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Pierce Group
Quarterly Report • Nov 11, 2022
3096_10-q_2022-11-11_d3f0ce68-4c4a-42ed-8617-37ed863727e4.pdf
Quarterly Report
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- Net revenue increased by 3%, totaling SEK 373 (361) million. In local currencies growth was 0%.
- EBITDA totaled SEK -2 (14) million. Adjusted EBITDA was SEK 4 (15) million, equivalent to a margin of 1.1% (4.1%).
- Operating profit (EBIT) was SEK -15 (2) million. Adjusted operating profit (EBIT) was SEK -9 (3) million and the adjusted operating margin was -2.4% (0.7%).
- Cash flow for the period was SEK 96 (-4) million. Positive cash position was a result of received proceeds from a new share issue of SEK 337 million, after deduction of issue costs, which was used to repay a bank loan facility of approximately SEK 180 million. The comparative period's cash flow was impacted negatively by the repayment of previous financing after the listing.
- Profit/loss for the period amounted to SEK -20 (-1) million.
- Earnings per share before dilution was SEK -0.26 (-0.03) and SEK -0.26 (-0.03) after dilution.
July – September 2022 January – September 2022
- Net revenue increased by 5%, totaling SEK 1,243 (1,181) million. In local currencies growth was 2%.
- EBITDA totaled SEK 0 (75) million. Adjusted EBITDA was SEK 7 (87) million, equivalent to a margin of 0.6% (7.4%).
- Operating profit (EBIT) was SEK -37 (41) million. Adjusted operating profit (EBIT) totaled SEK -30 (52) million and the adjusted operating margin was -2.4% (4.4%).
- Cash flow for the period was SEK 100 (-66) million. Positive cash position was a result of received proceeds from new share issue of SEK 337 million, after deduction of issue costs, which was used to repay a bank loan facility of approximately SEK 180 million. Cash flow during the comparative period primarily comprised of proceeds from the new share issue executed in conjunction with the listing, less the repayment of previous financing.
- Profit/loss for the period amounted to SEK -35 (20) million.
- Earnings per share before dilution was SEK -0.66 (0.54) and SEK -0.66 (0.54) after dilution.
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Net revenue | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Growth (%)¹ | 3% | 10% | 5% | 6% | 4% | 5% |
| Growth in local currencies (%)¹ | -0% | 11% | 2% | 10% | 2% | 7% |
| Gross profit | 146 | 159 | 496 | 544 | 680 | 728 |
| Profit after variable costs¹ ² | 60 | 72 | 192 | 263 | 273 | 343 |
| Overhead costs¹ | -57 | -57 | -185 | -176 | -248 | -239 |
| Adjusted EBITDA¹ | 4 | 15 | 7 | 87 | 25 | 104 |
| Adjusted operating profit (EBIT)¹ ³ | -9 | 3 | -30 | 52 | -24 | 58 |
| Items affecting comparability¹ | -6 | -1 | -7 | -12 | -7 | -12 |
| EBITDA¹ | -2 | 14 | 0 | 75 | 18 | 93 |
| Operating profit (EBIT)³ | -15 | 2 | -37 | 41 | -32 | 46 |
| Profit/loss for the period | -20 | -1 | -35 | 20 | -29 | 26 |
| Gross margin (%)¹ | 39.1% | 44.0% | 39.9% | 46.0% | 41.0% | 45.7% |
| Profit after variable costs (%)¹ | 16.2% | 20.0% | 15.5% | 22.2% | 16.5% | 21.5% |
| Adjusted EBITDA (%)¹ | 1.1% | 4.1% | 0.6% | 7.4% | 1.5% | 6.5% |
| Adjusted operating margin (EBIT) (%)¹ | -2.4% | 0.7% | -2.4% | 4.4% | -1.5% | 3.6% |
| Cash flow for the period | 96 | -4 | 100 | -66 | 95 | -71 |
| Net debt (+) / Net cash (-)⁴ | -115 | 105 | -115 | 105 | -115 | 160 |
¹ Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements. ²Variable costs refers, in addition to cost of goods sold, to variable sales and distribution costs. These include direct marketing costs as well as other direct costs and correlates essentially with net revenue.
⁴ Net debt refers to the alternative performance measure net debt excluding IFRS 16. ³ Operating profit (EBIT) includes depreciation and amortisation. Amortisation attributable to business acquisitions¹ were SEK 0.8 million during the last twelve months' period and SEK 1.5 million in 2021. Other direct costs mainly consist of freight, invoicing and packaging.
Significant events during the reporting period
In July 2022, Pierce Group AB (publ) carried out a preferential rights issue receiving SEK 337 million. Consecutively, the Company repaid bank loans of approximately SEK 180 million and decreased the credit facility to SEK 200 million.
Focus on financial resilience, cost efficiency and gradually restoring profitability
The market continued to be weak during the quarter. The focus has been on driving sales in order to reduce inventory and maintain a strong cash position, given the current challenging external environment. Profitability continues to be impacted by high costs for shipping and components. After the new share issue, the Company is debt-free with a net cash position of MSEK 115. During the quarter we continued the execution of our program to improve the financial performance.
Online traffic in the market was on level with the previous year, but the economic uncertainty due to high inflation impacts the customers' purchasing behaviour, implying that market developments are both challenging and difficult to assess, now, and in the near future. We estimate that the growth of the online market was slightly negative compared with the previous year.
The inventory levels are generally high in the market, which has hindered price increases vis á vis customers. Despite this, consumer prices are moving upwards, albeit slowly. According to our own statistics, consumer prices have increased by approximately 5 percent since the beginning of this year. Still, this is insufficient in terms of compensating for the cost increases we are experiencing.
The preferential rights issue which was concluded at the beginning of July resulted in a clear strengthening of the balance sheet. The Company is now debt-free and has a net cash position of MSEK 115. During the quarter, given the major uncertainties within the market, we continued to prioritize sales in order to decrease the inventory and maintain a strong cash position. In terms of volume, the inventory has decreased by approximately 20 percent since the beginning of the year. The inventory is also better balanced than in previous periods while, during this quarter, we have added new products to have a strong offering prior to the start of the campaign season. Total inventory value, impacted by both cost increases and currency fluctuations, decreased since end of 2021 by 6 percent from MSEK 534 to MSEK 504.
Gross margin squeeze
Net revenue amounted to MSEK 373 during the quarter, which implies a growth of 3 percent, or 0 percent in local currencies. The gross margin continued to be impacted by high costs for shipping and components, a strong USD and by our focus on stimulating sales in a weak market through various campaign activities. Adjusted EBIT amounted to MSEK -9 in the quarter against MSEK 3 in the previous year. The decline was entirely driven by the negative development of the gross margin.
Uncertainty in the near future, but lower container prices is a positive factor facing 2023
The container freight fees from Asia have declined sharply just recently which will result in lower costs, primarily for our own brand products. Prior to the problems in the container market, the total price for a 40-foot container was approximately USD 3,000 but this price had increased to approximately USD 20,000 by the end of 2021. This has resulted in extraordinarily large cost increases, in fact shipping costs alone impacted EBIT negatively by MSEK 75 from January to September 2022 compared with MSEK 51 during the same period in 2021 and MSEK 30 in 2020. The increase is equivalent to a margin reduction of 1.7 percentage points compared with 2021. Compared with
2020, the decrease is 3.3 percentage points. It is good to see that shipping prices are now almost back to pre-crisis levels, but we deem that it will take a few more quarters before this positive factor will begin to be seen in the income statement as we are, still, selling the products which were shipped when freight prices were high.
However, there continues to be a high degree of uncertainty regarding market developments in the near future, in particular, as regards demand which has been hit by inflation in combination with a possible recession. The campaign season which begins in November will, therefore, be an important yardstick. Furthermore, cost levels, where the USD development has an impact, are uncertain and can have a major effect on results going forward.
Three priorities
Our overarching objective is to be well prepared and come out as winners when the market turns for the better again. In the short-term this requires us to be both cautious and quick to respond. During the next few periods we will work according to three major priorities:
-
- Maintain a strong cash position: The most important factor is to preserve our strong cash situation given the major uncertainties inherent for next year. We will continue to prioritise sales, at the cost of some gross margin points, for as long as it is required and continue to adapt our purchasing volumes to current market conditions.
-
- Execute the program to improve financial performance: Since the spring we are working on a program where the main objective is to improve the margins after variable costs but also to improve the net working capital. This program involves, amongst other things, measures to improve pricing vis á vis customers, a reduction in purchase prices for components, improving performance marketing ROI and the optimization of the assortment. This work is progressing according to plan and we expect to see its full effects from the second half year 2023, but we are already experiencing certain positive results, primarily in terms of marketing ROI.
-
- Secure economies of scale: The long-term work with reducing overheads in relation to net revenue continues. The number of employees, excluding warehouse personnel, has now decreased by approximately 10 percent since 2019 in spite of major increases in volume since then. This demonstrates the scalability of the business. We continue to work with these costs through, amongst other things, the development of routines, processes and systems to secure further economies of scale and the strengthening of margins when the conditions for growth return.
Finally, I wish to emphasize and show my appreciation to all of our personnel for a lot of hard work under difficult circumstances. I also want to thank the shareholders for their strong support with the
preferential rights issue which provides the Company with a very important level of financial sustainability.
Stockholm, 11 November 2022
Henrik Zadig CEO, Pierce Group AB
| SEKm (unless stated otherwise) 2022 2021 2022 2021 Sep 2022 2021 Revenue measures Net revenue per geographical area 129 124 447 425 584 563 Nordics 231 Outside the Nordics 249 796 755 1,072 1,031 361 1,243 1,181 1,656 1,594 Net revenue 373 Growth per geographical area Nordics (%)¹ 20% -4% 5% 11% 6% 11% 5% Outside the Nordics (%)¹ 7% 5% 4% 3% 1% 10% Growth (%)¹ 6% 3% 5% 4% 5% Performance measures Gross margin (%)¹ 44.0% 39.1% 39.9% 46.0% 41.0% 45.7% Profit after variable costs (%)¹ 20.0% 16.2% 15.5% 22.2% 16.5% 21.5% 15.9% Overhead costs (%)¹ 15.2% 14.9% 14.9% 15.0% 15.0% Adjusted EBITDA (%)¹ ² 4.1% 1.1% 0.6% 7.4% 1.5% 6.5% 0.7% Adjusted operating margin (EBIT) (%)¹ -2.4% -2.4% 4.4% -1.5% 3.6% -0.03 -0.26 -0.66 0.54 -0.59 0.68 Earnings per share before dilution (SEK) -0.03 Earnings per share after dilution (SEK) -0.26 -0.66 0.54 -0.59 0.68 Cash flow and other financial measures 2 Operating profit (EBIT) -15 -37 41 -32 46 Investments³ -3 -12 -17 -21 -26 -3 -1 -18 -49 23 -52 20 Operating profit (EBIT) minus investments -48 Changes in net working capital -22 -17 -80 -74 -137 Other non-cash items¹ ⁴ 3 2 25 13 33 21 -46 Operating cash flow¹ -38 -42 -43 -94 -96 -195 -183 -379 Net change in loans 45 -135 -331 Paid/received blocked funds 14 0 14 — — — Other cash flow¹ ⁵ 329 -2 325 343 324 342 -4 96 100 -66 95 -71 Cash flow for the period 23 115 115 23 115 18 Cash and cash equivalents⁶ Net debt excluding IFRS 16¹ ⁶ ⁸ 105 -115 -115 105 -115 160 Net debt/EBITDA¹ ⁷ 0.9 -267.0 -267.0 0.9 -267.0 2.0 479 504 504 479 504 534 Inventory⁶ 27 Other current operating assets¹ ⁶ 24 24 27 24 30 Other current operating liabilities¹ ⁶ -305 -248 -248 -305 -248 -305 Net working capital¹ ⁶ 200 280 280 200 280 260 Operating measures Number of orders (thousands)¹ 385 371 1,315 1,290 1,761 1,735 936 Average order value (AOV) (SEK)¹ 1,004 945 915 941 919 Net revenue from private brands¹ 129 138 489 452 646 609 |
Jul-Sep | Jan-Sep | Jan-Dec | ||||
|---|---|---|---|---|---|---|---|
| Active customers last 12 months (thousands)¹ | 1,163 | 1,155 | 1,163 | 1,155 | 1,163 | 1,148 |
¹Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements.
² Adjusted EBITDA, excluding IFRS 16, amounted during the last twelve months' period to SEK 0 (113) million.
³ Investments regards cash flow from investments excluding paid/received blocked funds.
⁴ Other non-cash items refers in all significance to amortisation and depreciation, excluding depreciation of right-of-use assets, and change in current short term provisions.
⁵ Other cash flow mainly regards paid/received tax, paid financial net and new share issues and issue of warrants excluding paid issue costs.
⁶ Measures correspond to each period end.
⁷ Net debt refers to the alternative performance measure net debt excluding IFRS 16, and EBITDA refers to the measure adjusted EBITDA excluding IFRS 16.
⁸ Positive values refer to net debt, whereas negative values refer to net asset
Pierce is a leading e-commerce company selling gear, parts and accessories to riders across all of Europe via some forty websites adapted to local markets. Pierce has two major segments, Offroad – sales to motocross and enduro riders, and Onroad – sales to high road riders. Pierce also has a smaller segment, Other, which primarily focuses on sales to snowmobile riders. With a large and unique product assortment, including several private brands, an excellent customer experience and attractive prices, Pierce is changing the motorcycle enthusiast market in Europe. Headquarters is located in Stockholm, the distribution warehouse is in Szczecin in Poland, and, in addition, the major portion of our customer support services is located in Barcelona. The Company has approximately 420 employees.
(Figures in parentheses refer to the equivalent period last year)
July – September 2022
Net sales
Net revenue increased by 3 percent to SEK 373 (361) million. In local currencies growth was 0 percent. Net revenue for Offroad and Onroad grew by 3 and 2 percent respectively.
The company assesses that the total European online market declined slightly compared with the equivalent quarter last year. The net revenue growth in the declining market was driven by attractive and competitive pricing, together with an improved assortment within especially the Onroad segment.
Gross profit and gross margin
Gross profit amounted to SEK 146 (159) million, equivalent to a gross margin of 39.1 (44.0) percent.
Higher shipping costs from Asia, SEK -24 (-18) million, impacted the margin by -1.4 percentage points, while a disadvantageous revaluation of currencies in net working capital, SEK -2 (0) million, contributed negatively by -0.4 percentage points. The remaining margin decline, -3.1 percentage points, was primarily attributable to higher purchasing prices from suppliers, a strengthened USD and increased campaigning activities.
Costs for shipping was still on a high level in the third quarter, despite that shipping prices from Asia has decreased significantly from peak levels in forth quarter of 2021 and first quarter of 2022. The price decrease will affect cost with a delay as these reductions will take some time until materialized in the costs. This is because changes in shipping prices directly affect inventory value but impact the cost of goods when the products are sold.
Operating costs
Sales and distribution costs amounted to SEK -116 (-117) million and include, primarily, variable costs for marketing and freight costs to customers. In relation to net revenue, these costs were equivalent to 31.1 (32.5) percent. The decrease was driven by lower spending on performance marketing activities.
Administration costs were SEK -45 (-40) million. Excluding items affecting comparability, these costs totaled SEK -39 (-39) million. Last year's costs were partly affected by temporary negative effects related to capitalizations.
Adjusted EBIT and EBIT
Adjusted operating profit (EBIT) was SEK -9 (3) million, equivalent to a margin of -2.4 (0.7) percent. The decrease in operating profit was mainly driven by a reduced gross margin. Operating profit (EBIT) totaled SEK -15 (2) million.
Items affecting comparability totaled SEK -6 (-1) million and were incurred for external advisors' support with strategic initiatives.
Operating income was negatively impacted by exchange rate fluctuations versus the second quarter 2022.
Financial items
Financial income amounted to SEK 3 (-4) million, of which SEK 4 (-2) million referred to exchange rate differences from revaluation of financial balance sheet items and SEK 4 (0) million referred to exchange rate effects on cash hedges.
Other financial expenses, SEK -5 (-2) million, consisted of interest expenses for tax liabilities from export adjustments and of periodic expense of prepaid loan fees. In the comparative period it mainly referred to interest expenses on the external financing.
Taxes and result for the period
Tax result totaled SEK -8 (1) million and the result for the period was SEK -20 (-1) million. Tax cost in the period is a result of reversed income tax accrual and of reversed deferred tax asset that was recognized in the previous year.
January – September 2022
Net revenue
Net revenue increased by 5 percent to SEK 1,243 (1,181) million. In local currencies growth was 2 percent. Growth within Offroad and Onroad was 0 percent and 15 percent respectively.
The Company assesses that the total European online market has declined since the beginning of the year. The negative development in the general economic situation and uncertainty of future development, has affected consumers negatively.
Net revenue growth during the year has been driven by more attractive offers to customers, including more competitive pricing and increased assortment especially within Onroad.
Gross profit and gross margin
Gross profit amounted to SEK 496 (544) million, equivalent to a margin of 39.9 (46.0) percent.
The decline in the margin was primarily attributable to increased costs for shipping from Asia, SEK -75 (-51) million impacting the margin by -1.7 percentage points. Gross margin has also been negatively affected by higher purchasing prices from suppliers driven by increased cost for raw materials together with customer price adjustments to drive growth.
Exchange rate differences, attributable to the revaluation of net working capital items, impacted gross profit by SEK -5 (-4) million.
Operating costs
Sales and distribution costs amounted to SEK -403 (-375) million, equivalent to 32.4 (31.8) percent of net revenue. This increase in relation to net revenue referred to increased freight costs driven by fuel prices and increased cost for packaging material.
Administration costs were SEK -133 (-126) million. Excluding items affecting comparability, cost totaled SEK -125 (-117) million. The increase was primarily explained by general salary increases and increased IT costs.
Adjusted EBIT and EBIT
Adjusted operating profit (EBIT) amounted to SEK -30 (52) million, equivalent to a margin of -2.4 (4.4) percent. The margin decrease was mainly driven by the negative gross margin development of 6.2 percentage points.
Operating profit (EBIT) amounted to SEK -37 (41) million and was impacted by items affecting comparability totalling SEK - 7 (-12) million. The items affecting comparability were related to external costs regarding strategic initiatives. Cost in 2021 were attributed to the Company's stock market listing in March 2021.
Operating profit was slightly positively impacted by exchange rate fluctuations compared with same period 2021.
Financial items
Financial income totaled SEK 9 (-23) million, of which SEK 5 (0) million referred to exchange rate differences related to the revaluation of financial balance sheet items, and SEK 14 (1) million was attributable to exchange rate effects on cash hedges.
Other financial expenses of SEK -10 (-15) million consisted of interest expenses for tax liabilities from export adjustments, interest expenses on external financing and of periodic expense of prepaid loan fees. In the comparative period it mainly referred to interest expenses on external financing. Costs incurred last year related to early redemption of bond loan, interest expense on bond loan and shareholders loans. That was due to the previous financing structure being repaid, at the beginning of the second quarter, in conjunction with the listing and was replaced by a credit facility totaling SEK 300 million.
Taxes and result for the period
Tax totaled SEK -6 (3) million and the result for the period was SEK -35 (20) million.
The tax result was comprised of tax income of SEK 0 (7) million and tax expenses of SEK -6 (-3) million. The tax income in the comparative period referred primarily to deferred tax receivables on previous years' non-deductible interest expenses. These expenses were previously assessed to be deductible in future income tax returns. During the third quarter a reassessment was made and concluded that it is uncertain that the interest carried forward will be deductible in the near future. The tax cost in the period is a result of that reassessment.
,
Net revenue and growth in local currencies (%)1
1 Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements.
Adjusted EBIT¹ and adjusted EBIT (%)¹, last twelve months
(Figures in parentheses refer to the equivalent period last year)
July – September 2022
Cash flow from operating activities was SEK -31 (-41) million. Compared with the same period in 2021 the operating profit (EBIT) was lower by SEK 17 million and amounted to SEK -15 (2) million. Cash outflow within net working capital in the current quarter was SEK 26 million lower than in the comparative quarter and amounted to SEK -22 (-48) million. Changes in net working capital in current period were primarily attributable to an increase of inventories, SEK 14 million, as a result of inventory build-up for "Black Week" in the fourth quarter. Another change in net working capital during the quarter was a decrease in working capital liabilities, SEK 40 million. Lower sales during the quarter resulted in a decrease in VAT liabilities and lower sales in the last few days of the quarter resulted in a decrease in deferred revenue. Additionally, the quarter was affected by positive non-cash items on net working capital of total SEK 21 million. The negative non-cash items from second quarter of 2022 arising from rights issue costs accrual of SEK 16 million were reversed in the third quarter, causing a positive effect in the same amount. Other non-cash items referred to positive exchange rates effect of SEK 4 million. During the comparison period, changes in net working capital were mainly related to increase in inventories of SEK 105 million.
Cash flow from investments amounted to SEK -3 (-3) million and referred mainly to investments in IT systems in both periods.
Cash flow from financing activities totaled SEK 130 (40) million and was a result of receipt of proceeds from new rights issue less the loan repayment. The equivalent figure for the previous year was largely explained by new loans received under the credit facility.
Cash flow for the period was SEK 96 (-4) million and cash and cash equivalents for the period totaled SEK 115 (23) million.
Net revenue and net working capital (%)1 ,
last twelve months
January – September 2022
Cash flow from operating activities was SEK -18 (-22) million. The difference between comparative periods referred to changes in net working capital, SEK -17 (-80) million, and operating profit of SEK -37 (41) million.
Cash flow from investments totaled SEK -12 (-3) million and referred to investments in IT systems and to purchase of equipment for distribution warehouse of SEK -12 (-17) million. Additionally, the comparison period included repaid blocked funds of SEK 14 million.
Cash flow from financing activities was SEK 131 (-40) million. This net improvement was a result of receipt of proceeds from new rights issue less the loan repayment. The equivalent figure in comparative period is explained by costs for the listing, repayment of previous financing structure and repaid earn-out, and also by utilised credit facility.
Cash flow during the interim period was SEK 100 (-66) million. Including exchange rate differences, which totaled SEK -4 (2) million, cash and cash equivalents at the end of the period amounted to SEK 115 (23) million.
Operating cash flow during the last twelve months amounted to SEK -94 (-20) million.
(Figures in parentheses refer to the equivalent period last year)
Net working capital
Net working capital at the end of the period was SEK 280 (200) million and increased due to higher inventory and lower other current operating liabilities.
Right-of-use assets and leasing liabilities
Right-of-use assets decreased by SEK 6 million to SEK 61 million, compared with the same period last year, largely as a result of depreciations for the period. Leasing liabilities decreased by SEK 7 million to SEK 68 million.1
Net debt (net asset)
Following the repayment of bank loans of approximately SEK 180 million, Pierce reduced the credit facility from SEK 300 million to SEK 200 million. The credit facility has not been utilised at the end of the period. Therefore, net cash position at the end of the period equaled cash and cash equivalents and amounted to SEK 115 (23) million.
In the comparison period net debt position, excluding IFRS 16, amounted to SEK 105 million. The change is explained by a significant increase in level of cash and cash equivalents, SEK 92 million, and decrease of interest-bearing liabilities, SEK 128 million. The key performance measure, Net debt/EBITDA1 , amounted to -267x.
Equity
The Group's equity amounted to SEK 740 (432) million. The SEK 308 million increase in equity between comparative quarters was explained mainly by the rights issue effective in July 2022 of SEK 331 million after deducting issue costs, the loss for the period of SEK -29 million, tax effect on issue cost within equity recognized in 2021 of SEK 3 million, and a translation reserve of SEK 3 million.
Credit facility
The Pierce credit facility is subject to, amongst other things, certain financial covenants regarding the Group's leverage ratio and interest coverage ratio. As of 30 September 2022, there was no risk of lack of compliance with covenants according to the agreement for the credit facility. Covenants are reported quarterly.
1 Alternative Performance Measures (APM), see pages 23 - 25 for definitions and the purpose of these measures.
(Figures in parentheses refer to the equivalent period last year)
Pierce's operations are, in all essential aspects, carried out in Europe and primarily within the segments Offroad and Onroad. Offroad refers to sales to motocross and enduro riders and these products are sold under the brand 24MX. Onroad refers to sales to motorcycle riders primarily using high roads and the products are sold under the brand XLMOTO. Within Offroad, Pierce has significantly larger market shares compared to Onroad. The Company's addressable market within Onroad is significantly larger and more exposed to competition compared to Offroad. Pierce's sales consist of gear, parts and accessories. Pierce has one more segment, Other, which primarily focuses on sales to snowmobile riders.
Overall summary
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Offroad | 233 | 226 | 717 | 714 | 977 | 974 |
| Onroad | 131 | 128 | 462 | 401 | 561 | 500 |
| Other | 9 | 8 | 65 | 65 | 119 | 119 |
| Net revenue | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Offroad | 95 | 104 | 301 | 344 | 419 | 462 |
| Onroad | 49 | 51 | 172 | 170 | 211 | 209 |
| Other | 4 | 4 | 27 | 34 | 53 | 59 |
| Intra-group costs¹ | -2 | 0 | -5 | -4 | -4 | -2 |
| Gross profit | 146 | 159 | 496 | 544 | 680 | 728 |
| Offroad | 45 | 52 | 130 | 182 | 187 | 238 |
| Onroad | 16 | 18 | 58 | 67 | 69 | 78 |
| Other | 1 | 2 | 9 | 18 | 20 | 29 |
| Intra-group costs¹ | -2 | 0 | -5 | -4 | -4 | -2 |
| Profit after variable costs² ³ | 60 | 72 | 192 | 263 | 273 | 343 |
¹
Intra-group costs, consists of exhange rate revaluation of net working capital items which are not divided between segments. These amounted in Q4 2021 SEK 2 (6) million, Q1 2022 SEK -1 (-4) million, Q2 2022 SEK -2 (0) million and Q3 2022 SEK -2 (0) million. ²
Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements. ³ Variable costs refers, in addition to cost of goods sold, to variable sales and distribution costs. These include direct marketing costs as well as other direct costs and correlates essentially with net revenue.
Other direct costs mainly consist of freight, invoicing and packaging.
For more information about the segment, see Note 4.
Offroad
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Net revenue | 233 | 226 | 717 | 714 | 977 | 974 |
| Growth (%)¹ | 3% | 9% | 0% | 6% | -1% | 2% |
| Gross profit | 95 | 104 | 301 | 344 | 419 | 462 |
| Gross margin (%)¹ | 40.7% | 46.1% | 42.1% | 48.2% | 42.9% | 47.5% |
| Profit after variable costs¹ ² | 45 | 52 | 130 | 182 | 187 | 238 |
| Profit after variable costs (%)¹ | 19.1% | 23.0% | 18.2% | 25.5% | 19.1% | 24.5% |
| Number of orders (thousands)¹ | 223 | 238 | 741 | 783 | 1,022 | 1,064 |
| Average order value (AOV) (SEK)¹ | 1,041 | 947 | 967 | 912 | 956 | 916 |
| Active customers last 12 months (thousands)¹ ¹ Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements. |
641 | 668 | 641 | 668 | 641 | 660 |
Other direct costs mainly consist of freight, invoicing and packaging. ² Variable costs refers, in addition to cost of goods sold, to variable sales and distribution costs. These include direct marketing costs as well as other direct costs and correlates essentially with net revenue.
For more information about the segment, see Note 4.
July – September 2022
Net revenue grew by 3 percent to SEK 233 (226) million compared with the equivalent period in 2021. The decrease in local currencies was approximately 1 percent. The Nordics decreased net revenue by 9 percent and outside the Nordics net revenue increased by 7 percent. In local currencies the change was -11 and 3 percent, respectively.
Profit after variable costs amounted to SEK 45 (52) million, which is equivalent to a margin of 19.1 (23.0) percent. The decrease in the margin was primarily attributable to higher costs for shipping from Asia, higher purchasing prices, strengthened USD and extended campaigning to drive growth.
January – September 2022
Net revenue was SEK 717 (714) million, flat development compared with 2021. In local currencies the negative development was -3 percent. The Nordics decreased net revenue by 2 percent and outside the Nordics increased by 1 percent. In local currencies the decrease was 4 and 2 percent respectively
Profit after variable costs amounted to SEK 130 (182) million, equivalent to a margin of 18.2 (25.5) percent. The decrease in the margin was primarily attributable to the higher shipping costs from Asia, increased purchasing prices and strengthened USD together with extended campaigning activities.
Onroad
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Net revenue | 131 | 128 | 462 | 401 | 561 | 500 |
| Growth (%)¹ | 2% | 14% | 15% | 9% | 14% | 8% |
| Gross profit | 49 | 51 | 172 | 170 | 211 | 209 |
| Gross margin (%)¹ | 37.4% | 39.9% | 37.3% | 42.3% | 37.7% | 41.8% |
| Profit after variable costs¹ ² | 16 | 18 | 58 | 67 | 69 | 78 |
| Profit after variable costs (%)¹ | 12.6% | 14.3% | 12.6% | 16.7% | 12.4% | 15.6% |
| Number of orders (thousands)¹ | 140 | 143 | 514 | 448 | 634 | 568 |
| Average order value (AOV) (SEK)¹ | 934 | 896 | 897 | 897 | 884 | 881 |
| Active customers last 12 months (thousands)¹ | 449 | 418 | 449 | 418 | 449 | 414 |
¹ Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements. ² Variable costs refers, in addition to cost of goods sold, to variable sales and distribution costs. These include direct marketing costs as well as other direct costs and correlates essentially with net revenue.
Other direct costs mainly consist of freight, invoicing and packaging.
For more information about the segment, see Note 4.
July – September 2022
Net revenue increased by 2 percent to SEK 131 (128) million compared with the equivalent period in 2021. Growth in local currencies was approximately -1 percent. The growth in the Nordics and outside the Nordics was -3 and 8 percent, respectively. In local currencies the change was -5 and 3 percent, respectively.
Profit after variable costs, SEK 16 (18) million, was equivalent to a margin of 12.6 (14.3) percent. The decrease in the margin was primarily attributable to increased costs for shipping from Asia, higher purchasing prices, strengthened USD and more competitive pricing to drive revenue growth.
January – September 2022
Net revenue increased by 15 percent compared to 2021, totaling SEK 462 (401) million. Growth in local currencies was approximately 11 percent. Growth in the Nordics and outside the Nordics amounted to 13 and 17 percent respectively. In local currencies the change was 10 and 12 percent, respectively. Growth was driven by a stronger customer offering, both related to pricing and improved assortment.
Profit after variable costs amounted to SEK 58 (67) million, equivalent to a margin of 12.6 (16.7) percent. The decrease in the margin was primarily attributable to increased shipping costs, higher purchasing prices, strengthened USD and more competitive pricing.
Other
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Net revenue | 9 | 8 | 65 | 65 | 119 | 119 |
| Growth (%)¹ | 22% | -22% | -1% | 3% | 7% | 9% |
| Gross profit | 4 | 4 | 27 | 34 | 53 | 59 |
| Gross margin (%)¹ | 39.6% | 49.4% | 42.1% | 51.4% | 44.2% | 49.4% |
| Profit after variable costs¹ ² | 1 | 2 | 9 | 18 | 20 | 29 |
| Profit after variable costs (%)¹ | 13.9% | 30.7% | 14.2% | 27.8% | 16.8% | 24.2% |
² Variable costs refers, in addition to cost of goods sold, to variable sales and distribution costs. These include direct marketing costs as well as other direct costs and correlates essentially with net revenue. ¹Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements.
Other direct costs mainly consist of freight, invoicing and packaging.
July – September 2022
For more information about the segment, see Note 4.
Net revenue increased by 22 percent to SEK 9 (8) million compared with the equivalent period last year.
The margin decreased from 49.4 to 39.6 percent.
The activity level was low during summer period.
January – September 2022
Net revenue decreased by 1 percent to SEK 65 (65) million compared with the previous year.
The margin after variable costs decreased from 51.4 to 42.1 percent mainly due to increased costs including shipping and availability problems within some private brand products with strong gross margin.
The Pierce share was listed on the Nasdaq Stockholm Mid Cap on 26 March 2021 and trades under the ticker symbol PIERCE and ISIN code SE0015658364. In conjunction with the listing, a total of 5,468,750 shares were issued.
On 6 April 2021 a total of 534,600 shares were registered through a share issue based on the exercise of warrants from LTIP 2020/2025. On 6 July 2022 a total of 39,687,050 shares were registered through a new share issue. The number of registered shares, and votes, as of 30 September 2022, amounted to 79,374,100, equivalent to a quota value of SEK 0.02.
The share price at the beginning of the year was SEK 68.6 and was SEK 9.9 on the last trading day of the period. The number of shareholders was 1,459, of which the largest were Verdane Capital (29.9%), Procuritas (25.4%), Fourth AP fund (6.1%), Allianz (5.0%) and Handelsbankens Fund (4.2%).
The Company has launched warrant programs, long-term incentive programs – LTIP (entitling the right to acquire shares according to certain terms and conditions). See the additional information provided below.
LTIP 2021/2024
LTIP 2021/2024 was issued in March 2021 as a part of an incentive program for certain senior executives and key employees of the Group. The program comprises 376,443 warrants, all of which were subscribed as of 31 March 2021. The warrants were subscribed at market value, calculated applying the Black & Scholes model, equivalent to SEK 4 million. Following the rights issue in July 2022 the incentive program was recalculated and after the update each warrant grants the right to subscribe to 1,03 ordinary share in the Company.
The warrants can be exercised from the day after publication of the interim report for the period 1 January – 31 March 2024, however not earlier than on 1 April 2024, up to and including 31 August 2024, at an updated predetermined share price of SEK 71.2. With full subscription of the warrants, the Company's share capital can increase with a maximum of SEK 7,528.9, based on the current quota value.
The Company has reserved the right to repurchase warrants if, amongst other circumstances, the Participant's employment with the Company is terminated.
On 6 July 2022 Pierce Group AB (publ) finalized its preferential rights issue and a total of 39,687,050 shares were registered. Pierce's share capital increased by SEK 793,741 to SEK 1,587,482. The number of shares in Pierce Group AB after the rights issue amounted to 79,374,100 shares.
On 7 July 2022, following a completion of the rights issue, Pierce received approximately SEK 337 million after deductions of issue costs. After receipt of the proceeds from the rights issue, Pierce repaid bank loans of approximately SEK 180 million. Moreover, the Company decreased its credit facility from SEK 300 million to SEK 200 million. Considering the global uncertainty, the remaining proceeds from the rights issue will allow Pierce to strengthen the Company's financial capacity in order to continue Pierce's long-term growth strategy and to implement measures to increase profitability.
In all material aspects, net revenue and the sum of total costs and investments are equivalent to payments received and payments made. Payments received during the last 12-month period in EUR, SEK and NOK accounted for 55, 18 and 11 percent respectively. With regards to payments made, EUR, SEK, USD and PLN accounted for 45, 25, 14 and 9 percent respectively. In order to reduce exposure to effects on earnings and cash flow due to exchange rate fluctuations, the Group utilises currency derivatives for certain currencies, including EUR, PLN and USD.
Furthermore, operating assets and operating liabilities in foreign currency are revalued at the end of each month. This revaluation refers primarily to operating liabilities including trade payables. Exchange rate fluctuations arising from revaluations of operating balance sheet items are reported net, primarily as a part of the cost of goods sold.
If leasing agreements have been signed in a currency other than the functional currency of each Group company, the leasing liability is revalued at each month-end close. These revaluation effects, as well as the revaluation of financial balance sheet items, are reported in financial net.
The average number of employees during the quarter amounted to 415 (446). Of these, 138 (151) worked at the distribution warehouse in Poland and 267 (295) were white collar workers in Sweden, Poland and Spain.
Excluding customer services personnel and certain production staff, the number of white-collar workers was 201 (228).
As "Black Week" and Christmas occur in the fourth quarter, this quarter most often shows the highest level of net revenue, while the first quarter often shows the lowest. Together, these two quarters account for about half of the annual sales.
Pierce Group AB (publ), Corp. ID Number 556967-4392, is the Parent Company in the Pierce Group, and is a public company with registered offices in Stockholm, Sweden. Since 26 March 2021, Pierce Group AB (publ) is listed on the Nasdaq Stockholm Mid Cap.
The Parent Company is comprised of owning and managing the subsidiaries.
During the quarter, net revenue totaled SEK 2 (2) million and was fully attributable to sales to Group companies. Financial net mainly comprised of interest expenses regarding bond and shareholders' loans up and until April last year as the previous financing structure had been repaid. Net result before tax during the quarter was SEK -2 (0) million.
The Parent Company's equity at the end of the period was SEK 747 (392) million.
The CEO is employed by the Parent Company.
The Group's operations and results are affected by a number of external factors. The Pierce Group is primarily exposed to operational risks which are largely comprised of competition and market developments in local markets, quality of delivered goods mainly from Asia, inventory and product assortment risks, IT-related risks, and dependency on key individuals. A more detailed description of risks and risk management can be found in Pierce's Annual Report for 2021. During the recent year, the Covid-19 pandemic has impacted the operations through cost increases, certain product availability shortages in the market and through delays in deliveries. Shipping costs from Asia have increased significantly due to the global shortage of containers. There are continuing factors of uncertainty in the supply chain in the form of shortages of products and delays of certain goods, which challenges both access to goods and purchase prices. All in all, this negatively impacts the gross margin. This negative effect is expected to continue during forthcoming quarters. The inflation and possible recession's impact on customer behavior and demand also continues to be factors of uncertainty.
On 24 February 2022, the conflict between Russia and Ukraine started. The conflict is deemed to possibly imply a major impact on prices, exchange rates, import and export restrictions, availability of raw materials and goods and resources where Russia, Belarus and/or Ukraine are involved.
The Pierce Group has no direct operations in any of these countries which implies that the direct impact of the events is assessed as low. However, the indirect effects can prove to be significant depending on the manner in which the situation develops and how long the conflict continues. The primary effect is the impact on customer demand in general in Europe Since the beginning of the conflict, the decrease in demand has had a negative effect on Pierce's sales. Furthermore, the impact on the financial and foreign exchange markets could have a negative effect on Pierce.
Financial risks include e.g., currency risks (see previous page), interest rate risks and the risk of not being able to obtain sufficient financing. E-commerce is characterised, amongst other things, by a sharp increase in sales during certain
campaign periods. If Pierce's sales do not develop in line with the Group's expectations during these periods, this may affect both the result and financial position negatively.
In conjunction with the listing, the Group entered into a new financing agreement with one of the larger Swedish banks for a credit facility totalling SEK 300 million. During the reporting period, in connection with new share issue, the credit facility was decreased to SEK 200 million.
The credit facility contains certain financial covenants and there is a risk that Pierce will not be able to comply with them in the future. As of 30 September 2022, there was no risk of lack of compliance with covenants according to the agreement for the credit facility.
For further information, see Note 7.
In Interim Report for January – March 2022 and in Annual Report for 2021 the Board of Directors disclosed a material uncertainty of not being able to comply with the financial covenants, which could lead to a significant risk of going concern. That risk was mitigated by the rights issue completed in July 2022. For further information regarding the rights issue, see Significant events during the reporting period on page 11. In the Board's assessment, the material uncertainty of going concern is no longer relevant.
During third quarter, we continued to execute the next major stage in our efficiency enhancement work, which includes a number of initiatives within purchasing, pricing, the supply chain and overheads. There is a risk that we will not achieve the expected effect of these initiatives to improve the gross margin, shipping costs and overheads.
In the Prospectus published on 13 June 2022 the Board of Directors disclosed a tax risk related to VAT exposure in Poland. That risk was mitigated during the third quarter.
During the current interim period the Group did not have any related party transactions.
For further information regarding related parties see Note 6.
Pierce's Board of Directors has adopted the following financial targets1 .
Growth – 15-20%
In the medium to long term, grow net revenue by 15–20% on average per annum.
Adjusted operating margin – around 8%
In the medium to long term, reach an adjusted operating margin of around 8 percent.
Capital structure – 2.0x
Net debt/EBITDA2 not exceeding 2.0x, subject to temporary flexibility for strategic initiatives.
Dividend policy
In the coming years, free cash flows3 are planned to be used for the continued development4 of the Company and will, therefore, not be distributed to shareholders.
1 The Board adopted the financial targets in December 2020. Medium to long term should be understood as 3-5 years. 2 Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements.
3 Free cash flow refers to cash flow from operating activities and operations and investment activities.
4 Development of the company refers to e.g., investments in IT-hardware, IT-development, expansion of distribution warehouses, marketing, customer acquisition and business and asset acquisitions.
Upcoming financial events
17 February 2023 Interim report January – December 2022
31 March 2023 Annual report 2022
12 May 2023 Interim report January – March 2023
16 May 2023 Annual General Meeting
25 August 2023 Interim report January – June 2023
17 November 2023
Interim report January – September 2023
Telephone and web conference in conjunction with the publication of quarterly reports
CEO Henrik Zadig and acting CFO Niclas Olsson will hold a web telephone conference in English on 11 November 2022, 9.30 am CET, in conjunction with the publication of the quarterly report.
To participate in this conference, please call in on any of the following telephone numbers.
SE: +46-8-5055-8366
UK: +44-33-330-09034
US: +1-646-722-4902
The presentation and conference can be followed via the following web link: https://ir.financialhearings.com/pierce-group-q3-2022
The presentation material will be available prior to the start of the conference on Pierce Group's website via the following web link: https://www.piercegroup.com/en/reports-presentations/
Henrik Zadig, CEO, +46 73 146 14 60 Niclas Olsson, acting CFO, +46 70 889 05 75
The information in this Interim report comprises information which Pierce Group AB (publ) is obliged to disclose under the EU Market Abuse Regulation.
The undersigned hereby confirm that the interim report provides a true and fair view of the Parent Company's and Group's operations, financial position and results, and that it describes the significant risks and uncertainties to which the Parent Company and the companies included in the Group are exposed.
Stockholm, 11 November 2022
Henrik Zadig CEO
THIS IS A TRANSLATION FROM THE SWEDISH ORIGINAL
Pierce Group AB (publ), corporate identity number 556967-4392
Introduction
We have reviewed the condensed interim report for Pierce Group AB as of September 30, 2022 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and 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.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review 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 other generally accepted auditing standards in Sweden. The procedures performed in a review do 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 interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.
Stockholm, 11 November 2022
Ernst & Young AB
Jonatan Hansson Authorized Public Accountant
Q3/2022
Condensed consolidated statement of profit/loss
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | ||||
|---|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | Note | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Net revenue | 3.4 | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Cost of goods sold | -227 | -202 | -747 | -637 | -977 | -866 | |
| Gross profit | ব | 146 | 159 | 496 | 544 | 680 | 728 |
| Sales and distribution costs | -116 | -17 | -403 | -375 | -540 | -512 | |
| Administration costs | -45 | -40 | -133 | -126 | -176 | -169 | |
| Other operating income and expenses | O | O | 2 | -2 | 4 | -1 | |
| Operating profit | র্ব | -15 | 2 | -37 | 41 | -32 | 46 |
| Financial net | 3 | -4 | 9 | -23 | 12 | -20 | |
| Profit/loss before tax | ব | -11 | -2 | -28 | 17 | -20 | 26 |
| Tax | -8 | 1 | -6 | ਤ | -9 | O | |
| Profit/loss for the period | -20 | -1 | -15 | 20 | -29 | 26 | |
| Attributable to shareholders of the parent | |||||||
| company | -20 | -1 | -35 | 20 | -29 | 26 | |
| Earnings per share | |||||||
| Earnings per share before dilution (SEK) | -0.26 | -0.03 | -0.66 | 0.54 | -0.59 | 0.68 | |
| Earnings per share after dilution (SEK) | -0.26 | -0.03 | -0.66 | 0.54 | -0.59 | 0.68 | |
| Average number of shares before dilution (thousands) |
77,217 | 39.687 | 52,335 | 37,818 | 49,147 | 38,289 | |
| Average number of shares after dilution (thousands) |
77,217 | 39.687 | 52,335 | 37.941 | 49,147 | 38,378 |
Consolidated statement of comprehensive income
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | ||||
|---|---|---|---|---|---|---|---|
| SEKm | Note | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Profit/loss for the period | -20 | -35 | 20 | -29 | 26 | ||
| Items that may subsequently be reclassified to | |||||||
| income statement | |||||||
| Translation difference | O | O | 3 | ||||
| Other comprehensive income for the period | O | O | S | 5 | |||
| Comprehensive income for the period and | |||||||
| attributable to shareholders of the parent | |||||||
| company | -20 | -1 | -32 | 21 | -26 | 28 |
Condensed consolidated statement of financial position
| Sep 30 | Sep 30 | Dec 31 | |
|---|---|---|---|
| SEKm Note |
2022 | 2021 | 2021 |
| Assets | |||
| Non-current assets | |||
| Intangible assets | 348 | 350 | 351 |
| Property, plant and equipment | 15 | 16 | 18 |
| Right-of-use assets | 61 | 67 | 63 |
| Financial assets 7 |
M | 2 | 2 |
| Deferred tax assets | 5 | 13 | 10 |
| Total non-current assets | 432 | 448 | 445 |
| Current assets | |||
| Inventory | 504 | 479 | 534 |
| Other current assets 5 |
42 | 29 | 38 |
| Cash and cash equivalents | 115 | 23 | 18 |
| Total current assets | 661 | 531 | 591 |
| Total assets | 1,093 | 979 | 1,035 |
| Equity and liabilities | |||
| Total equity attributable to shareholders of the parent company | 740 | 432 | 441 |
| Non-current liabilities | |||
| Leasing liabilities | 43 | 54 | 48 |
| Deferred tax liabilities | 28 | 29 | 28 |
| Total non-current liabilities | 72 | 83 | 76 |
| Current liabilities | |||
| 7 Liabilities to credit institutions |
128 | 178 | |
| Leasing liabilities | 25 | 22 | 23 |
| Trade payables | 98 | 128 | 147 |
| Other current liabilities 5 |
158 | 186 | 169 |
| Total current liabilities | 281 | 464 | 517 |
| Total equity and liabilities | 1.093 | 979 | 1,035 |
Condensed consolidated statement of changes in equity
| Retained earnings |
Total equity attributable to |
|||||
|---|---|---|---|---|---|---|
| including | shareholders | |||||
| Share | Other capital Translation | profit/loss for | of the Parent | |||
| SEKm | capital | contributions reserve | the year | Company | ||
| Opening balance 2021-01-01 | O | 128 | -1 | -70 | 57 | |
| Profit/loss for the year | 20 | 20 | ||||
| Other comprehensive income for the year | 1 | 1 | ||||
| Total comprehensive income for the year | 1 | 20 | 21 | |||
| Transactions with shareholders | ||||||
| New share issue including issue costs | 0 | 350 | 350 | |||
| Bonus issue | 1 - |
|||||
| Issue of warrants including issue costs | 4 | 4 | ||||
| Total | O | 354 | 354 | |||
| Closing balance 2021-09-30 | 1 481 |
O | -49 | 432 | ||
| Opening balance 2022-01-01 | 484 1 |
O | -44 | 441 | ||
| Profit/loss for the year | -35 | -35 | ||||
| Other comprehensive income for the year | 3 | 3 | ||||
| Total comprehensive income for the year | 3 | -35 | -32 | |||
| Transactions with shareholders | ||||||
| New share issue including issue costs¹ | 1 330 |
331 | ||||
| Total | 1 330 |
334 | ||||
| Closing balance 2022-09-30 | 2 | 814 | ਤ | -78 | 740 | |
| 1 Now chara icrua including icrue caste was finalized in July 2022 total incue costs amountad to SEV 16 million |
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | ||||
|---|---|---|---|---|---|---|---|
| SEKm | Note | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Operating activities | |||||||
| Operating profit | -15 | 2 | -37 | 41 | -32 | 46 | |
| Adjustments for non-cash items¹ | 8 | 9 | 45 | 31 | 58 | 45 | |
| Paid interest | -5 | -1 | -9 | -10 | -11 | -12 | |
| Realised cash hedges | 5 | 0 | 9 | 0 | 10 | 1 | |
| Paid/received tax | -3 | -2 | -8 | -3 | -9 | -4 | |
| Cash flow from operating activities | |||||||
| before changes in net working capital | -9 | 8 | -1 | 58 | 17 | 76 | |
| Changes in net working capital | -22 | -48 | -17 | -80 | -74 | -137 | |
| Cash flow from operating activities | -31 | -41 | -18 | -22 | -57 | -61 | |
| Investing activities | |||||||
| Investments in non-current assets | -3 | -3 | -12 | -17 | -21 | -26 | |
| Paid/received blocked funds | — | — | — | 14 | 0 | 14 | |
| Cash flow from investing activities | -3 | -3 | -12 | -3 | -21 | -12 | |
| Financing activities | |||||||
| New share issue including issue costs | 331 | — | 331 | 350 | 331 | 350 | |
| Issue of warrants including issue costs | — | — | — | 4 | — | 4 | |
| Change in utilised credit facility | -45 | 45 | -26 | 129 | 21 | 177 | |
| Repayment of shareholder loans² | — | — | — | -64 | — | -64 | |
| Repayment of liabilities to credit institutions³ | -150 | — | -157 | -414 | -157 | -414 | |
| Repayment of leasing liabilities | -6 | -5 | -17 | -15 | -22 | -20 | |
| Paid contingent consideration | — | — | — | -30 | — | -30 | |
| Cash flow from financing activities | 130 | 40 | 131 | -40 | 173 | 2 | |
| Cash flow for the period | 96 | -4 | 100 | -66 | 95 | -71 | |
| Cash and cash equivalents | 23 | 27 | 18 | 87 | 23 | 87 | |
| Exchange rate difference | -4 | 0 | -4 | 2 | -3 | 2 | |
| Cash and cash equivalents end of period | 115 | 23 | 115 | 23 | 115 | 18 |
¹ Adjustments for non-cash items mainly comprises depreciation and amortisation and changes in the short term provisions. ²
Repaid amount referred to capitalised interest expenses, which for the last interim period and for the previous financial year amounted to SEK 3 million. ³Of which SEK 64 million referred to capitalised interest expenses during the last interim period and the previous financial year. During the current reporting period no interest expenses were capitalized..
Q3/2022
Condensed Parent Company statement of profit/loss
| Jul-Sep | Jan-Sep | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEKm | 2022 | 2021 | 2022 | 2021 | 2021 | |
| Net revenue | 2 | த | 12 | |||
| Gross profit | N | 2 | ರಿ | 12 | ||
| Administration costs | -7 | -3 | -15 | -18 | -21 | |
| Operating profit | -5 | i | - / | -9 | -9 | |
| Financial net | 3 | ব | -12 | -12 | ||
| Profit/loss after financial items | -2 | O | P | -21 | -21 | |
| Appropriations | 27 | |||||
| Profit/loss before tax | -2 | O | -3 | -21 | 6 | |
| laxında və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və bir və b | -2 | |||||
| Profit/loss for the period | -2 | O | P | -21 | ব |
Condensed Parent Company balance sheet
| SEKm | Sep 30 2022 |
Sep 30 2021 |
Dec 31 2021 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Shares in group companies | 308 | 308 | 308 |
| Receivables from group companies | 412 | 77 | 77 |
| Total non-current assets | 720 | 385 | 385 |
| Current assets | |||
| Receivables from group companies | 28 | 28 | |
| Other current assets | 2 | 1 | 2 |
| Cash and cash equivalents | য | 8 | 7 |
| Total current assets | 34 | 10 | 37 |
| Total assets | 753 | 395 | 422 |
| Equity and liabilities Total equity |
747 | 392 | 419 |
| Current liabilities | |||
| Other current liabilities | ട് | 3 | 3 |
| Total current liabilities | 6 | 3 | m |
| Total equity and liabilities | 753 | 395 | 422 |
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU. The Group's Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and the applicable parts of the Swedish Annual Accounts Act.
The Interim Report for the Parent Company has been prepared in accordance with Chapter 9 of the Annual Accounts Act, Interim reports, and RFR 2 Accounting for legal entities.
For the Group and the Parent Company, the same accounting principles, basis for calculations and assessments have been applied as applied in the Annual Report for 2021. For a description of the Group's applied accounting principles, see Note 1 and Note 2 in the Annual Report for 2021.
Disclosures in accordance with IAS 34.16A are shown, in the financial statements and associated Notes in the interim information, in addition to pages 1–13 which form an integral part of this financial report.
All amounts in this report are stated in millions of Swedish kronor (SEKm) unless stated otherwise. Rounding variances may occur.
Information on future standards
A few standards and interpretations were updated during this financial year. These have had no impact on the preparation of these financial statements. None of the IFRS or IFRIC interpretations that are yet to come into force are expected to have any significant impact on the Group.
The preparation of the Interim Report requires that the Company's management make assessments and estimates as well as assumptions that affect the application of the accounting principles and the reported amounts of assets, liabilities, income, and expenses. The actual outcome may differ from these estimates. Changes in estimates are recognised in the period in which the change occurs, if the change affected only that period, or in the period in which the change is made and future periods if the change affects both the current period and future periods.
Important estimations and assessments can be found in Note 2 in the 2021 Annual Report. No changes have been made to these estimations and assessments that could have a significant impact on the interim report.
The Group's revenue consists exclusively of the sale of goods via the Group's websites and a physical store. Revenue is reported at a given point in time as the conditions for control being transferred over time are not met. In addition to the segments, geographical area is also an important attribute when specifying revenue, and this is presented in the table below.
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Sweden | 27 | 31 | 80 | 87 | 107 | 113 |
| Other Nordics | 27 | 28 | 77 | 74 | 102 | 99 |
| Outside the Nordics | 179 | 166 | 559 | 553 | 769 | 763 |
| Revenue Offroad | 233 | 226 | 717 | 714 | 977 | 974 |
| Sweden | 26 | 26 | 89 | 77 | 102 | 90 |
| Other Nordics | 35 | 37 | 136 | 122 | 155 | 141 |
| Outside the Nordics | 70 | 65 | 237 | 202 | 303 | 269 |
| Revenue Onroad | 131 | 128 | 462 | 401 | 561 | 500 |
| Sweden | 6 | 6 | 36 | 39 | 66 | 70 |
| Other Nordics | 3 | 2 | 29 | 26 | 53 | 50 |
| Outside the Nordics | — | — | — | — | — | — |
| Revenue Other | 9 | 8 | 65 | 65 | 119 | 119 |
| Sweden | 59 | 63 | 205 | 203 | 275 | 273 |
| Other Nordics | 65 | 66 | 242 | 222 | 309 | 290 |
| Outside the Nordics | 249 | 231 | 796 | 755 | 1,072 | 1,031 |
| Revenue Group | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Offroad | 233 | 226 | 717 | 714 | 977 | 974 |
| Onroad | 131 | 128 | 462 | 401 | 561 | 500 |
| Other | 9 | 8 | 65 | 65 | 119 | 119 |
| Net revenue | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Offroad | 95 | 104 | 301 | 344 | 419 | 462 |
| Onroad | 49 | 51 | 172 | 170 | 211 | 209 |
| Other | 4 | 4 | 27 | 34 | 53 | 59 |
| Intra-group costs | -2 | 0 | -5 | -4 | -4 | -2 |
| Gross profit | 146 | 159 | 496 | 544 | 680 | 728 |
| Offroad | -50 | -52 | -171 | -162 | -233 | -224 |
| Onroad | -32 | -33 | -114 | -103 | -142 | -131 |
| Other | -2 | -1 | -18 | -15 | -33 | -30 |
| Variable sales and distribution costs¹ | -85 | -86 | -304 | -281 | -407 | -384 |
| Offroad | 45 | 52 | 130 | 182 | 187 | 238 |
| Onroad | 16 | 18 | 58 | 67 | 69 | 78 |
| Other | 1 | 2 | 9 | 18 | 20 | 29 |
| Intra-group costs | -2 | 0 | -5 | -4 | -4 | -2 |
| Profit after variable costs¹ ² | 60 | 72 | 192 | 263 | 273 | 343 |
| Other expenses in the operation¹ ³ | -75 | -70 | -229 | -222 | -304 | -297 |
| Operating profit | -15 | 2 | -37 | 41 | -32 | 46 |
| Financial net³ | 3 | -4 | 9 | -23 | 12 | -20 |
| Pre-tax income | -11 | -2 | -28 | 17 | -20 | 26 |
¹Alternative performance measures (APM), see pages 23 - 25 for definitions and purpose of these measurements.
Other direct costs mainly consist of freight, invoicing and packaging. ²Variable costs refers, in addition to cost of goods sold, to variable sales and distribution costs. These include direct marketing costs as well as other direct costs and correlates essentially with net revenue.
³Other expenses in the operation and financial net regards intra-group costs.
Pierce sells gear, parts and accessories to riders. The operating segments into which the Group's operations are divided are:
- Offroad: sales to motocross and enduro riders under the 24MX brand.
- Onroad: sales to customers who ride motorcycles on highroads. Sales are under the XLMOTO brand.
- Other: sales to snowmobile riders under the Sledstore brand and sales via a physical store in Stockholm.
- Intra-group transactions:
- Intra-group transactions included under Gross profit and Profit after variable costs refer to revaluation of net working capital items, mainly included in cost of goods sold. These are not allocated to segments.
- Intra-group costs, after Profit after variable costs, refers to expenses for group-wide functions, such as central administration, which are not allocated to segments.
No information is provided on segment assets or liabilities as no separate segmentation is performed in reporting the consolidated financial position.
Contingent consideration and currency derivatives are the only instruments reported at fair value through profit/loss. Other financial instruments are valued at amortised cost in the statement of financial position and the reported values corresponded in all material respects with the fair value.
The liability regarding the contingent consideration last year was attributable to level 3 and the currency derivatives to level 2 in the fair value hierarchy, in accordance with IFRS 13.
The valuation of currency derivatives is based on official market data for exchange rates. At the end of the period, the fair value amounted to SEK 8 (0) million and these derivatives have been classified as current assets.
Other related party transaction
During the current interim period the Group did not have any related party transactions. In the comparison quarter 2021, related party sales transactions totaled SEK 42 thousand. In the comparison interim period related party sales transactions totaled SEK 51 thousand and purchases totaled SEK 197 thousand. See Note 29 in the Annual Report for 2021 for more information.
Applied input for the valuation of level 3 financial liabilities
The valuation of the contingent consideration took place in two steps; a probability adjustment was assigned to an assumed value in case of a listing or sale, as well as a date for payment and then, this probability-adjusted value was discounted to present value based on a discount rate. The contingent consideration was settled during the second quarter last year.
Warrant program
The Group has a warrant program as a part of an incentive program for certain senior executives and key employees in the Group. See page 11 for further information.
All transactions are based on market terms and conditions.
| Sep 30 | Sep 30 | Dec 31 | |
|---|---|---|---|
| SEKm | 2022 | 2021 | 2021 |
| To credit institutions for the Group's own liabilities and provisions | |||
| Deposits for fulfillment of payments | 2 | 2 | 2 |
| Utilised credit facility¹ | — | 3 | 26 |
| Total pledged assets | 2 | 5 | 28 |
¹Utilised credit facility refers to utilised overdraft, which does not include obtained loan or capitalised loan and interest expenses.
In conjunction with the listing, the previous financing structure was replaced by a SEK 300 million credit facility, which was decreased during the current quarter to SEK 200 million in connection with new share issue. At the end of the quarter Pierce has not utilised the credit facility, holding a positive cash position. There is a surety given on the credit facility provided by the Parent Company, Pierce Group AB, in favor of the subsidiary, Pierce AB's, liabilities to credit institutions.
The credit facility includes certain financial covenants. See more information under the "Risks and factors of uncertainty" section, page 12.
No significant events took place after the end of the reporting period.
Pledged shares in Pierce AB relating to bond loans, as well as blocked funds, were released in conjunction with the early redemption that took place in the beginning of the second quarter 2021. Pledged assets at the end of the quarter referred to deposits paid and utilised credit facility.
Financial measures not defined in accordance with IFRS
Pierce applies financial measurements in its interim reports which are not defined in accordance with IFRS. The Company believes that these measurements provide valuable supplementary information to investors and the Company's management. As not all companies calculate Alternative Performance Measures in the same manner, these measures are not always comparable with measures used by other companies. These financial measurements should, therefore, not be seen to comprise a replacement for measures defined according to IFRS. Following a review of the alternative performance measures, an update and clarification of "Items affecting comparability" measure has taken place in connection with the quarterly report in June 2022. The item was amended to better describe operational measures for Pierce.
Definitions
The interim report contains financial performance measures in accordance with the applied framework for financial reporting, which is based on IFRS. In addition, there are other performance measures and indicators which are used as a supplement to the financial information. These performance measures are applied to provide the Group's stakeholders with financial information for the purpose of analysing the Group's operations and goals. The various performance measures applied which are not defined according to IFRS are described below.
Financial Performance Measures – Group
| Performance measure | Definition | Purpose |
|---|---|---|
| Adjusted EBITDA | EBITDA, excluding items affecting comparability. |
This measure is used to measure the profit from the ongoing operations, excluding items affecting comparability, amortisation, depreciation, and impairment. |
| Adjusted EBITDA (%) | Adjusted EBITDA in relation to net revenue. |
The performance measure is used to assess the profitability generated by the ongoing operations, excluding items affecting comparability, amortisation, depreciation, and impairment. |
| Adjusted EBITDA excluding IFRS 16 |
Operating profit (EBIT) excluding depreciation, amortisation and items affecting comparability, less rental costs for leasing agreements reported in the statement of financial position. |
The measure aims to measure the profit generated by the ongoing operations, including expenses for office rent but excluding items affecting comparability, amortisation, depreciation, and impairment |
| Rental costs essentially correspond to depreciation on right-of-use assets and interest expenses on leasing liabilities. |
||
| Adjusted operating margin (EBIT) (%) |
Adjusted operating profit (EBIT) in relation to net revenue. |
The performance measure is used to monitor the Company's profitability generated by the operating activities, including depreciation and amortisation, but excluding items affecting comparability. |
| Adjusted operating profit (EBIT) |
Operating profit (EBIT) excluding items affecting comparability. |
This measure is used to measure the profit generated by the ongoing operations, including amortisation, depreciation, and impairment, but excluding items affecting comparability. |
| Amortisation related to business acquisitions |
Amortisation less amortisation excluding business acquisitions. |
The purpose is to measure the performance measure's impact on operating profit (EBIT). |
| EBITDA | Operating profit (EBIT), excluding amortisation, depreciation, and impairment. |
The measure is used to measure the profit generated by ongoing operations before amortisation, depreciation, and impairment. |
| CAGR | Compound annual growth rate in percent over a given period. |
The measure shows the Company's growth over time. |
| The formula to calculate CAGR is: (ending value/starting value) ^ (1/number of years between the ending value and strarting value)-1. |
||
| Gross margin (%) | Gross profit in relation to net revenue. | This measure Is used to measure profitability after deduction of cost of goods sold. |
| Growth (%) | Net revenue for the period compared with net revenue during the corresponding period last year. |
This performance measure makes it possible to analyse the Group's and the segments' growth in net revenue. |
| Growth in local currencies (%) | Change in net revenue, adjusted for exchange rate changes and business acquisitions, in comparison with the corresponding period last year. |
This measure enables follow-up of the development of net revenue excluding exchange rate effects and business acquisitions. |
| Growth per geographical area (%) | Net revenue for the period for a geographical area compared to net revenue for the same geographical area during the corresponding period last year. |
This measure makes it possible to analyse net revenue growth for the Group specified according to geographical area. |
| Performance measure | Definition | Purpose |
|---|---|---|
| Items affecting comparability | Items affecting comparability refers to material transactions lacking a clear connection to the ordinary operations, and Company's underlying earnings trend over which are not expected to occur regularly. time. These transactions include, for instance, advisory and integration costs in conjunction with business acquisitions, IPO or new share issue costs, advisory and directly attributable costs in conjunction with essential restructuring or efficiency programs/projects, and changes in fair value regarding contingent consideration. |
This measure is excluded in calculating adjusted measures which are used to monitor the |
| Net debt/EBITDA | Net debt excluding IFRS 16 in relation to adjusted EBITDA excluding IFRS, during the last twelve months. |
This measure is used to measure the debt/ equity ratio and to follow up on Pierce's financial targets on capital structure. |
| Net debt excluding IFRS 16 |
Liabilities to credit institutions, decreased by cash and cash equivalents at the end of the period. Pierce's assessment of the Groups' actual net debt corresponds to liabilities to credit institutions, and that is why shareholders loans and leasing liabilities are excluded. |
This measure is used to monitor the indebtedness, financial flexibility, and capital structure. |
| Net working capital | Inventory and other operating assets less other operating liabilities. |
This measure is used to analyse the Company's short-term tied up capital. |
| Net working capital (%) | Net working capital in relation to net revenue. |
This measure is a measure of how efficiently working capital is managed. |
| Operating cash flow | Cash flow from the ongoing operations, excluding paid interest, realised cash hedges and tax paid/received, with deduction for investments in non-current assets, repayment of leasing liabilities and interest expenses on leasing liabilities. |
This measure shows the underlying cash flow generated from the operating activities. |
| Other operating costs | Overhead costs, amortisation, depreciation, impairment, and items affecting comparability. |
This measure shows the costs for intra-Group functions such as central administration costs which are not distributed over segments. |
| Overhead costs | Operating costs, excluding variable sales and distribution costs, amortisation, depreciation, impairment, and items affecting comparability. Operating costs refer to sales and distribution costs, administration costs, and other operating revenue and costs. |
Costs that are not allocated to segments, but which each segment contributes to cover. These costs are largely fixed and semi-fixed. The measure is used to calculate the scalability of this part of the cost mass, see overhead costs (%) below for more information. |
| Overhead costs (%) | Overhead costs in relation to net revenue. | This measure shows the scalability of the Company's semi-fixed and fixed cost structure. |
| Other non-cash items | Non-cash items less repayment of leasing liabilities and interest expenses on leasing liabilities. |
This measure excludes other non-cash flow impacting items and is used to calculate the operating cash flow. |
| Other cash flow | Cash flow from financing activities, excluding net changes In Ioans and cash hedges, and tax paid/received as well as interest, less interest expenses on leasing liabilities. |
This measure is used, together with operating cash flow, received/paid blocked funds and repayment of leasing liabilities, less realised net changes in loans, to calculate the cash flow for the period. |
| Profit after variable costs | Gross profit less variable sales and distribution costs. |
The measure is used to measure contribution after all variable costs. |
| Profit after variable costs (%) | revenue. | Profit after variable costs in relation to net This measure is used to illustrate profitability after deduction of all variable costs. |
| Variable sales and distribution costs |
Sales and distribution costs less non- variable sales and distribution costs. Variable sales and distribution costs refers to direct marketing costs and other direct costs. Other direct costs essentially include costs for shipping to end customer, invoicing, and packaging. |
This measure is monitored at Group and segment level in order to calculate results after variable costs. |
Operating performance measures – Group
| Performance measure | Definition | Purpose | ||
|---|---|---|---|---|
| Active customers during the last 12 months |
Number of customers making purchases on at least one occasion during the last 12 months in one of the online stores. |
This measure is primarily relevant at segment level and illustrates the number of individual customers choosing to order goods on several occasions, which shows the Company's capability to attract customers. |
||
| One customer can be counted several times if they make purchases in different stores. |
||||
| Average order value (AOV) | Net revenue for the period divided by number of orders. |
This measure is used as an indicator of revenue generation per customer. |
||
| Net revenue from private brands | Net revenue for the period less net revenue for the period from external brands from and net revenue not attributable to brands such as revenue from freight and accrued income. |
Interesting to follow over time as these products are unique and can often be sold at attractive prices and at a relatively high gross margin. |
||
| Number of orders | Number of orders handled during the period. |
This measure is used to measure customer activity generating sales. |
Reconciliation of Alternative Performance Measures from statement of profit/loss
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Gross profit | 146 | 159 | 496 | 544 | 680 | 728 |
| Variable sales and distribution costs | -85 | -86 | -304 | -281 | -407 | -384 |
| Profit after variable costs | 60 | 72 | 192 | 263 | 273 | 343 |
| Operating profit (EBIT) | -15 | 2 | -37 | 41 | -32 | 46 |
| Reversal of depreciation and amortisation | 13 | 12 | 37 | 35 | 49 | 46 |
| EBITDA | -2 | 14 | 0 | 75 | 18 | 93 |
| Reversal of items affecting comparability | 6 | 1 | 7 | 12 | 7 | 12 |
| Adjusted EBITDA | 4 | 15 | 7 | 87 | 25 | 104 |
| Operating profit (EBIT), past twelve months | -32 | 67 | -32 | 67 | -32 | 46 |
| Reversal of depreciation and amortisation, | ||||||
| past twelve months | 49 | 46 | 49 | 46 | 49 | 46 |
| Reversal of items affecting comparability, | ||||||
| past twelve months | 7 | 24 | 7 | 24 | 7 | 12 |
| Rental costs, past twelve months, regarding | ||||||
| leasing agreements reported in the statement of | ||||||
| financial position¹ | -24 | -24 | -24 | -24 | -24 | -23 |
| Adjusted EBITDA excluding IFRS 16 | 0 | 113 | 0 | 113 | 0 | 81 |
| ¹ Refers in all significance to depreciation of right-of-use assets and interest expenses on leasing liabilities. |
||||||
| Operating profit (EBIT) | -15 | 2 | -37 | 41 | -32 | 46 |
| Reversal of items affecting comparability | 6 | 1 | 7 | 12 | 7 | 12 |
| Adjusted operating profit (EBIT) | -9 | 3 | -30 | 52 | -24 | 58 |
| Sales and distribution costs | -116 | -117 | -403 | -375 | -540 | -512 |
| Reversal of non-variable sales and distribution | ||||||
| costs | 31 | 31 | 99 | 94 | 133 | 128 |
| Variable sales and distribution costs | -85 | -86 | -304 | -281 | -407 | -384 |
| Sales and distribution costs | -116 | -117 | -403 | -375 | -540 | -512 |
| Administration costs | -45 | -40 | -133 | -126 | -176 | -169 |
| 0 | 0 | 2 | -2 | 4 | -1 | |
| Other operating income and expenses | -711 | -681 | ||||
| Operating costs Reversal of variable sales and distribution costs |
-160 85 |
-157 86 |
-533 304 |
-503 281 |
407 | 384 |
| -303 | -297 | |||||
| Other expenses in the operation Reversal of depreciation and amortisation |
-75 13 |
-70 12 |
-229 37 |
-222 35 |
49 | 46 |
| Reversal of items affecting comparability | 6 | 1 | 7 | 12 | 7 | 12 |
| Overhead costs | -57 | -57 | -185 | -176 | -248 | -239 |
| Amortisation | -6 | -6 | -17 | -15 | -22 | -20 |
| Reversal of amortisation excluding business | ||||||
| acquisitions | 6 | 5 | 16 | 14 | 21 | 19 |
| Amortisation related to business acquisitions | 0 | 0 | 0 | -1 | -1 | -1 |
| IPO costs | 0 | -1 | -1 | -9 | -1 | -9 |
| Change in fair value, contingent consideration | — | — | — | -3 | — | -3 |
| Other | -5 | — | -6 | -0 | -6 | -0 |
| Items affecting comparability | -6 | -1 | -7 | -12 | -7 | -12 |
Reconciliation of Alternative Performance Measures from statement of financial position
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Inventory | 504 | 479 | 504 | 479 | 504 | 534 |
| Other current assets | 42 | 29 | 42 | 29 | 42 | 38 |
| Current tax receivables | -10 | -2 | -10 | -2 | -10 | -5 |
| Current investments | -8 | -0 | -8 | -0 | -8 | -3 |
| Other current operating assets | 24 | 27 | 24 | 27 | 24 | 30 |
| Trade payables | -98 | -128 | -98 | -128 | -98 | -147 |
| Other current liabilities | -158 | -186 | -158 | -186 | -158 | -169 |
| Reversal of: | ||||||
| Current tax liabilities | 3 | 2 | 3 | 2 | 3 | 3 |
| Current provisions | 6 | 6 | 6 | 6 | 6 | 8 |
| Other current operating liabilities | -248 | -305 | -248 | -305 | -248 | -305 |
| Net working capital | 280 | 200 | 280 | 200 | 280 | 260 |
| Liabilities to credit institutions | 0 | 128 | 0 | 128 | 0 | 178 |
| Cash and cash equivalents | -115 | -23 | -115 | -23 | -115 | -18 |
| Net debt excluding IFRS 16¹ | -115 | 105 | -115 | 105 | -115 | 160 |
| Net debt excluding IFRS 16 (A)¹ | -115 | 105 | -115 | 105 | -115 | 160 |
| Adjusted EBITDA excluding IFRS 16, | ||||||
| past twelve months (B) | 0 | 113 | 0 | 113 | 0 | 81 |
| Net debt/EBITDA (A) / (B) | -267 | 1 | -267 | 1 | -267 | 2 |
¹ Positive values refer to net debt, whereas negative values refer to net asset
Reconciliation of Alternative Performance Measures from statement of cash flow
| Jul-Sep | Jan-Sep | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Cash flow from operating activities | -31 | -41 | -18 | -22 | -57 | -61 |
| Investments in non-current assets | -3 | -3 | -12 | -17 | -21 | -26 |
| Repayment of leasing liabilities | -6 | -5 | -17 | -15 | -22 | -20 |
| Interest expenses on leasing liabilities | -1 | -1 | -3 | -3 | -3 | -4 |
| Reversal of: | ||||||
| Paid interest | 5 | 1 | 9 | 10 | 11 | 12 |
| Realised cash hedges | -5 | 0 | -9 | 0 | -10 | -1 |
| Paid/received tax | 3 | 2 | 8 | 3 | 9 | 4 |
| Operating cash flow | -38 | -46 | -42 | -43 | -94 | -96 |
| Adjustments for non-cash items | 8 | 9 | 45 | 31 | 58 | 45 |
| Repayment of leasing liabilities | -6 | -5 | -17 | -15 | -22 | -20 |
| Interest expenses on leasing liabilities | -1 | -1 | -3 | -3 | -3 | -4 |
| Other non-cash items | 2 | 3 | 25 | 13 | 33 | 21 |
| Cash flow from financing activities | 130 | 40 | 131 | -40 | 173 | 2 |
| Paid interest | -5 | -1 | -9 | -10 | -11 | -12 |
| Realised cash hedges | 5 | 0 | 9 | 0 | 10 | 1 |
| Paid/received tax | -3 | -2 | -8 | -3 | -9 | -4 |
| Reversal of: | ||||||
| Interest expenses on leasing liabilities | 1 | 1 | 3 | 3 | 3 | 4 |
| Net change in loans¹ | 195 | -45 | 183 | 379 | 135 | 331 |
| Repayment of leasing liabilities | 6 | 5 | 17 | 15 | 22 | 20 |
| Other cash flow | 329 | -2 | 325 | 343 | 324 | 342 |
¹Net change in loans refers to changes in the utilised credit facility, repayment of shareholder loans, repayment of liabilities to credit institutions and paid contingent consideration.
Reconciliation of other Alternative Performance Measures
| Jul-Sep | Jan-Sep | Oct 2021- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Net revenue (A) | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Number of orders (thousands) (B) | 371 | 385 | 1,315 | 1,290 | 1,761 | 1,735 |
| Average order value (AOV) (SEK) (A) / ((B) / 1,000) |
1,004 | 936 | 945 | 915 | 941 | 919 |
| Net revenue | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Reversal of net revenue from external brands | -195 | -200 | -680 | -654 | -914 | -888 |
| Non-branded net revenue | -39 | -31 | -75 | -75 | -97 | -98 |
| Net revenues from private brands | 138 | 129 | 489 | 452 | 646 | 609 |
Reconciliation of Alternative Performance Measures concerning growth
| Jul-Sep | Jan-Sep | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEKm (unless stated otherwise) | 2022 | 2021 | 2022 | 2021 | Sep 2022 | 2021 |
| Net revenue for the period (A) | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Net revenue for the period previous year (B) | 361 | 329 | 1,181 | 1,109 | 1,595 | 1,523 |
| Growth (%) (A) / (B) -1 | 3% | 10% | 5% | 6% | 4% | 5% |
| Net revenue for the period in local currencies¹ (A) | 359 | 365 | 1,204 | 1,218 | 1,622 | 1,636 |
| Net revenue for the period previous year (B) | 361 | 329 | 1,181 | 1,109 | 1,595 | 1,523 |
| Growth in local currencies (%) (A) / (B) -1 ¹ Net revenue for both the period and the period last year in local currencies, converted to SEK using previous year's exchange rates. |
-0% | 11% | 2% | 10% | 2% | 7% |
| Net revenue Nordics for the period (A) | 124 | 129 | 447 | 425 | 584 | 563 |
| Net revenue Nordics for the period | ||||||
| previous year (B) | 129 | 108 | 425 | 382 | 550 | 507 |
| Growth Nordics (%) (A)/(B) -1 | -4% | 20% | 5% | 11% | 6% | 11% |
| Net revenue outside the Nordics for the period (A) Net revenue outside the Nordics for the period |
249 | 231 | 796 | 755 | 1,072 | 1,031 |
| previous year (B) | 231 | 221 | 755 | 727 | 1,044 | 1,016 |
| Growth outside the Nordics (%) (A) / (B) -1 | 7% | 5% | 5% | 4% | 3% | 1% |
| Net revenue (A) | 373 | 361 | 1,243 | 1,181 | 1,656 | 1,594 |
| Net revenue, 2 years ago (B) | 329 | 291 | 1109 | 899 | 1,453 | 1,243 |
| Number of years calculated (C) | 2 | 2 | 2 | 2 | 2 | 2 |
| CAGR (%) ((A) / (B)) ^(1 / (C)) -1 | 6% | 11% | 6% | 15% | 7% | 13% |
Corp. ID number: 556967–4392 Elektravägen 22 | 126 30 Hägersten | Sweden www.piercegroup.com