Interim Report for New Wave Group AB  -  JANUARY–JUNE 2015

PERIOD 1 APRIL – 30 JUNE 2015

  · Sales amounted to SEK 1,191 million, which was 21% higher than last year
(SEK 983 million).
  · Operating profit amounted to SEK 48.7 (48.0) million.
  · The periods result amounted to SEK 27.8 (29.4) million.
  · Earnings per share amounted to SEK 0.41 (0.44).
  · Cash flow from operating activities amounted to SEK -55.9 (-27.7) million.

PERIOD 1 JANUARY – 30 JUNE 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
APRIL - JUNE
I’m quite satisfied with the second-quarter. We are, by and large, following our
plan and are at double digit growth even with currency effects excluded. Growth
including currency effects at 21% feels strong, not the least because part of
what we do requires some time before it gives results. And there is still
virtually no sales of Cottover in the figures, as the launch was delayed a month
and occurred only at the end of June.
Operating profit of SEK 48.7 million is slightly more than last year and
acceptable considering all the investments we are making in growth, but I
believed in a higher result. The difference being gross profit, which I had
hoped for a better outcome. But as I said, I’m quite satisfied with the outcome
of the quarter.
JANUARY - JUNE
I feel confident and secure with our first six months. Even for the half year,
we have double digit growth with currency effects excluded and a whole 21%
including currency effects. Operating income is just over SEK 8 million better
than last year but it is lower than my expectations. A somewhat lower gross
profit in the second quarter and just under SEK 10 million in currency losses,
mainly in Switzerland, in the first quarter make up the difference and with that
knowledge, I think it is fully approved.
THE FUTURE
As I wrote after the first quarter, I have not looked so bright on the future
since 1997. We will continue to grow and the investments we have made will
produce results! We should also remember (see prior interim report) that we are
in an investment phase and cannot always count on results within a few quarters
– it will take a little time.
A shining example of this is Cottover which we launched at the end of the second
quarter and actually started to sell in June. Cottover is the Group’s most
important launch ever and will really leave many competitors far behind us. But
if we look critically at the first and second quarters, the result could have
been millions better and the balance sheet smaller without the investment, but I
am totally convinced that this is the way to go even though in a snapshot, it
affects negatively.
I look forward to the coming quarters and years with great confidence!
TORSTEN JANSSON
CEO New Wave Group

COMMENTS
SUMMARY OF THE QUARTER APRIL-JUNE

Our investment in better delivery reliability and new products continues to
produce results. The Group increased its sales by 21% (10% excluding currency
fluctuations) compared with last year. Out of our operating segments, Sport &
Leisure increased the most with 29% of which the USA market accounts for the
largest increase. Sales increased in both sales channels. Exchange rates have
affected sales positively. The operating segment Corporate Promo increased by
19%, which is related to the regions Sweden, Other Nordic countries and Europe,
as well as the promo sales channel. Gifts & Home Furnishings increased its sales
by 2%. Product launches as well as the improved supply has mainly taken place in
the promo sales channel and it is also here we see the largest increase, namely
24%. The retail sales channel increased by 17%.
The gross profit margin was slightly lower than last year and is due to our mix
of products, customers and countries.
The Group’s costs have increased compared with last year, which is related to
the planned investment in sales and marketing as previously announced. Both
external costs and personnel costs will increase in the coming quarters as we
continue to market our product launches and expand our sales force.
Operating profit was slightly higher compared to last year. The improvement is
mainly attributable to increased sales but our increased investments in sales
and marketing have reduced the effectiveness of sales growth. Higher interest
expense due to higher net debt had a negative impact on financial costs and
profit after tax was on par with last year.
Cash flow from operating activities amounted to SEK -55.9 (-27.7) million, in
which the deterioration is related to our purchase of goods and payment of
these. Stock increased by SEK 866 million and amounted to SEK 2,486 (1,620)
million, of which SEK 143 million is related to changes in exchange rates. Net
debt increased by SEK 760 million and amounted to SEK 2,087 (1,327) million, of
which SEK 169 million is related to changes in exchange rates. Net debt/equity
ratio increased, amounting to 86.5 (62.9)%, which is related to the above
mentioned stock building.

APRIL – JUNE
TURNOVER
Turnover amounted to SEK 1,191 million, which was 21% higher than last year (SEK
983 million). Exchange rates affected turnover positively by SEK 109 million
(11%).
The operating segment Corporate Promo increased by 19%, Sports & Leisure
increased by 29% and Gifts & Home Furnishings by 2%. Of the Group’s sales
channels, promo increased by 24% while retail sales increased 17%.
Turnover in Sweden increased by 7%. USA increased by 36% which is primarily
attributable to the positive currency change. Turnover in local currency
increased by 8%. Other Nordic countries increased by 18% and all countries in
the region are increasing. Sales in Central and Southern Europe have increased
by 15% and 34% respectively. The improvement in all regions is mainly due to the
promo sales channel.
GROSS PROFIT
The gross profit amounted to 44.7 (45.9)%. The decrease is due to the mix of
products, customers and countries.
OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES
Other operating income increased by SEK 2.4 million to SEK 7.8 (5.4) 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 foreign exchange losses are reported. Other operating
expenses increased by SEK 4.1 million and amounted to SEK -6.7 (-2.6) million.
The net total of the above items amounted to SEK 1.1 (2.8) million.
COSTS AND DEPRECIATION
External costs increased by SEK 42.0 million and amounted to SEK -258.9 (-216.9)
million. The increase is related to increased investment in sales and marketing.
Personnel costs amounted to SEK -212.0 million which is SEK 35.3 million higher
than last year (SEK -176.7 million). The increase is related to an increased
number of employees, mainly within sales and customer service.
Currency exchange rates had a negative impact on costs by SEK 42 million.
Depreciation increased slightly compared to last year and amounted to SEK -14.3
(-13.2) million. The increase is mainly related to currency movements.
OPERATING MARGIN
Our increased investments in sales and marketing have given a lower operating
margin. The operating margin for the period was 4.1 (4.9)%.
NET FINANCIAL ITEMS AND TAXES
Net financial items amounted to SEK -13.7 (-9.4) million. This deterioration is
related to a worse net interest due to higher net debt.
Tax on result for the period amounted to SEK -7.2 (-9.2) million.
RESULT FOR THE PERIOD
Result for the period amounted to SEK 27.8 (29.4) million and earnings per share
amounted to SEK 0.41 (0.44).

JANUARY – JUNE
TURNOVER
Turnover amounted to SEK 2,287 million, which was 21% higher than last year (SEK
1,892 million). Exchange rates affected turnover positively by SEK 216 million
(11%).
The operating segment Corporate Promo increased by 23%, Sports & Leisure
increased by 24% and Gifts & Home Furnishings was on par with last year. Of the
Group’s sales channels, promo increased by 27% while retail sales increased 15%.
Turnover in Sweden increased by 7% and this is related to the promo sales
channel which increased by 11%, while retail was on par with last year. USA
increased by 33% which is primarily attributable to the positive currency
change. Turnover in local currency increased by 5% and was mainly in the promo
sales channel. Other Nordic countries increased by 16%, where the increase was
in all countries as well as in both sales channels. Sales in Central and
Southern Europe increased by 16% and 35% respectively, which is related to the
promo sales channel.
GROSS PROFIT
The gross profit margin was 45.1 (45.6)%. The lower margin is due to the mix of
products, customers and countries.
OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES
Other operating income increased by SEK 4.6 million to SEK 17.1 (12.5) 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 foreign exchange losses are reported. Other operating
expenses increased by SEK 20.2 million and amounted to SEK -25.2 (-5.0) million.
The net total of the above items amounted to SEK -8.1 (7.5) million, where the
deteriorated earnings is primarily attributable to the first quarter’s 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 the first six months.
COSTS AND DEPRECIATION
External costs increased by SEK 82.6 million and amounted to SEK -529.0 (-446.4)
million. The increase is related to increased investment in sales and marketing.
Personnel costs amounted to SEK -417.3 million which is SEK 61.1 million higher
than last year (SEK -356.2 million). The increase is related to an increased
number of employees, mainly within sales and customer service.
Currency exchange rates had a negative impact on costs by SEK 87 million.
Depreciation increased slightly compared to last year and amounted to SEK -29.2
(-25.6) million. The increase is mainly related to currency movements.
OPERATING MARGIN
Sales growth resulted in an improved operating profit, while the operating
margin was unchanged compared with last year and amounted to 2.2 (2.2)%. The
margin was negatively affected by our investments in sales.
NET FINANCIAL ITEMS AND TAXES
Net financial items amounted to SEK -28.8 (-17.7) million. This deterioration is
related to a worse net interest due to higher net debt.
Tax on result for the period amounted to SEK -4.8 (-6.3) million.
RESULT FOR THE PERIOD
Result for the period amounted to SEK 16.9 (18.1) million and earnings per share
amounted to SEK 0.24 (0.27).

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 19% and amounted to SEK 540 (454) million. The result
(EBITDA) amounted to SEK 52.4 (54.7) 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 all regions. The deterioration in earnings is primarily related to
increased investments and costs for sales and marketing as well as a slightly
lower gross profit margin (mix of products).
During the period January-June turnover increased by 23% and amounted to SEK
1,007 (816) million. The result (EBITDA) amounted to SEK 61.5 (56.1) million.
Sales growth occurred in all regions and is due to increased sales and marketing
activities, as well as an improved inventory structure and level of service. The
improved result is related to the increased turnover but has also been
negatively affected by increased costs for sales and marketing during the first
half of the year.
SPORTS & LEISURE
Turnover amounted to SEK 522 (404) million, which is 29% higher than last year.
The result (EBITDA) amounted to SEK 10.9 (7.9) million. Sales increased mainly
in the promo sales channel and in the regions of USA 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.
During the period January-June turnover increased by SEK 1,046 (842) millions,
which is 24% higher than last year. The segment has a significant portion of its
sales in the American market and the exchange rates have affected turnover
positively. Sales increased mainly in the promo sales channel and in the regions
of USA and Europe. The result (EBITDA) amounted to SEK 35.5 (26.8) million. The
improved result is related to the increased turnover but has also been
negatively affected by increased costs for sales and marketing during the first
half of the year
GIFTS & HOME FURNISHINGS
Turnover increased by 2% and amounted to SEK 129 (126) million. The result
(EBITDA) amounted to SEK -0.3 million which is somewhat better than last year
(SEK -1.4 million). The increase in turnover is related to the retail sales
channel.
During the period January-June turnover amounted to SEK 235 (234) million. The
result (EBITDA) is somewhat lower than last year and amounted to SEK -17.3 (
-15.2) million. The lower result is related to the planned cost increases in
sales and marketing.

CAPITAL TIED UP

Capital tied up in stock amounted to SEK 2,486 (1,620) million and increased by
SEK 866 million compared to the same period last year. Changes in exchange rates
for conversion to SEK have affected the stock value by SEK 143 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 stock increase raises the level of service and
provides supply reliability for our customers. The turnover rate in stock is
lower than last year because of our stock build-up and amounted to 1.1 (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 Corporate Promo range as well as
new and upcoming base collections.

+--------------------+-------+-------+
|SEK million         |2015-06|2014-06|
+--------------------+-------+-------+
|Raw materials       |   23.2|   23.2|
+--------------------+-------+-------+
|Work in progress    |    2.6|    4.1|
+--------------------+-------+-------+
|Goods in transit    |  126.8|  155.2|
+--------------------+-------+-------+
|Merchandise on stock|2 333.4|1 437.5|
+--------------------+-------+-------+
|Total               |2 486.0|1 620.0|
+--------------------+-------+-------+

Stock was written down by SEK 110 (101) million, of which SEK 11 (13) million
pertains to raw materials. Write-down related to merchandise on stock amounted
to 4,1 (5,7)%.
Accounts receivable amounted to SEK 784 (657) 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 during the quarter
and amounted to SEK -55.9 (-27.7) million. The reason for this is that payments
of our stock purchases have a different payment period compare to last year. The
cash net investments amounted to SEK -39.6 (-17.5) million. The increase is
related to tangible assets.
Consolidated cash flow from operating activities during the first half year
amounted to SEK -84.8 (61.1) million, which relates to increased stock
purchases. The cash net investments amounted to SEK -65.9 (-32.5) million. The
increase is related to tangible assets.
Net debt increased by SEK 760 million to SEK 2,087 (1,327) million, which is
primarily related to our planned build-up of stock. Exchange rates have
increased the debt by SEK 169 million. The increase in stock means that our net
debt in relation to shareholders’ equity and working capital has increased to
86,5 (62,9)% and 75,5 (69,5)% respectively.
As a result of our stock build-up, our equity ratio decreased by 5.4 percentage
points and amounted to 43.8 (49.2)% as of 30 June.
The Group has a funding agreement which extends up to 12 November 2016. Total
credit facility at the end of the quarter amounted to SEK 2,625 million, of
which the principal agreement amounts to SEK 2,375 million. The credit facility
amount is limited to and dependent on the value of some underlying assets. 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.
PERSONNEL AND ORGANIZATION

The number of annual employees as of 30 June 2015 was 2,308 (2,185) of whom 51%
were woman 49% were men. Of the total number of employees 589 (535) 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 recieved compensation for consultancy services
rendered. All transactions are on market terms.
THE PARENT COMPANY
Total income amounted to SEK 67.4 (44.5) million. Profit before appropriations
and tax amounted to SEK 69.8 (-10.4) million, which includes dividends paid by
subsidiaries of SEK 77.3 million. Net borrowing amounted to SEK 1,963 (1,316)
million, of which SEK 1,785 (969) million relates to the financing of
subsidiaries. Net investments amounted to SEK -3.8 (-12.0) million. The balance
sheet total amounted to SEK 3,664 (2,818) million and shareholders’ equity,
including 78% of untaxed reserves, to SEK 1,324 (1,095) 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.
CALENDAR

  · 12 November 2015: Interim report for Q3
  · 11 February 2016: Year-end report 2015
  · 21 April 2016: Interim report for Q1


The Board and the CEO certify that the financial report gives a true and fair
view of the company’s and the Group’s financial position and results and
describes the principal risks and uncertainties that the Company and the
companies included in the Group face.
GOTHENBURG 20 AUGUSTI 2015
NEW WAVE GROUP AB (PUBL)


Anders Dahlvig         Christina Bellander  M Johan Widerberg
Chairman of the Board  Member of the Board  Member of the Board

Helle Kruse Nielsen    Mats Årjes           Torsten Jansson
Member of the Board    Member of the Board  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 (torsten.jansson@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 20 August 2015.