xxl q2 2014
DESCRIPTION
Quarter 2 results XXL ASATRANSCRIPT
PAGE 1
INTERIM REPORT Q2 2014
XXL ASA
Q2 Growth
Revenue +32%
EBITDA +47%
HIGHLIGHTS
Total revenues of NOK 1 246 million (NOK 945 million), up 32 per cent
EBITDA increased by 47 per cent to NOK 184 million
Successful opening in Finland
One new store in Norway and two new stores in Sweden
Q2 2014
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KEY FIGURES
(Amounts in NOK million) Q2 2014 Q2 2013 H1 2014 H1 2013
FY 2013
Audited
GROUP
Operating revenue 1 246 945 2 280 1 724 4 010
Growth (%) 31,8 % 38,8 % 32,3 % 29,5 % 29,1 %
Gross profit⁴ 530 392 931 688 1 611
Gross margin (%) 42,5 % 41,4 % 40,8 % 39,9 % 40,2 %
EBITDA² 184 126 257 177 460
EBITDA margin (%) 14,8 % 13,3 % 11,3 % 10,3 % 11,5 %
EBIT¹ 166 112 222 150 401
EBIT margin 13,4 % 11,8 % 9,7 % 8,7 % 10,0 %
Basic Earnings per share (NOK) 0,07 0,03 0,06 0,02 0,11
Average number of shares (1 000 shares) 1 094 450 1 094 450 1 094 450 1 094 450 1 094 450
Net cash flow from operating activites 33 117 407
Like for like revenue growth 5,2 % 7,1 % 7,8 % 3,0 % 3 %
Number of stores at quarter end 39 30
SEGMENT
Norway
Operating revenue 785 687 1 508 1 270 2 883
Growth (%) 14,3 % 29,0 % 18,8 % 19,7 % 19,8 %
Gross profit⁴ 352 300 644 531 1 223
Gross margin (%) 44,9 % 43,6 % 42,7 % 41,8 % 42,4 %
EBITDA 197 149 319 237 588
EBITDA margin (%) 25,2 % 21,7 % 21,2 % 18,6 % 20,4 %
Number of stores at quarter end 23 20
Sweden
Operating revenue 385 257 695 452 1 125
Growth (%) 49,8 % 72,5 % 53,8 % 75,9 % 60,6 %
Gross profit⁴ 156 92 267 157 386
Gross margin (%) 40,6 % 35,8 % 38,3 % 34,8 % 34,3 %
EBITDA 37 4 43 1 26
EBITDA margin (%) 9,7 % 1,7 % 6,2 % 0,3 % 2,3 %
Number of stores at quarter end 15 10
Finland
Operating revenue 76 0 76 0 0
Growth (%) N/A N/A N/A N/A N/A
Gross profit⁴ 21 0 21 0 0
Gross margin (%) 27,6 % 0,0 % 27,6 % 0,0 % 0
EBITDA 2 -1 -5 -1 -4
EBITDA margin (%) 2,6 % 0,0 % -6,1 % 0,0 % 0,0 %
Number of stores at quarter end 1 0
HQ & logistics
Operating revenue 0 2 0 2 2
EBITDA -53 -27 -101 -60 -150
EBITDA margin (%) -4,2 % -2,9 % -4,4 % -3,5 % -3,7 %
Q2 2014
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Strong improvement in EBITDA margin and
successful entry in Finland Oslo, 28 August 2014: The Nordic sporting goods retailer Megasport AS (to be renamed to XXL ASA) reports continued strong growth and increased margins in the second quarter and first half year of 2014. One new store in Norway and two new stores in Sweden are added to the XXL Group this quarter, but most important, a successful entry in Finland. The XXL Group (Megasport AS, to be renamed XXL ASA with subsidiaries) continues its strong growth path with total operating revenues in the quarter of NOK 1 246 million (NOK 945 million), equaling a 32 per cent growth rate compared to the same quarter last year. Operations in Norway reported a 14 per cent revenue growth, while the Swedish operation achieved a 50 per cent growth. In addition to growth in Norway and Sweden, XXL has successfully opened its first store and started online sales in Finland. With only one store and e-commerce XXL has reached sales of NOK 76 million in the first three months of operations. On the opening day, 2
April, the brand new
Helsinki store reached gross sales of NOK 6.4 million, with customers queuing up in 1.5 km line outside the store at the opening. Most remarkably, XXL is already showing a positive EBITDA-margin in Finland with second quarter EBITDA of NOK 2 million. Gross margin for the Group improved to 42.5 per cent, compared to 41.4 percent in the same quarter in 2013. The improvement includes NOK 19 million of supplier bonuses relating to 2013 which equals 1.5 per cent of sales. Adjusted gross margin for second quarter is thus 41.0 per cent. Sweden is showing significant improvement in gross margin, while the adjusted gross margin in Norway was somewhat below last year. Operating expenses before depreciation in the second quarter of 2014 increased to NOK 346 million (NOK 266 million) which is an increase of 29.9 per cent compared to the same period in 2013, mainly driven by an increase in the number of stores. There was a significant improvement in efficiency where operating expenses decreased from 28.1 per cent of sales in Q2 2013 to 27.7 per cent in Q2 2014. The figures include a one-off cost of NOK 5 million in the second quarter of 2014. Adjusting for this, operating expenses is 27.3 per cent of sales, down 0.8 per cent points from the same period in 2013. Both Norway and Sweden showed improvement in cost as per cent of sales. As a result Group EBITDA in second quarter of 2014 was NOK 184 million, up from NOK 126 million in the same quarter last year, which is an increase of 46.6 per cent. Adjusted for the supplier bonuses for 2013 and the one-off cost item the increase was 35.9 per cent, which gives an EBITDA margin of 13.7 per cent compared to 13.3 per cent in 2013. The group had net financial expenses in the quarter of NOK
59 million (NOK 57 million), resulting in a net profit of NOK 80 million for the quarter, compared to a profit of NOK 37 million in the same period last year. Inventories were higher than normal at the end of the quarter, mainly due to a poor winter and planned build-up of assortment for new stores. This inventory build-up is also reflected in the cash flow from operations, which was weaker than the same period last year. The financial position is good. Total liquidity reserves as of 30 June 2014 totaled NOK 234 million and the equity ratio was 25 per cent. The strong growth of the revenues and earnings are expected to continue throughout 2014, following the plan for new store openings in Sweden and Finland. By the end of 2014 XXL is planning to open two new stores in Sweden and three in Finland.
Strategy and operations
The XXL Group operates a retail chain with large, fully-owned sporting goods stores. As of 30 June 2014, the group operated 23 stores in Norway, 15 stores in Sweden, one in Finland, plus E-commerce in all three countries. Nordic growth strategy XXL is actively focusing on expanding its footprint in the Nordic countries. An important part of this strategy is entering into new markets. With each new market, the organization is better prepared and poised to be successful, which has been demonstrated with the successful entry into Finland. Continuous efforts are made to improve operations,
Q2 2014
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combined with a strong focus on driving growth throughout the organization.
Market conditions
Temperatures and snow conditions play an important role in the demand for winter sports goods in the Nordic region. The first quarter was impacted by a mild winter, but the early spring resulted in good sales of spring and summer related products. XXL’s efficient logistics provides the ability for stores to rapidly switch from winter to summer assortment, enabling the company to achieve strong sales growth in the two first quarters of 2014. This proves that the XXL concept is dynamic and not dependent on perfect seasonal conditions.
The markets in Norway, Sweden and Finland are characterized by local differences in terms of both size, consumer behavior and margins, but all three markets have a strong the demand for a wide range of sporting goods, following a strong culture for outdoor activities, distinct difference between seasons as well as generally good household economies.
Efficiency improvements
XXL’s growth strategy also implies a strong and continued focus on operational improvements in stores, supply chain and logistics. These efforts have enabled XXL to increase the operating margins and at the same time deliver strong growth. The new central warehouse in Sweden, which opened in October 2013, covers all product flow outside of Norway and is instrumental in achieving economies of scale and more optimal sourcing in Sweden. Additional benefits of the warehouse's location inside the EU include more efficient logistics and an improved gross margin, due to lower prices from suppliers and reduced customs from Norway, as XXL Sweden used to receive its goods from the existing central warehouse in Norway. Lean and sales focused organization
XXL is a lean organization with a strong focus on sales growth and effective operations. Good sales people in all stores is a key success factor, and recruitment and training are important activities to ensure all employees “live the brand” and are able to contribute to continued success for XXL.
The Finnish market entry has demanded significant resources from the whole XXL organization, both to ensure a successful launch of the first store and the XXL concept in Finland. We are therefore delighted to see that the first months of operation in Finland are significant above our expectations.
Operating segments
The group’s reporting structure comprises three operational segments based on XXL’s operations in Norway, Sweden and Finland, in addition to HQ and logistics.
Norway
XXL is the largest market player in Norway with 25 per cent market share. The market is characterized by high consumption of sports equipment and clothing. XXL further strengthened its leading position during the second quarter. Operating revenues increased by 14.3 per cent to NOK 785 million (NOK 687 million). This increase was primarily due to the opening of three new stores during the last 12 months, but the like for like growth was also strong with 6.1 per cent. EBITDA was NOK 197 million (NOK 149 million). The growth in profit is a result of both higher sales and improved margins. The improvement includes NOK 16 million of supplier bonuses which is related to the financial year 2013. Adjusted EBITDA margin is 23.1 per cent compared to 21.7 per cent last year. Several new stores were opened in smaller towns during 2013 and 2014, Steinkjer, Tønsberg, Mo i Rana and Hamar. All stores are already profitable, and stores opened in 2013 are already as profitable as the average Norwegian store. Sweden
XXL continues with its solid growth in Sweden. Operating revenues grew by 49.8 per cent (45.9 per cent in local currency) and amounted to NOK 385 million (NOK 257 million). The strong growth is mainly due to the sales from five new stores opened during the last 12 months. Like for like growth was 2.0 per cent (-0.1 per cent in local currency) lowered by one additional store in Stockholm cannibalizing from the existing stores. The additional store in Stockholm has though given a positive synergy effect on marketing cost for the other Stockholm stores. XXL now has four stores in Stockholm, The last store is located in central Stockholm making it possible for XXL to reach a significant higher share of the population of the biggest city in Scandinavia.
The growth in Q2 implies that XXL will continue to gain market share from competitors in Sweden. One of the key competitors, Decathlon, has recently closed its first store in Stockholm, after only two years of operation. This store was close to the XXL store located in Bromma, Stockholm. This may be a proof of how strong the XXL concept is. XXL’s strong growth in Sweden will continue in 2014 with the
Q2 2014
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opening of two more stores. This development proves that Swedish consumers have welcomed the XXL concept. There has been significant improvement in both gross margins and operating expenses. The improvements in margins is a result of the new central warehouse in Sweden which has reduced customs duties, but has also achieved better prices from suppliers and improved logistics costs. Improvement in operating expense is a result of better store operations and reduced cost due to synergies, as for example marketing cost in Stockholm. Improvements in gross margin and operating expenses resulted in an EBITDA of NOK 37 million (NOK 5 million), which is up 733 per cent. The improvement includes NOK 2 million supplier bonuses which is related to the financial year 2013. Adjusted EBITDA margin is 9.1 per cent compared to 1.7 per cent last year. Finland
The opening of the first store in Finland was and is a huge success, and together with e-commerce sales well above expectations, XXL is very pleased with the entry into the Finnish market. Operating revenue for the first quarter was NOK 76 million. The gross margin in Finland is lower than both Norway and Sweden. This can be explained by using very low prices when entering a new market. There is only one chance to make a solid first impression and XXL shall be cheapest in the market. At a more mature stage gross margin for Finland should come closer to that of Sweden. A combination of good planning, professional operations and the Finnish consumer embracing the XXL concept has resulted in a positive EBITDA of NOK 2 million already in the first quarter of operation. XXL is planning to open three additional stores within the end of 2014. E-Commerce
E-commerce is an important focus area for XXL, representing the sales channel with the highest growth rate. E-commerce is included in the country figures, but is managed by a specialized e-commerce team and operates the websites xxl.no, xxl.se and xxl.fi. Operating revenue for E-commerce in second quarter is NOK 73 million (NOK 38 million) a growth of 92 per cent. All markets are showing high growth, as well as the launch of the Finnish website.
HQ and logistics
The HQ and logistics segment includes cost related to the group’s headquarter and logistics operations, as well as centralized E-commerce management and all financial income and financial expenses. Operating expenses of these functions were NOK 53 million (NOK 27 million). The increase compared to last year is related to one additional central warehouse, more goods to handle as a result of growth Group and Group functions to handle the growth. There has also been a change in policy related to bonus
accruals. From 2014 bonus for management is accrued during the year instead of taking all cost in December as in 2013. The bonus accrual for 30 June 2014 equals NOK 6 million, where of NOK 3 million in the second quarter. The increase in cost is also including a one-off cost of NOK 5 million accrued in 2014. Adjusted cost rate for the quarter is 3.6 per cent (2.9 per cent).
Financials
(Figures in brackets = same quarter previous year, unless otherwise specified)
Consolidated income statement
Operating revenues increased by 32 per cent to NOK 1 246 million (NOK 945 million). The increase was primarily due to new stores opened in the last 12 months, but also reflecting strong E-commerce growth and growth in existing stores. At the end of the quarter, XXL operated 39 stores compared to 30 at the end of the same quarter in 2014. Gross profit amounted to NOK 530 million (NOK 392 million), an increase of 35 percent and is driven by higher operating revenue. The improvement includes bonus from suppliers of NOK 18 million related to 2013. Adjusted increase is 31 per cent, and gives a gross margin of 41.0 per cent (41.4 per cent).
The gross margin in Norway is slightly lower than last year, but must be viewed together with the high Like for Like sales growth. Sweden has a significant improvement in gross margin which is a result of continuous improvement of purchasing practices as well as the effects from the new central warehouse in Sweden.
Operating expenses were NOK 1 079 million (NOK 833
million), up 30 per cent. New stores are the largest contributor to the increase as well as the new central warehouse in Sweden, which has been operational since October 2013. Most of the new established stores are opened in Sweden where the operating expenses are higher than in Norway.
Net financial expenses increased by NOK 2 million and came to NOK 59 million (NOK 57 million). The increase was primarily due to foreign exchange differences.
Tax expenses were NOK 27 million (NOK 17 million). The effective tax rate was 25 per cent (31 per cent). Net profit improved from NOK 37 million to NOK 80 million as a result of the reasons stated above.
Consolidated cash flow
Cash flow from operating activities YTD was NOK 33 million which is lower than last year (NOK 117 million), mainly due to increased inventory
of NOK 241 million following the poor
winter and build-up for new stores. Cash used by investing activities was negative NOK 49
Q2 2014
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Condensed consolidated financial statements UNAUDITED, FOR THE PERIOD ENDED JUNE 30, 2014
Condensed Consolidated Interim Income Statement
(Amounts in NOK million) Q2 2014 Q2 2013 H1 2014 H1 2013FY 2013
Audited
Total Operating Revenue 1 246 945 2 280 1 724 4 010
Cost of goods sold 716 554 1 349 1 036 2 399
Personnel expenses 173 131 351 259 606
Depreciation 18 14 35 27 59
Other operating expenses 173 135 324 253 544
Total Operating Expenses 1 079 833 2 059 1 574 3 609
Operating Income 166 112 222 150 401
Total Financial Income 18 1 36 14 42
Total Financial Expense 76 58 160 131 267
Net Financial Income (+) / Expense (-) -59 -57 -124 -117 -225
Profit before income tax 108 54 98 33 176
Income tax expense 27 17 27 13 51
Profit for the period 80 37 71 21 125
Basic Earnings per share (NOK) 0,07 0,03 0,06 0,02 0,11
Diluted Earnings per share (NOK) 0,07 0,03 0,06 0,02 0,11
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Foreign currency rate changes 4 -2 6 1 1
Total Other Income and Expense 4 -2 6 1 1
Total comprehensive income for the year 84 35 77 22 126
The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements
Q2 2014
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Condensed Consolidated Interim Statement of Financial Position
(Amounts in NOK million) 30.6.14 30.6.13
31.12 2013
Audited
NON CURRENT ASSETS
Intangible Assets
Goodwill 2 734 2 734 2 734
Other intangible assets 215 195 214
Total Intangible Assets 2 948 2 929 2 948
Fixed Assets 420 363 413
Noncurrent Financial Assets 4 6 4
Total Non Current Assets 3 373 3 298 3 365
CURRENT ASSETS
Inventory 1 314 894 1 073
Trade and Other Receivables 193 118 227
Cash and Cash Equivalents 44 47 170
Total Current Assets 1 550 1 058 1 469
TOTAL ASSETS 4 923 4 356 4 834
SHAREHOLDERS' EQUITY
Paid-in Capital 1 096 1 096 1 096
Retained Earnings 154 -27 78
Total Shareholders' Equity 1 250 1 069 1 173
LIABILITIES
Deferred tax liability 66 49 41
Total Provisions 66 49 41
Other long-term debt
Other long-term debt 991 1 099 1 038
Loan from shareholder 1 752 1 592 1 669
Total other long-term debt 2 743 2 691 2 707
Total long-term debt 2 809 2 740 2 747
Short-term debt
Accounts payable 440 250 415
Short-term borrowings 118 78 139
Derivatives - 8 4
Tax payable 23 8 48
Public duties payable 114 87 120
Other short-term debt 171 115 188
Total short-term debt 865 547 913
TOTAL LIABLILITIES 3 673 3 287 3 661
TOTAL EQUITY AND LIABILITIES 4 923 4 356 4 834
The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements
Q2 2014
PAGE 9
Condensed consolidated interim Statement of Changes in Equity
(Amounts in NOK million)
Paid-in
Capital
Retained
earnings
Foreign Currency
Rate Changes
Total
Shareholders'
Equity
Shareholders' Equity 01.01.13 1 096 -48 0 1 048
Net income H1 2013 21 21
Foreign currency rate changes 1 1
Shareholders' Equity 30.06.13 1 096 -27 1 1 069
Shareholders' Equity 01.01.14 1 096 77 1 1 173
Net income H1 2014 71 71
Foreign currency rate changes 5 5
Shareholders' Equity 30.06.14 1 096 148 6 1 250
The share capital as of 30.06.2014 is 109.5 million NOK
The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements
Q2 2014
PAGE 10
Condensed consolidated interim statement of cash flows
(Amounts in NOK million) H1 2014 H1 2013
FY 2013
Audited
Operating Activities
Profit before income tax 98 33 176
Adjustments for:
Income tax paid -25 -17 -25
Depreciation 35 27 59
Impairment of non-current assets 0 0 1
Interest payments 42 46 80
Interest expense on shareholder loan 83 75 152
Amortisation of capitalised transaction costs 4 4 8
Fair value movement of financial derivatives -4 -4 -8
Changes in working capital:
Changes in inventory -241 -115 -295
Changes in accounts receivable 50 166 55
Changes in accounts payable 25 -17 147
Prepayments of financial leases -5 -1 40
Changes in other assets and liabilities -29 -92 17
Cash provided (used) by operating activities 33 105 407
Investing Activities
Acquisition of fixed assets and intangible assets -49 -53 -152
Cash provided (used) by investing activities -49 -53 -152
Financing Activities
Payments on long-term debt -68 -28 -60
Interest payments -42 -46 -80
Change in bank loans 0 12 0
Cash provided (used) by financing activities -110 -62 -140
Net Change in Cash and Cash Equivalents -126 -10 114
Cash and cash equivalents - beginning of year 170 57 57
0 0 -2
Cash and Cash Equivalents - End of Period 44 47 170
The accompanying notes are an integral part of the Condensed Consolidated Interim Financial Statements
Effect of foreign currency rate changes on cash and equivalents
Q2 2014
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Notes to the interim financial statements
Note 1 General information
XXL ASA and its subsidiaries' (together the "company" or the "group operating activities are related to the resale of sport clothes in the Nordic countries. All amounts in the interim financial statements are presented in NOK million unless otherwise stated. Due to rounding, there may be differences in the summation columns. The condensed interim financial statements were authorized for issue by the Board of Directors in XXL ASA on 28 August 2014. These condensed interim financial statements have not been audited.
Note 2 Basis of preparation
These condensed interim financial statements for the three months ended 30 June 2014 have been prepared in accordance with IAS 34, 'Interim financial reporting'. The condensed interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2013, which have been prepared in accordance with IFRS as adopted by the European Union ('IFRS').
Note 3 Accounting policies
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the annual IFRS financial statements for the year ended 31 December 2013, except for the adoption of amended standards and new interpretations which are mandatory from 1 January 2014. These are described below:
IFRS 10 Consolidated Financial Statements builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional
guidance to assist in the determination of control where this is difficult to assess. Adoption of IFRS 10 did not have any material effect on these financial statements.
IFRS 12 Disclosures of Interest in Other Entities includes the disclosure requirements for all forms of interest in other entities, including joint arrangements, associates, structured entities and other off-balance sheet vehicles. Adoption of IFRS 12 did not have any material effect on these financial statements.
Note 4 Estimates, judgments and
assumptions
The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed interim financial statements, the significant judgments made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31.12.2013.
Note 5 Financial risk management and
Financial Instruments
Determination of fair value
The interest rate swap contract expired during the second quarter. At the date of the contract expiration the fair value of the swap was NOK 0. There no other open derivative contracts as of 30 June 2014.
.
Note 6 Earnings per share
Q2 2014 Q2 2013 H1 2014 H1 2013
Total profit ( in NOK million) 80 37 71 21
Weighted average number of ordinary shares in issue1 094 449 501 1 094 449 501 1 094 449 501 1 094 449 501
Adjustment for:
Weighted number of ordinary shares in issue for diluted earnings per share 1 094 449 501 1 094 449 501 1 094 449 501 1 094 449 501
Basic Earnings per share (in NOK) 0,07 0,03 0,06 0,02
Diluted Earnings per share (in NOK) 0,07 0,03 0,06 0,02
Q2 2014
PAGE 12
Note 7 Seasonality of operations
Our business is seasonal, and we have historically realized a higher percentage of our total operating revenue and operating income in the first quarter of each year. This seasonality is a characteristic of the Nordic sports retail market since countries in the Nordic region are attractive and reputed places for winter sports. Therefore sales of winter related products are higher when winter conditions are favorable. For example, we generated approximately 19.4 per cent of our total operating revenues in the three months ended 31 March 2013 and 43.0 per cent by the end
of 30 June 2013. Accordingly our working capital increases in the fourth quarter of the year, since we significantly expand our inventory of the winter sport product range. Revenue and profit related to the rest of our products is more evenly spread between the second and the third quarter. As a result, our working capital fluctuates during the year in response to seasonal trends in our business, with a peak in July and December.
Note 8 Operating Segments
The Group's business is the sale of sports and leisure equipment. Segment performance is reviewed by Management and the Board of Directors as three reportable geographical segments and HQ & Logistics segment. The following presents the Group’s revenue by geographic segment:
Q2 2014
Amounts in NOK million Norway Sweden Finland
HQ &
Logistics Total
Operating revenue 785 385 76 - 1 246
Gross profit 352 156 21 - 530
EBITDA² 197 37 2 -53 184
Operating Income 191 33 2 -59 166
Q2 2013
Amounts in NOK million Norway Sweden Finland
HQ &
Logistics Total
Operating revenue 687 257 - 2 945
Gross profit 300 92 - 0 392
EBITDA² 149 4 -1 -27 126
Operating Income 142 1 -1 -30 112
01.01.2014 - 30.06.2014
Amounts in NOK million Norway Sweden Finland
HQ &
Logistics Total
Operating revenue 1 508 695 76 - 2 280
Gross profit 644 267 21 - 931
EBITDA² 319 43 -5 -101 257
Operating Income 306 33 -5 -112 222
01.01.2013 - 30.06.2013
Amounts in NOK million Norway Sweden Finland
HQ &
Logistics Total
Operating revenue 1 270 452 - 2 1 724
Gross profit 531 157 - -0 688
EBITDA² 237 1 -1 -60 177
Operating Income 223 -6 -1 -66 150
01.01.2013 - 31.12.2013
Amounts in NOK million Norway Sweden Finland
HQ &
Logistics Total
Operating revenue 2 883 1 125 - 2 4 010
Gross profit 1 223 386 - 2 1 611
EBITDA² 588 26 -4 -150 460
Operating Income 560 8 -4 -163 401
Q2 2014
PAGE 13
Note 9 Related Party Transactions
The Group's related parties include its associates, key management, members of the board and majority shareholders. The Board members represent 97.7 per cent of the shares (voting rights) in the Group. None of the Board members have been granted loans or guarantees in the current year. Furthermore, none of the Board members are included in the Group’s pension or bonus plans. The Group's principal owner, Xin Holding Guernsey, has provided an interest-bearing shareholder loan to the Group. The group has outstanding a loan to an associate, XXL Game Reserve, amounting to NOK 4 million as of 30 June 2014. As of 30 June 2014, the book value of this loan was NOK 1 752 million. The interest on the loan is calculated using the arm's length principle.
Note 10 Commitments
The Group has entered into agreements with fixed payment commitments in respect of the following as of 30.06.2014: Long term lease contracts for new stores in Finland, total commitments of 298.3 mNOK for the next 6-10 years.
Note 11 Fixed Assets and intangible assets
Note 12 Subsequent Events
On 15 July 2014, the Group refinanced the Prior Senior Facility and entered into a new senior facility agreement, which comprises a 5-year term loan facility of NOK 1 087 million, a multicurrency revolving credit facility and an overdraft facility. With the new loan agreement, the interest rate margin will be significantly reduced.
(Amounts in NOK million) PPE Goodwill
Other
intangible
assets
Balance 01.01.2014 413 2 734 214
Additions 45 0 4
Disposals 0 0 0
Depreciation and amortisation -32 0 -3
Net exchange differences -6 0 0
Balance 30.06.2014 (unaudited) 420 2 734 215
Additions mainly related to purchase of f ixtures and fittings in new and existing stores.
Amounts in NOK million PPE Goodwill
Other
intangible
assets
Balance 01.01.2013 325 2 734 200
Additions 38 0 15
Disposals 0 0 0
Depreciation and amortisation -25 0 -2
Net exchange differences 7 0 0
Reclassification fixed assets* 18 0 -18
Balance 30.06.2013 (unaudited) 363 2 734 195
Additions mainly related to purchase of f ixtures and fittings in new and existing stores.
*) Assets reclassif ied as part of the implementation of f ixed assets register
Q2 2014
PAGE 14
Disclaimer
This report includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this notice, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as “believe,” “expect,” “anticipate,” “may,” “assume,” “plan,” “intend,” “will,” “should,” “estimate,” “risk” and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forward-looking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this notice.
Footnotes/Definitions Non – GAAP Measures Certain financial measures and ratios related thereto in this
quarterly report, including growth, gross profit, gross margin, EBIT, EBIT margin, EBITDA, EBITDA margin, working capital and net interest bearing debt (collectively, the “Non-GAAP Measures”), are
not specifically defined under IFRS or any other generally accepted accounting principles. These measures are presented in this quarterly report because they are among the measures used by
management to evaluate the cash available to fund ongoing, long-term obligations and they are frequently used by other interested parties for valuation purposes or as a common measure of the
ability of a company to incur and meet debt service obligations. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under
IFRS or other generally accepted accounting principles, and you should not consider such items as alternatives to profit for the year, total operating revenues, operating income or any other
performance measures derived in accordance with IFRS, and they may be different from similarly titled measures used by other companies.
1)
EBIT
Our EBIT represents operating income. 2)
EBITDA Our EBITDA represents operating income plus depreciation. 3) Like for Like
Like for Like or Comparable stores are stores that have been open all months of the current year and all months of the previous year.
Stores that have been relocated or significantly expanded are excluded from Like for Like stores. 4) Gross profit
Gross profit represents operating revenue less cost of goods sold. 5) Working capital
Working capital consists of accounts receivables, accounts payables, inventory, other receivables and other current liabilities. 6) Net interest bearing debt
Net interest bearing debt is defined as total other long-term debt and short-term borrowings less cash and cash equivalents
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Q2 and H1 results: 31.07.2014
Q3 results: 06.11.2014
Q4 and full year results: 25.02.2015
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