Year End Report for New Wave Group AB (publ).Q4 January-December 2006 Fine profit growth as well as good cash-flow. STOCKHOLM Stockholm (stŏk`hôlm'), city (1995 pop. 692,954), capital of Sweden and of Stockholm co., E Sweden, situated where Lake Mälaren flows into the Baltic Sea. , Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. -- New Wave Group: FOR THE PERIOD 1 JANUARY January: see month. - 31 DECEMBER December: see month. 2006 - Sales increased by 15 % to SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 3 531 (3 059) M. - Thereof, acquired units contributed by SEK 245 M. This gives an organic growth of 7 %. - The result after net finance improved by SEK 36.2 M to SEK 290.2 (254.0) M. - The result after tax improved by SEK 20.4 to SEK 227.1 (206.7) M and profit per share improved to SEK 3.47 (3.22). - Acquired units burdened the results after net financial items to the second quarter inclusive with SEK 21.3 M. The rest of the year has not been affected by acquired units. - Cash flow from operation was SEK 281 (-97) M and after investments SEK 232 (-318) M. FOURTH QUARTER 2006 - Sales increased by 5 % to SEK 1 079 (1 030) M. Calculated in local currencies the increase was 8 %. - Profit after net financial items increased by SEK 24.5 M to SEK 156.1 (131.) M. DIVIDEND AND VIEW ON 2007 - The Board proposes to increase the dividend to SEK 1.00 (0.90) per share, which gives a total dividend of SEK 66.3 M. - For 2007 sales and results are expected to increase for the 17th year in a row. - Long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. gross profit goal is increased to 50 (40) %. SALES Sales increased by 15 % to SEK 3 531 (3 059) M during January - December, of which acquired units contributed with SEK 245 M. This gives an organic growth of 7 %. The currency exchange rate has burdened sales by SEK 21 M as the Swedish krona Noun 1. Swedish krona - the basic unit of money in Sweden krona Swedish monetary unit - monetary unit in Sweden ore - a monetary subunit in Denmark and Norway and Sweden; 100 ore equal 1 krona has appreciated in relation to 2005. Fourth quarter sales increased by 5 % to SEK 1 079 (1 030) M. The mild autumn/winter has had a negative impact on sales of textile both within profile and retail. The currency exchange rate has had a negative effect of SEK 29 M. That gives an organic growth of 8 % in local currencies. PROFIT The results after net finance improved by SEK 36.2 M to SEK 290.2 (254.0) M. The results after tax improved by 20.4 to SEK 227.1 (206.7) M and profit per share improved to SEK 3.47 (3.22). Acquired units burdened the results with SEK 21.3 M and the cost for new establishments amounted to SEK 41.0 M. The cost for new establishments also includes the new activities around Orrefors Orrefors (ôrəfôrs`,–fôsh`), town, Kronoberg co., SE Sweden. It is noted for the manufacture of fine crystal and glassware. Kosta Boda BODA British Overseas Development Administration . The acquired units are the Intraco group that is consolidated from July July: see month. 2005 and the Orrefors Kosta Boda group that is consolidated from June 2005, meaning that July - December was not effected by acquisitions. Fourth quarter profit increased before tax by SEK 24.5 M to SEK 156.1 (131.6) M. The cost for establishments amounted to SEK 7.4 M. The gross margin increased to 47.9 (46.4) % for January - December and to 50.0 (47.5) % for the fourth quarter. New Wave's external costs as part of sales increased and amounted to 22.5 (21.4) % of sales. The personnel costs decreased and amounted to 14.8 (15.1) % of sales. Depreciation increased by SEK 8.6 M to SEK 40.1 (31.5) M. Net financial items amounted to SEK -54.6 (-41.6) M for the period. The increase is due to increase of net debt and increased interest rates. The Group's policy is to have a short duration, which has a swift effect on the costs when the interest rate changes. The tax-rate for New Wave was 21.7 % for the period and 19.1 % for the quarter. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 9.8 (9.7) % and return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). was 12.9 (13.0) %. The acquisition of the Orrefors Kosta Boda group has contributed to higher sales, but will burden the Group's margin until they reach the same profitability as the rest of the Group. The goal for the Orrefors Kosta Boda group is to reach an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of 10 % in 2010 at the latest. THE CORPORATE SEGMENTS The Profiling Business Area The Profiling Business Area's sales increased by 9 % to SEK 2 146 (1 976) M. Profit on EBITDA-level increased by SEK 40.8 M to SEK 287.9 (247.1) M. Sales in the fourth quarter increased by 3 % to SEK 662 (641) M and the profit by SEK 16.1 M to SEK 115.3 (99.2) M. The Retailing Business Area The Retailing Business Area's sales increased by 28 % to SEK 1 385 (1 083) M. Profit on EBITDA-level increased by SEK 17.0 M to SEK 97.0 (80.0) M. Sales in the fourth quarter increased by 7 % to SEK 417 (389) M and the profit by SEK 13.9 M to SEK 64.4 (50.5) M. PURCHASE New Wave has purchase offices in Bangladesh, Vietnam and China. A lot of resources are currently spent on strengthening the purchase organization. GEOGRAPHICAL DISTRIBUTION the natural arrangements of animals and plants in particular regions or districts. See under Distribution. See also: Distribution Geographic See the table below for sales in the different markets. The acquisition of Orrefors Kosta Boda and Intraco has mainly affected the sales in Sweden, the USA, Benelux, England and "other countries". This means that the increases in the rest of the countries are mainly organic. New Wave is the market leader in the Nordic countries, which means that the future growth will mainly come from the rest of Europe. New Wave Italy presents continued strong growth as well as profitability, which is proof of the concept's success all over Europe. Ever since the establishment in 2004, the Swiss subsidiary has had a continuously high growth-rate. Apart from the profiling area, Craft has been established. This has cost a lot of money, but the high growth-rate is expected to make the results improve during 2007. New Wave Norway changed its location and computer system during 2005 and has regained its positive trend of a high level of service. New Wave Denmark continues to grow within the profiling area and Craft. It has also started selling Projob's work wear and DJ Frantexil's give-aways. All deliveries are made from Sweden. Bad service levels during autumn/spring 2005/2006 has lead to the weak increase in Spain. The service level is now corrected and the new management is currently working hard to get the clients' confidence back. The new management in New Wave in France is currently focusing on the service level to build up the clients' confidence. The profile companies in England/Wales will merge this spring and the stock in London will move to Wales Wales, Welsh Cymru, western peninsula and political division (principality) of Great Britain (1991 pop. 2,798,200), 8,016 sq mi (20,761 sq km), west of England; politically united with England since 1536. The capital is Cardiff. with much lower rent. Despite the move the clients will receive the same service level. Magnus Vaenerberg, previous Nordic Manager for Villeroy & Boch, was appointed as CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. for Sagaform in the autumn of 2006. When New Wave acquired the Orrefors Kosta Boda group, Magnus Andersson
prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the development of the Orrefors Kosta Boda group. Vaenerberg has already created a team with competence to take Sagaform to the next level and focus is now on marketing and product development. Sagaform sells in several countries in Europe, but mainly in Norway, Germany, Finland, England and Sweden with approximately 60 % of the sales in retail and 40 % in profile. ACQUISITIONS The acquired units are the Intraco group that is consolidated from July 2005 and the Orrefors Kosta Boda group that is consolidated from June 2005, meaning that January - June was affected by acquisitions. The both units have contributed with SEK 245 M in sales and burdened the results with SEK 21.3 M. The Orrefors Kosta Boda group has developed according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the expectations with cardinally lower external costs, increased sales and a profit for the whole year. The Intraco group has so far not met the expectations, but has contributed with a small profit. NEW ESTABLISHMENTS New Wave has launched and started several new establishments and most of these mean adding more of the existing trademarks and product assortments to already existing New Wave companies. It normally takes between 12 - 24 Months before an establishment is profitable, depending on the market and organization. Several of the Group's brands within promo pro·mo n. pl. pro·mos Informal A promotional presentation, such as a television spot, radio announcement, or personal appearance. wear, work wear and gifts are established in existing New Wave companies in Europe. New Wave has a high rate of establishment with several new start ups during the last years. The goal is to implement most concepts where New Wave is established to achieve wide coverage and big market shares. Outside Europe, a joint venture in Russia, in which New Wave holds 51 % of the shares and the management holds 49 %, and a wholly-owned company in China have been established. New Wave in Russia is a small establishment in promo wear that is supplied with goods from Sweden. In China, Orrefors Kosta Boda has opened three small flag-ship stores in Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. , with a very positive start. Except glass, New Wave sells promo wear in China. An assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. of textiles is launched under the trademark Kosta Linnewafveri autumn 2006. An assortment of metal products for kitchen and presents will be launched under the trademark Orrefors Jernverk autumn 2007. Both concepts are under development and the cost for this is taken on a running basis. One more outlet of approximately 11 000 m2 will be built in Kosta and mainly be let to external companies with attractive brands. Other establishments around Orrefors Kosta Boda, where New Wave is the only or the major share holder are OKB OKB OKbridge (online bridge club) OKB Old Kent Bank (Grand Rapids, Michigan) OKB OK Bye OKB Opytnoye Konstruktorskoye Byuro (Russian: Experimental Design Bureau) OKB Operator Keyboard Restaurang AB, which runs the hotel and restaurant business in Kosta and Orrefors. Several outlets have also been established. A new hotel in Kosta with more than 100 beds is planned for the summer of 2008. The real estate of the hotel will be owned by a company with Lessebo as the majority owner and New Wave as the minority owner. It will contain a crystal bar designed by Kjell Engman. An outdoor stage will be built for audiences and conferences. All establishments will be profitable on their own and meet New Wave's profit demands in the long term. Tourists are expected to visit the establishments during summer, while conferences will fill them during winter. Conference packages will be offered to companies via New Wave's retail network in Sweden and abroad. The real estates are the largest investments. These will be owned by a company of which New Wave holds 49 % of the shares and the municipality MUNICIPALITY. The body of officers, taken collectively, belonging to a city, who are appointed to manage its affairs and defend its interests. is the majority owner. CAPITAL TIED UP During the period, capital tied up in goods has increased by SEK 52 M to SEK 1 519 (1 467) M, of which Orrefors Kosta Boda as a producing company increased by SEK 89 M to be able to raise the service level. Running longer series in production keeps the cost for permutations at a minimum level and increases the profitability, but increases the stock level. The increase in stock is ravishing rav·ish·ing adj. Extremely attractive; entrancing. rav  ish·ing·ly adv. to Orrefors Kosta Boda's standard assortment, such as the classic Intermezzo intermezzo (ĭntərmĕt`sō, –mĕd`zō).1 Any theatrical entertainment of a light nature performed between the divisions of a longer, more serious work. 2 In the 17th and 18th cent. , that has been in the assortment in 25 years. Kosta Linnewafveri, that was established this autumn, has built up a stock of SEK 25 M. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying increased by SEK 25 M to SEK 745 (709) M. INVESTMENTS, FINANCING AND LIQUIDITY The Group's cash flow from operation amounted to SEK 281 (-97) M before investments and SEK 232 (-318) M after investments. New Wave's cash-effecting net investments amounted to SEK -49 (-220) M during January - December. Net debt decreased by SEK 173 M for the period January - December and amounted to SEK 1 316 (1 489) M. New Wave's credit limits were approximately SEK 2 400 M as of 31 December 2006. PERSONNEL AND ORGANISATION The number of employees as of 31 December 2006 amounted to 2 161 (2 032) persons, of which 40 % were female and 60 % were male. A total of 808 persons were employed within production units. The production owned by New Wave belongs to Orrefors Kosta Boda, Seger, Dahetra and Toppoint. SUBSCRIPTION OPTIONS IN NEW WAVE GROUP AB (PUBL PUBL Publisher PUBL Public Law (IRB) ) New Wave has one outstanding programme for subscription options. It expires in June 2008 and consists of 1 500 000 options with an exercise price of SEK 73.10. The options were subscribed in June 2005 with a price of SEK 9.00. VIEWS ON THE FISCAL YEAR 2006 Continued focus on improving the profitability in new establishments, integrate the acquired companies and concentrate the buying. For 2007 the sales and results are expected to increase for the 17th year in a row. The tax rate for 2007 is expected to get back to the same level as previous years. THE PARENT COMPANY Sales amounted to SEK 62 (56) M. Profit after financial items amounted to SEK 5.8 (6) M. Net borrowings increased to SEK 903 M, of which SEK 698 M refer to subsidiaries. Net investments amounted to SEK 100 (153) M. ACCOUNTING PRINCIPLES This interim report has been prepared according to IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. 34 interim report and the annual report law as well as according to the Swedish Financial Accounting Standards Council's standards RR 32 regarding the parent company. Applied accounting principles are in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the annual report for 2005. ANNUAL GENERAL MEETING The annual general meeting will be held on 11 May 2007 at 1 pm at New Wave Group's head office in Gothenburg. The Annual Report will be available for shareholders on 27 April at New Wave Group's head office. DIVIDEND New Wave's financial goal is to enable the company to continue growing and be prepared to exploit business opportunities. The goal is to pay out 30 % of the Group's net profit as dividend during a business cycle. The Board of Directors has decided to suggest a dividend of SEK 1.00 (0.90) per share totalling to SEK 66.3 M. The suggestion is an increase of 14 % (calculated on the total amount) from last year and is equivalent to 29 % of the Group's net profit. NOMINATION COMMITTEE The nomination committee for election of the board to the annual shareholders meeting consists of the following members: * Hakan Thylen, chairman of the board and convener con·vene v. con·vened, con·ven·ing, con·venes v.intr. To come together usually for an official or public purpose; assemble formally. v.tr. 1. . * Torsten Jansson, CEO and the major shareholder. * Britt britt n. Variant of brit. Noun 1. britt - the young of a herring or sprat or similar fish brit young fish - a fish that is young 2. Reigo, represents Robur - the second biggest shareholder. CALENDAR * 23 April 2007 Interim report for Q1 * 11 May 2007 Annual shareholders meeting * 13 July 2007 Interim report for Q2 Stockholm 16 February 2007 New Wave Group AB (publ) The Board |
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