Total profit for the period attributable to: | ||||
| The Parent Company's equity holders | 6,311 | 6,780 | 43,420 | 32,699 |
| Amount in MSEK) | 2018 | 2017 | 2016 | 2015 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |
| Net revenue | 156.1 | 208.1 | 177.0 | 159.3 | 192.4 | 149.2 | 179.5 | 119.7 | 171.9 | 144.6 | 174.2 | 109.4 | 152.6 | 119.2 | 145.9 |
| Raw materials, supplies and goods for resale |
-84.8 | -113.4 | -94.0 | -85.7 | -108.6 | -76.4 | -93.9 | -61.4 | -94.5 | -77.3 | -91.1 | -58.2 | -81.6 | -62.2 | -76.8 |
| Gross profit | 71.3 | 94.7 | 83.0 | 73.6 | 83.8 | 72.8 | 85.6 | 58.3 | 77.4 | 67.3 | 83.1 | 51.2 | 71.0 | 57.0 | 69.1 |
| Gross margin | 45.7% | 45.5% | 46.9% | 46.2% | 43.6% | 48.8% 47.7% | 48.7% | 45.0% 46.5% 47.7% 46.8% 46.5% 47.8% 47.4% | |||||||
| Other income | 1.7 | 1.4 | 2.0 | 1.7 | 1.6 | 0.5 | 2.3 | 0.9 | 1.2 | 1.2 | 2.3 | 1.2 | 1.4 | 2.6 | 1.3 |
| Operating costs | -58.4 | -66.8 | -63.8 | -56.6 | -59.6 | -56.3 | -60.8 | -48.4 | -51.7 | -50.1 | -62.1 | -46.8 | -53.7 | -49.8 | -49.5 |
| Depreciation, amortisation and impairment charges |
-1.2 | -2.0 | -2.1 | -1.2 | -1.6 | -1.7 | -1.8 | -1.3 | -1.0 | -1.0 | -1.2 | -0.9 | -1.0 | -1.0 | -1.3 |
| Operating profit | 13.4 | 27.3 | 19.1 | 17.5 | 24.2 | 15.3 | 25.3 | 9.5 | 25.9 | 17.4 | 22.1 | 4.7 | 17.7 | 8.8 | 19.6 |
| Operating margin | 8.6% | 13.1% | 10.8% | 11.0% | 12.6% | 10.2% 14.1% | 7.9% | 15.1% 12.0% 12.7% | 4.3% 11.6% | 7.4% 13.4% | |||||
| Operating profit per share | 1.2 | 2.4 | 1.7 | 1.5 | 2.1 | 1.3 | 2.2 | 0.8 | 2.3 | 1.5 | 1.9 | 0.4 | 1.6 | 0.8 | 1.7 |
| 1 January – 30 September 1 January – 31 December |
|||||||
|---|---|---|---|---|---|---|---|
| KEY FINANCIAL INDICATORS | 2017 | 2016 | 2017 | 2016 | 2015 | 2014 | 2013 |
| Revenue growth, % | 8.0 | 20.6 | 11.5 | 15.8 | 15.2 | 19.5 | 15.9 |
| Operating margin, % | 11.0 | 11.4 | 12.1 | 12.3 | 9.6 | 11.3 | 11.4 |
| Profit margin, % | 10.7 | 11.2 | 12.1 | 12.1 | 9.5 | 11.2 | 11.5 |
| Average equity | 152.8 | 133.6 | 145.9 | 125.6 | 113.8 | 104.6 | 90.7 |
| Return on equity, % | 29.1 | 32.2 | 44.6 | 44.8 | 34.3 | 39.9 | 38.2 |
| Equity ratio, % | 45.1 | 42.2 | 49.2 | 50.8 | 48.8 | 53.3 | 55.5 |
| Interest-bearing net cash (liabilities –), MSEK | –11.7 | –14.7 | 9.2 | 9.7 | 5.0 | 32.1 | 36.6 |
| Earnings per share, SEK | 3.90 | 3.77 | 5.70 | 4.93 | 3.42 | 3.66 | 3.04 |
| Equity per share, SEK | 13.31 | 11.35 | 13.50 | 12.08 | 9.94 | 10.02 | 8.33 |
| Average number of shares outstanding | 11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 |
| Number of shares outstanding at end of period |
11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 | 11,401,988 |
| Average number of employees | 478 | 436 | 446 | 358 | 335 | 301 | 268 |
| Amounts in SEK thousand | 2018-09 | 2017-09 | 2017-12 | 2016-12 |
|---|---|---|---|---|
| Assets | ||||
| Intangible non-current assets | 16,803 | 13,758 | 14,673 | 2,886 |
| Other non-current assets | 48,233 | 48,526 | 48,193 | 46,642 |
| Inventories | 104,996 | 96,672 | 110,017 | 88,891 |
| Trade receivables | 91,539 | 74,028 | 76,238 | 73,370 |
| Other current assets | 27,493 | 24,244 | 18,658 | 24,282 |
| Cash and cash equivalents | 47,722 | 49,796 | 44,837 | 35,210 |
| Total assets | 336,786 | 307,024 | 312,616 | 271,281 |
| Equity and liabilities | ||||
| Equity | 151,727 | 129,443 | 153,913 | 137,791 |
| Long-term non-interest-bearing liabilities | 997 | 1,858 | 1,242 | 5,035 |
| Current interest-bearing liabilities | 59,409 | 64,456 | 35,677 | 25,500 |
| Current non-interest-bearing liabilities | 124,653 | 111,267 | 121,784 | 102,955 |
| Total equity and liabilities | 336,786 | 307,024 | 312,616 | 271,281 |
| 2018 | Other contributed |
Retained earnings including net profit for the |
Total | |||
|---|---|---|---|---|---|---|
| Amounts in SEK thousand | Share capital | capital | Reserves | period | Total | equity |
| OPENING EQUITY 2018-01-01 | 2,850 | 43,231 | –5,760 | 113,592 | 153,913 | 153,913 |
| Net profit for the period | 44,447 | 44,447 | 44,447 | |||
| Other total profit | ||||||
| Translation differences during the period | –1,027 | –1,027 | –1,027 | |||
| Transactions with shareholders | ||||||
| Dividend | –45,606 | –45,606 | –45,606 | |||
| CLOSING EQUITY 2018-09-30 | 2,850 | 43,231 | –6,787 | 112,433 | 151,727 | 151,727 |
| 2017 | Retained earnings |
|||||
|---|---|---|---|---|---|---|
| Amounts in SEK thousand | Share capital | Other contributed capital |
Reserves | including net profit for the period |
Total | Total equity |
| OPENING EQUITY 2017-01-01 | 2,850 | 43,231 | 2,072 | 89,638 | 137,791 | 137,791 |
| Net profit for the period | 42,963 | 42,963 | 42,963 | |||
| Other total profit | ||||||
| Translation differences during the period | –10,264 | –10,264 | –10,264 | |||
| Transactions with shareholders | ||||||
| Dividend | –41,047 | –41,047 | –41,047 | |||
| CLOSING EQUITY 2017-09-30 | 2,850 | 43,231 | -8,192 | 91,554 | 129,443 | 129,443 |
| Consolidated Cash Flow Statement | July – September | January – September | |||
|---|---|---|---|---|---|
| Amounts in SEK thousand | 2018 | 2017 | 2018 | 2017 | |
| Operating activities | |||||
| Operating profit | 19,094 | 15,322 | 59,797 | 57,088 | |
| Adjustment for items not included in cash flow | |||||
| Depreciation, amortisation and impairment charges | 2,076 | 1,685 | 5,822 | 4,503 | |
| Profit/loss from sales of fixed assets | - | - | –236 | 364 | |
| Other non-cash generated items | 2,977 | - | –448 | - | |
| 23,911 | 17,371 | 64,935 | 61,955 | ||
| Interest income | 146 | 31 | 380 | 337 | |
| Interest expense | –1,300 | –260 | –2,303 | –1,087 | |
| Paid taxes | –2,565 | –3,677 | –8,685 | –12,700 | |
| Cash flow from operating activities before changes in working | |||||
| capital | 20,192 | 13,465 | 54,327 | 48,505 | |
| Cash flow from changes in working capital | |||||
| Inventories | –2,841 | –5,177 | 4,851 | –16,126 | |
| Trade receivables | –16,414 | 757 | –14,770 | –10,174 | |
| Other short-term receivables | 3,703 | –1,372 | –6,537 | –553 | |
| Trade payables | 10,025 | 4,595 | –1,285 | 6,517 | |
| Other liabilities | –233 | –1,081 | –3,000 | 12,544 | |
| Cash flow from operating activities | 14,432 | 11,187 | 33,586 | 40,713 | |
| Investment activities | |||||
| Acquisition of intangible non-current assets | –1,171 | 928 | –4,979 | –11,376 | |
| Acquisition of intangible non-current assets | –1,158 | –1,984 | –1,683 | –9,164 | |
| Acquisition of financial non-current assets | - | - | –29 | - | |
| Sales of fixed assets | - | - | 363 | - | |
| Change in long-term receivable | –2,246 | 93 | –2,821 | –146 | |
| Cash flow from investment activities | –4,223 | –809 | –9,149 | –20,140 | |
| Financing activities | |||||
| Repayment/raising loans | –12,238 | –6,214 | 23,487 | 38,956 | |
| Paid dividend | - | - | –45,606 | –41,047 | |
| Cash flow from financing activities | –12,238 | –6,214 | –22,119 | –2,091 | |
| Cash flow for the year | –2,029 | 4,164 | 2,318 | 18,482 | |
| Cash and cash equivalents at beginning of period | 51,441 | 47,211 | 44,837 | 35,210 | |
| Translation difference in cash and cash equivalents | –1,690 | –1,579 | 567 | –3,896 | |
| Cash and cash equivalents at end of period | 47,722 | 49,796 | 47,722 | 49,796 |
| Parent Company Income Statement | 3 months | 9 months | |||
|---|---|---|---|---|---|
| Amounts in SEK thousand | July - September | January - September | |||
| 2018 | 2017 | 2018 | 2017 | ||
| Net revenue | 5,403 | 4,227 | 16,383 | 13,370 | |
| Other operating income | 2,051 | 1,230 | 6,089 | 4,486 | |
| Total revenue | 7,454 | 5,457 | 22,472 | 17,856 | |
| Other external costs | –2,467 | –3,731 | –7,828 | –9,605 | |
| Personnel costs | –3,939 | –4,594 | –14,480 | –15,161 | |
| Depreciation, amortisation and impairment charges | –444 | –166 | –1,021 | –456 | |
| Operating profit | 604 | –3,034 | –857 | –7,366 | |
| Net finance items | 8,240 | 3,391 | 10,921 | 2,753 | |
| Profit after finance items | 8,844 | 357 | 10,064 | -4,613 | |
| Year-end appropriations | - | - | 0 | 0 | |
| Taxes | –22 | –3 | –356 | –27 | |
| Net profit for the period | 8,822 | 354 | 9,708 | –4,640 |
Since there are no comprehensive profit items, comprehensive income coincides with the period's results.
| Amounts in SEK thousand | 2018-09 | 2017-09 | 2017-12 | 2016-12 |
|---|---|---|---|---|
| Assets | ||||
| Intangible non-current assets | 11,146 | 7,803 | 8,857 | 2,769 |
| Tangible non-current assets | 1,632 | 1856 | 1,940 | 1244 |
| Financial non-current assets | 119,815 | 98,710 | 98,904 | 99,580 |
| Short-term receivables | 86,269 | 48,947 | 97,213 | 56,784 |
| Cash and cash equivalents | - | 3 | - | 186 |
| Total assets | 218,862 | 157,319 | 206,914 | 160,563 |
| Equity and liabilities | ||||
| Equity | 41,093 | 21,097 | 76,993 | 66,784 |
| Untaxed reserves | 2,186 | 5,186 | 2,186 | 5,186 |
| Long-term liabilities | - | - | - | 2,818 |
| Current liabilities | 175,583 | 131,036 | 127,735 | 85,775 |
| Total equity and liabilities | 218,862 | 157,319 | 206,914 | 160,563 |
As was the case with the Annual Accounts for 2016, the Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by EU, recommendation No 1 (RFR 1) of the Swedish Financial Reporting Board. As was the case with the Annual Accounts for 2016, the Parent Company prepares its financial statements in accordance with the Annual Accounts Act and recommendation No 2 (RFR 2) of the Swedish Financial Reporting Board. The Year-end Report is prepared in accordance with IAS 34 and the Swedish Annual Accounts Act.
On January 1 2018 IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial instruments" entered into force.
IFRS 9 "Financial Instruments" has been applied by the Group since 1 January 2018. The transition to IFRS 9 has not resulted in any differences in the Group's way of classifying financial assets and liabilities, and the hedge accounting method used is compatible with the new hedging rules.
The transition to IFRS 9 had no effect on the Group's way of classifying financial assets and liabilities, and hedge accounting is consistent with the new hedge accounting rules. Nilörngruppen applies the simplified model for anticipated credit losses according to which total anticipated credit losses for the remaining tenor of the receivable is recognised. When assessing future expected credit losses due consideration is given to historical and forward-looking information. The transition has not resulted in any transitional effects that need to be reported.
For a more detailed description of the new accounting policies, refer to the 2017 Annual Report, "Note 1 Accounting policies" in section "New introduced and amended IFRS".
IFRS 15 "Revenue from Contracts with Customers" has not entailed any changes for the Nilörn Group. Most of the Nilörn
Group's revenue comes from the sale of goods, recognised when control over the goods is transferred to the customer. Variable compensation in the form of discounts, bonuses and returns constitute a part of the transaction price.
IFRS 16 "Leases" will replace IAS 17 "Leases" on 1 January 2019. The effect of implementing IFRS 16 will be a larger balance sheet total with higher tangible non-current assets and a higher financial liability. There will also be a shift in the report on comprehensive profit with a positive effect on operating profit and a negative effect on net finance items. For Nilörn the largest item is attributable to rental for office and warehouse space. The Group will continue to evaluate the full impact of IFRS 16 during the year.
The Group is exposed to exchange rate fluctuations since most purchases and sales are made in foreign currency.
Aside from the transaction exposure described above, the Group is affected by foreign exchange rate fluctuations from the receivables and liabilities that arise in foreign currencies. These are largely covered by hedging.
All are officially traded currencies and contracts are typically and the contracts are typically extended for a period of three months on average. The Group has no other derivative instruments. Outstanding forward contracts are valued at market value on the balance sheet date in accordance with IAS 39 Financial instruments: Recognition and Measurement, level 2 has been applied in accordance with IFRS 7.27. The valuation of forward contracts is based on fair value on the balance sheet date and the forward rate for each respective contract. Total net value for derivative instrument in the balance sheet as per 30/9- 2018 is 1,0 MSEK.
| Nordic | Other | Intra | |||
|---|---|---|---|---|---|
| Period January - September 2018 | region | Europe | Asia | Group | Total |
| Revenue | |||||
| External revenue | 52,500 | 178,461 | 310,285 | - | 541,246 |
| Total revenue | 52,500 | 178,461 | 310,285 | 0 | 541,246 |
| Profit | |||||
| Operating profit | 7,358 | 24,590 | 28,707 | –857 | 59,797 |
| Interest income | 380 | 380 | |||
| Interest expense | –2,303 | –2,303 | |||
| Taxes on the on the period's profit | –13,427 | –13,427 | |||
| Net profit for the period | 7,358 | 24,590 | 28,707 | –16,207 | 44,447 |
| Period January - September 2017 | |||||
| Revenue | |||||
| External revenue | 48,613 | 160,398 | 291,913 | - | 500,924 |
| Total revenue | 48,613 | 160,398 | 291,913 | 0 | 500,924 |
| Profit | |||||
| Operating profit | 9,919 | 25,220 | 29,317 | –7,368 | 57,088 |
| Interest income | 337 | 337 | |||
| Interest expense | –1,087 | –1,087 | |||
| Taxes on the profit for the year | –13,375 | -13,375 | |||
| Net profit for the year | 9,919 | 25,220 | 29,317 | –21,493 | 42,963 |
ESMA (The European Securities and Markets Authority) has published guidelines for alternative key financial indicators for companies with securities listed on a regulated market within EU. These guidelines shall be applied to alternative key financial indicators used starting 3 October 2016. Reference is made in the annual accounts to a number of non-IFRS performance metrics used to help investors as well as management to analyse the company's operations. These financial metrics should therefore not be seen as replacements for metrics defined according to IFRS. Since all companies do not calculate financial metrics in the same way, they are not always comparable with metrics used by other companies. These financial metrics should therefore not be seen as replacements for metrics defined according to IFRS. We describe below the various non-IFRS performance metrics used as a complement to the financial information reported in accordance with IFRS and how these metrics have been used.
| Non-IFRS metrics | Definition | Justification |
|---|---|---|
| Average equity | Equity at the beginning of the period, plus equity at the end of the period, divided by two. |
The metric is the difference between the Group's assets and liabilities, which is equivalent to consolidated equity contributed by owners and the consolidated aggregated profit. This metric is used to report the capital attributable to the Group's owners. |
| Average number of employees | Average number of yearly employed | This metric is used to measure the development of the Group's workforce. |
| Revenue growth | Net revenue at the end of the period, minus net revenue at the beginning of the period, divided by net revenue at the beginning of the period. |
This metric is used to measure the development of the Group's revenue over time. |
| Return on equity | Period's result according to the income statement in percent of average equity. |
This metric is used to analyse profitability over time, given the resources attributable to the Parent Company's owners. |
| Return on capital employed | Result before taxes, plus financial expenses, in percent of average capital employed. |
Return on capital employed is a profitability metric used to gauge the result relative to the capital required to run the business. |
| Interest-bearing net cash and cash equivalents/liabilities |
Interest-bearing receivables, cash and cash equivalents, reduced by interest-bearing liabilities. |
The metric shows the total debt financing and is used as a complement to judge the feasibility of paying dividends, to implement strategic investments and to gauge the Group's ability to meet its financial obligations. |
| Operating margin | Operating result in percent of net revenue. | This metric is used to measure operative profitability. |
| Equity ratio | Equity in percent of balance sheet total. | This measure shows the proportion of the company's total assets financed with equity by its shareholders. A high equity ratio is an indication of financial strength. |
| Operating margin | Operating result in percent of net revenue. | This metric is used to measure operative profitability. |
Nilörngruppen is a global company founded in the 1970s, with expertise in adding value to trade marks through branding in the form of labels, packaging and accessories, primarily for customers in the fashion and apparel industry. Nilörngruppen offers complete, creative and customised concepts in branding, design, product development and logistic solutions. The Group conducts business via its own subsidiaries in Sweden, Denmark, Great Britain, Germany, Belgium, Portugal, Hong Kong, India, Turkey, China, Bangladesh, Italy and Pakistan. The Group has partner companies in Tunisia and Switzerland.
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