Interim report for New Wave Group AB (publ) - JANUARY–SEPTEMBER 2013

PERIOD 1 JULY – 30 SEPTEMBER 2013

  · Sales amounted to SEK 1,035 Million, which was SEK 19 million lower than
last year (SEK 1,054 million).
  · Operating profit amounted to SEK 92.8 (-139.9) million.
  · Profit after tax amounted to SEK 57.8 (-120.0) million. Last year included
restructuring costs for SEK 161.5 million.
  · Acquired units contributed by SEK 16.4 million in turnover and SEK 2.5
million in profit after tax.
  · Earnings per share amounted to SEK 0.87 (-1.81).
  · Cash flow from operations amounted to SEK -2.5 (-112.8) million.

PERIOD 1 JANUARY – 30 SEPTEMBER 2013

  · Sales amounted to SEK 2,908 million, which was SEK 196 million lower than
last year (SEK 3,104 million).
  · Operating profit amounted to SEK 179.1 (-78.6) million.
  · Profit after tax amounted to SEK 96.8 (-94.9) million. Last year included
restructuring costs for SEK 161.5 million.
  · Acquired units contributed by SEK 16.4 million in turnover and SEK 2.5
million in profit after tax.
  · Earnings per share amounted to SEK 1.47 (-1.43).
  · Cash flow from operations amounted to SEK 145.4 (65.0) million.
  · Equity ratio amounted to 46.4 (40.6) %.
  · Net debt to equity ratio amounted to 73.7 (97.1) %.


CEO comments
SALES
The third quarter continued to be a tough market and we see no economic
turnaround or increase in demand. Within the operating segment corporate promo,
I unfortunately believe that we have also lost market shares in the Nordic
countries. In our quest for cash flow, solvency, stock turnover and to reduce
our net debt – we have forgotten the most important thing of all – reliable
delivery and service are the most important parameters for our corporate promo
clients. We have simply not been good enough at this over the last three to four
years.

Low inventories, combined with delays of incoming deliveries in 2013 have led to
reduced sales and dissatisfied customers. We are now doing all we can and as
quickly as possible to raise our inventories so that we can provide a better
delivery performance and service in the future.

Initially, this will lead to a poorer cash flow, higher inventories and thus
lower key ratios in general. But within 12 to 18 months, I am convinced that it
will lead to growth in terms of both sales and earnings. Even within the
operating segment Sports & Leisure it has continued to be a tough market, but at
least here, sales were approximately as expected.

Finally, in Gifts & Home Furnishings sales were worse than expected,
nevertheless I am still positive and believe that sales growth will soon turn,
now that the restructuring of Orrefors Kosta Boda is over and we can focus our
efforts fully.

RESULTS
Under the circumstances , I am satisfied with the result. At the same time, I
feel frustrated because I know we can perform significantly better. I am glad
that the results improved in all three segments – but I would have been happier
if it had been due to increased revenues rather than savings.

BALANCE SHEET
We have an extremely strong balance sheet for our type of business where current
assets such as accounts receivable and inventory comprise the largest part of
the balance sheet. Virtually all key figures in the balance sheet are above, on
or around historic highs – since we went public 16 years ago – and even compared
to the years before that. The equity ratio is at a record high, net gearing
record low and net debt does not even represent the inventory value. I’m glad
because the market is finally starting to understand this, but the downside is
that we would have had more satisfied customers and greater profitability if we
had higher inventory and good service.

THE FUTURE
I believe that the next five quarters may be a bit tough, partly because we do
not see any improvement in the economy, but mostly because of the actions and
investments we make to gain satisfied customers and delivering growth and
increased profitability. Above all, I am at the moment concerned for the next
quarter in which we will probably continue to lose sales due to low inventories
but also because we can’t see any increase in demand. The warm weather so far
gives us no help either and we also had very strong fourth quarter last year.

We will therefore increase inventories by a minimum of 300 million, which will
increase the level of debt and impair short-term indicators. In addition, we
will increase efforts in terms of sales and marketing. This together can
obviously be interpreted negatively by the stock market but for those
shareholders who have a perspective longer than 12 months then this should be
good news. I am confident that New Wave, within 12–18 months, will deliver
better results in almost all areas due to these actions and I feel that our
brands are constantly strengthened. Craft should be able to continue its rapid
growth and still improve profitability, Orrefors and Kosta Boda already feels
much more stable. Our brands within corporate promo and work wear are standing
strong – if only we can deliver and bring back satisfied customers.

Last but not least, we have a stable, hungry, and competent manage-ment in Asia,
Europe and the U.S. so I look to the future with confidence and joy, even if
some of the next five quarters might be tough, and I am more motivated than
ever.

Torsten Jansson CEO


FOR MORE INFORMATION, PLEASE CONTACT:

CEO Torsten Jansson
Phone: 031–712 89 01
E-mail: torsten.jansson@nwg.se

CFO Lars Jönsson
Phone: 031–712 89 12
E-mail: lars.jonsson@nwg.se

The information in this report is that which New Wave Group is required to
disclose under the Securities Market Act and/or the Financial Trading Act. The
information was released for publication at 7 am (CET) on 13 November 2013.