Interim Report for New Wave Group AB JANUARY–MARCH 2015


 PERIOD 1 JANUARY – 31 MARCH 2015

  · Sales amounted to SEK 1,096 million, which was 21 % higher than last year
(SEK 909 million).
  · Operating profit amounted to SEK 1.8 (-5.9) million.
  · Result for the period amounted to SEK -10.9 (-11.3) million.
  · Earnings per share amounted to SEK -0.17 (-0.17).
  · Cash flow from operating activities amounted to SEK -28.9 (88.8) million.
  · Equity ratio amounted to 45.8 (51.4) %.
  · Net debt to equity ratio amounted to 79.1 (56.8) %.

CEO COMMENTS
Growth increases! For the first time in five years, it is incredibly enjoyable
to be able to submit a report which I am pleased with, by and large, on all
points. Growth in the quarter amounted to almost 21% including currency and
turnover of SEK 1,096 million is All Time High for a first quarter.
CORPORATE PROMO
The segment grew by 29% and the sales channel by a total of 30%. Our actions in
Corporate Promo has, to say the least, given effect, and today we can proudly
say to our customers that we are their best alternative, irrespective of whether
we are talking delivery, products, brands, quality, price or CSR, and keeping in
mind that, for example, Cottover will be delivered first in May and furthermore
some important new launches for customers in autumn. These new launches as well
as continually winning back customers should actually imply that the growth of
Corporate Promo could increase further, although even I find it hard to believe
when looking at this quarter’s growth in the segment.
SPORTS & LEISURE
Sports & Leisure showed a growth rate of 19%, which is according to plan and
that I’m relatively happy with, but I believe we should be able to do even
better looking forward.
GIFTS & HOME FURNISHINGS
The segment was -2% during the quarter, which is one of the few disappointments
but with the actions taken and the marketing plan we have ahead, I am quite sure
that we will show growth in the third quarter of the year.
SALES CHANNELS
Promo showed 30% growth while retail showed almost 12% growth. Looking at
countries and regions within promo, the Nordic countries grew by 17%, Central
Europe by 25% and Southern Europe by a whole 37%.
RESULT FOR THE PERIOD
In view of the fact that we are still – and even for the remainder of 2015 —in
an investment phase where we are increasing our costs in sales and marketing as
well as taking one-off costs in the form of currency losses, then I am clearly
pleased that we managed to improve operating profit by SEK 8 million. Excluding
one-off costs, the period’s result is actually
SEK 16 million better than last year.
BALANCE SHEET
Despite conscious inventory build-up as well as a strengthening of the USD
against the SEK, we have, for our industry, a very good equity ratio of 46%.
Based on our 20 biggest competitors’ annual accounts for 2013 (in Sweden in
Corporate Promo), there are only 5 of 20 competitors who have an equity ratio of
45% or higher, while 15 of the 20 are below this level.  5 of these 20 don’t
reach an equity ratio of 25%, so compared to our competitors, we are very
strong.
In the balance sheet we should also remember that we received a severe blow
owing to the weakening of the SEK especially against the USD. For example, stock
value increased by SEK 226 million and our net debt increased by SEK 279 million
due to changes in exchange rates. Of course, even our assets outside of Sweden
increased in value because of the conversion to SEK, but it’s worth mentioning
as the numbers are so large.
THE FUTURE
I have not looked so bright on the future since 1997. We are taking market
shares in almost all trademarks in most countries. We will have a good sales
trend 2015, and sooner or later, I am totally convinced that the result will
follow! Right now and the next few quarters, I want to ensure continued
investment in products, sales and marketing that will give us a platform for
growth for many years to come-above giving priority to profitability. However, I
am convinced that we will see improved profit development within the coming
quarters.
My management and all our staff are glad, motivated, passionate, hungry, well
-armed and strong!
TORSTEN JANSSON
CEO New Wave Group
COMMENTS
SUMMARY OF THE QUARTER JANUARY-MARCH

The Group’s sales increased by 21 % (9 % excluding currency fluctuations)
compared with last year. This is mainly due to our investment in better delivery
reliability and new products within the business segment Corporate Promo. This
segment increased its sales by 29 %. It is mainly within the promo sales channel
and within the regions of Sweden, the rest of the Nordic countries and Europe
that this growth occurred. Sports & Leisure increased its sales by 19 %. We see
an increase in both sales channels and then mainly in the Nordic countries and
Europe. Sales within Gifts & Home Furnishings decreased by 2 %. The decrease was
related to the promo sales channel. Totally, the promo sales channel increased
by 30 % while the retail sales channel increased by 12 %.
A better level of service, but even the mix of customers and countries has
improved the gross profit margin during the quarter.
The Group’s external costs have increased compared with the previous year, which
is related to the increased investments in sales and marketing that we
previously communicated. Both external costs and personnel costs will increase
in the coming quarters as we continue to market our new products as well as
expanding our sales force. Other expenses during the quarter increased due to
one-time costs in the form of foreign exchange losses associated with the Swiss
Franc as it abandoned its euro cap. Financial expenses were also affected by one
-off costs during the quarter. These relate to an acquisition of the remaining
shares in a Canadian company (formerly a minority company).
Operating profit grew by SEK 7.7 million compared to last year, reflecting the
higher turnover. Increased interest expense due to higher net debt, as well as
the above mentioned financial cost in connection with the acquisition,
negatively impacted the financial costs and the profit after tax was on par with
last year.
Cash flow from operating activities amounted to SEK -28.9 (88.8) million. The
negative cash flow is mainly attributable to an increase in the purchase of
goods compared to last year. Inventories increased by SEK 926 million and
amounted to SEK 2,427 (1,501) million, of which SEK 226 million related to
changes in exchange rates. Net debt increased by SEK 786 million and amounted to
SEK 1,974 (1,188) million, of which SEK 279 million related to changes in
exchange rates. Equity ratio increased to 79.1 (56.8) %, which is related to the
aforementioned inventory build-up.
JANUARY-MARCH

SALES
Sales amounted to SEK 1,096 million, which was 21 % higher than last year (SEK
909 million). The currency exchange rates positively affected sales by SEK 108
million (12 %).
The operating segment Corporate Promo increased sales by 29 %, Sports & Leisure
increased by 19 % and Gifts & Home Furnishings sales decreased by 2 %. Of the
Group’s sales channels, promo increased by 30% while retail increased sales by
12 %.
Sales in Sweden increased by 7 %, which is related to the promo sales channel
with an increase of 16 %, while retail sales were at the same level as last
year. USA increased by 30 % which is primarily attributable to the positive
currency change. Net sales in local currency was slightly better compared to
last year. Other Nordic countries increased by 14 %, which is related to the
Danish and Norwegian markets and occurs in both sales channels. Sales in Central
and Southern Europe have increased by 17 % and 36 % respectively, and is related
to the promo sales channel.
GROSS PROFIT
The gross profit margin was 45.7 (45.2 %). The increase is related to an
enhanced level of service, as well as the mix of customers and countries. Last
year was negatively affected by freight and more expensive substitute goods
because of shortages in some basic articles of the promo inventory.
OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES
Other operating income increased by SEK 2.2 million to SEK 9.3 (7.1) million.
Other operating income is mainly attributable to operating currency gains but
also invoiced expenses and should be compared to the result row ”Other operating
expenses” where mainly operating losses are reported. Other operating expenses
increased by SEK 16.1 million and amounted to SEK -18.5 (-2.4) million. The net
total of the above items amounted to SEK -9.2 (4.7) million, where the
deteriorated earnings is primarily attributable to foreign exchange losses
associated with the Swiss Franc as it abandoned its euro cap. Last year also
includes a number of allowances and invoiced expenses which have not occurred
during this year’s quarter.
COSTS AND DEPRECIATION
External costs increased by SEK 40.6 million and amounted to SEK -270.1 (-229.5)
million. The increase is related to increased investment in sales and marketing.
Personnel costs amounted to SEK -205.3 million, which is SEK 25.8 million higher
than last year (SEK -179.5 million). The increase is related to an increased
number of employees, mainly within sales, customer service and marketing.
Currency exchange rates negatively affected costs by SEK 45 million.
Depreciation increased slightly compared with last year and amounted to SEK
-14.9 (-12.4) million.
OPERATING MARGIN
The operating margin amounted to 0.2 (-0.7) % whereby the improvement is related
to higher turnover.
NET FINANCIAL ITEMS AND TAXES
New Wave Group AB has during the quarter acquired the remaining shares in a
Canadian company (formerly a minority company). The cash affect amounted to SEK
-1.7 million. In connection with this acquisition emerged costs of approximately
SEK 2.9 million.
Net financial items amounted to SEK -15.1 (-8.3) million. This decrease is due
to the abovementioned financial costs associated with the acquisition as well as
worse net interest due to higher net debt.
Tax on result for the period amounted to SEK 2.4 (2.9) million.
RESULT FOR THE PERIOD
Result for the period amounted to SEK -10.9 (-11.3) million and earnings per
share amounted to SEK -0.17 (-0.17).
REPORTING OF OPERATING SEGMENTS
New Wave Group AB divides its operations into segments - Corporate Promo, Sports
& Leisure, and Gifts & Home Furnishings. The Group monitors the segments’ and
brands’ sales and profit (EBITDA). The operating segments are based on the
Group’s operational management.
CORPORATE PROMO
Turnover increased by SEK 105 million and amounted to SEK 467 (362) million. The
result (EBITDA) amounted to SEK 9.1 (1.4) million. The increased turnover is due
to increased sales and marketing activities, as well as an improved inventory
structure and level of service. The increase occurred in the promo sales channel
and in particular in the regions of Sweden, other Nordic countries and Europe.
The improved result is related to the increased turnover but has also been
negatively affected by increased costs for sales and marketing.
SPORTS & LEISURE
Turnover for the first quarter amounted to SEK 523 (439) million. The result
(EBITDA) amounted to SEK 24.6 (18.9) million. Sales increased in both sales
channels and mainly in the other Nordic countries and Europe. The segment has a
significant portion of its sales in the American market and the exchange rates
have affected turnover positively. The improvement in earnings is attributable
to higher turnover but even here the result has been negatively affected by
increased sales and marketing costs.
GIFTS & HOME FURNISHINGS
Turnover decreased by 2 % and amounted to SEK 106 (108) million. The result
(EBITDA) amounted to SEK -17.0 million, which was SEK 3.2 million lower than the
previous year (SEK -13.8 million). The decrease in turnover is related to the
promo sales channel and the lower result is due to higher costs for sales and
marketing.
CAPITAL TIED UP

The Group has continued its work to improve the level of service and product
range. Capital tied up in inventories increased by SEK 926 million compared with
last year’s first quarter, of which SEK 226 million is due to exchange rate
fluctuations when converted into SEK.  Total inventories amounted to SEK 2,427
(1,501) million. The increase is a planned increase and is mainly related to the
promo sales channel and its supplemental purchases within its basic range of
goods as well as its new base collections. The turnover rate in inventories is
lower than last year because of our inventory build-up and amounted to 1.0
(1.3). The inventory value is expected to be on a higher level than before even
in the coming quarters, mainly because of our extended promo range as well as
new and upcoming base collections.

SEK million           2015-03  2014-03
Raw materials            22.6     24.2
Work in progress          2.9      3.9
Goods in transit        104.4     87.4
Merchandise on stock  2 297.0  1 385.8
Total                 2 426.9  1 501.3

Inventories were written down by SEK 108 (104) million, of which SEK 11 (14)
million is pertaining to raw materials. Impairment related to merchandise on
stock amounted to 4.1 (6.1) %.
Accounts receivable amounted to SEK 778 (651) million, where growth is primarily
turnover related. However, even currency fluctuations when converted into SEK
increased this amount.
INVESTMENTS, FINANCING AND LIQUIDITY

Consolidated cash flow from operating activities was negative and amounted to
SEK -28.9 (88.8) million. This is mainly due to increased inventory purchases
compared to the same period last year. The cash net investments amounted to SEK
-26.3 (-15.0) million.
Net debt increased by SEK 786 million to SEK 1,974 (1,188) million, which is
primarily related to our planned build-up of inventories. Exchange rates have
increased the debt by SEK 279 million. The increase in inventories means that
our net debt in relation to shareholders’ equity and working capital has
increased to SEK 79.1 (56.8) % and 72.9 (66.5) % respectively.
As a result of our inventory build-up, our equity ratio decreased by 5.6
percentage points and amounted to 45.8 (51.4) % as of 31 March.
The Group has a funding agreement which extends up to 12 November 2016. As of 31
March our total credit facility and principal agreement increased by SEK 300
million and at the end of the quarter amounted to SEK 2,482 million, of which
the principal agreement amounts to SEK 2,387 million. The new agreement means a
somewhat higher interest rate and that the covenants under the previous
agreement remain unchanged. The principal agreement means that financial ratios
(covenants) must be fulfilled in order to maintain the agreement. Interest is
based on each respective currency’s base rate and fixed margin.
Based on the present forecast, management estimates that the Group will be able
to meet these covenants with sufficient margin.
PERSONNEL AND ORGANIZATION

The number of employees as of 31 March 2015 amounted to 2,264 (2,159), of whom
51% were female and 49% were men. Of the total number of employees 566 (533)
work in production. The production contained within New Wave group is
attributable to Ahead (embroidery), Cutter & Buck (embroidery), Paris Glove,
Orrefors Kosta Boda, Seger, Dahetra and Toppoint.
RELATED PARTY TRANSACTIONS

There are lease agreements with affiliates. Affiliates of the Managing Director
have bought merchandise and received compensation for consultancy services
rendered. All transactions are on market terms.
PARENT COMPANY
Total income for the first quarter of the year amounted to SEK 31.5 (23.0)
million. Result before appropriations and tax amounted to SEK -5.3 (-3.3)
million. Net borrowing amounted to SEK 1,913 (1,227) million, of which SEK 1,707
(957) million relates to the financing of subsidiaries. Net investments amounted
to SEK -1.7 (-6.6) million. The balance sheet total amounted to SEK 3,576
(2,827) million and shareholders’ equity, including 78 % of untaxed reserves, to
SEK 1,314 (1,166) million.
RISKS AND RISK CONTROL

New Wave Group’s international operations mean that it is continuously exposed
to various financial risks. The financial risks are currency, borrowings and
interest rate risks, as well as liquidity and credit risks. In order to minimize
the affect these risks may have on earnings, the Group has established a
financial policy. For a more detailed description of the Group’s risk management
please refer to the Annual Report 2014; www.nwg.se.
The Group’s policy is to have short fixed-interest agreements resulting in quick
effects on the Group’s net interest as the short-term interest rate changes.
The Group’s reported risks are deemed to be essentially unchanged.
ACCOUNTING PRINCIPLES

This report is prepared in accordance with IAS 34 Interim Report and the Annual
Accounts Act.
No new or revised IFRS which came into force 2015 has had any significant impact
on the Group.
The interim report for the parent company has been prepared according to the
Annual Accounts Act as well as the Swedish Financial Accounting Standards
Council’s recommendation RFR2 - Accounting for Legal Entities. Applied
accounting policies are in accordance with the Annual Report for 2014.
ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 4 May at 13.00 in Kosta. The annual
report is available at the company’s headquarters in Göteborg, as well as on its
website www.nwg.se
DIVIDEND
The Group’s dividend policy is that 40 % of the Group’s net profit will be
distributed over a business cycle. The Board has decided to propose a dividend
of SEK 1.00 (1.00) per share, amounting to SEK 66.3 million. This proposal
corresponds to 38 % of the profit for the year 2014.
NOMINATION COMMITTEE

The nomination committee for the board election at the 2015 Annual General
Meeting is:

  · Johan Ståhl, representative of Lannebo Fonder and Chairman of the Nomination
Committee
  · Torsten Jansson, CEO and representative of Torsten Jansson Förvaltnings AB
  · Arne Lööw, representative of Fjärde AP-fonden

For more information about the nomination committee and its work, please see
www.nwg.se/en/investor-relations/corporate-governance/nomination-committee.html
CALENDAR

  · 4 May 2015: Annual General Meeting 2015
  · 20 August 2015: Interim report for Q2
  · 12 November 2015: Interim report for Q3

GOTHENBURG 29 APRIL 2015
NEW WAVE GROUP AB (PUBL)
Anders Dahlvig
Chairman of the Board
Christina Bellander
Member of the Board
M Johan Widerberg
Member of the Board
Helle Kruse Nielsen
Member of the Board
Mats Årjes
Member of the Board
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 29 April 2015..

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