MQ Holding AB - Interim report

Transcription

1 MQ Holding AB - Interim report MQ solidified its market position INTERIM REPORT SEPTEMBER 2011 MAY 2012 Third quarter (March 2012-May 2012) Net sales amounted to SEK 347 million (347), which was in line with the sales level of the yearearlier period. Sales in comparable stores fell 2.3 percent. (The Swedish Retail Institute Index was down 2.4 percent.) The gross margin was 61.6 percent (62.5). Operating profit totalled SEK 25 million (32), corresponding to an operating margin of 7.2 percent (9.1). The change in profit was primarily attributable to increased proactive market investments. Profit after tax amounted to SEK 15 million (23), corresponding to SEK 0.44 (0.66) per share after dilution. Cash flow from operating activities totalled SEK 37 million (38). Nine-month period (September 2011-May 2012) Net sales amounted to SEK 1,148 million (1,129), up 1.7 percent. Sales in comparable stores fell 1.4 percent. (The Swedish Retail Institute Index was down 4.4 percent.) The gross margin was 57.1 percent (58.0). Operating profit totalled SEK 77 million (100), corresponding to an operating margin of 6.7 percent (8.9). Profit after tax amounted to SEK 49 million (66), corresponding to SEK 1.40 (1.87) per share after dilution. Cash flow from operating activities totalled SEK 84 million (107). Events during the third quarter MQ opened a new store in Norway in Kristiansand A new website was launched for MQ Shop Online based on the new e-commerce platform, which also enables internationalisation. Events after the end of the reporting period No significant events took place after the end of the reporting period. Key figures SEK m 11/12 10/11 11/12 10/11 Rolling 12 months June 11- May 12 10/11 Net sales ,148 1,129 1,506 1,487 Gross margin, % Operating profit Operating margin, % Profit after financial items Profit for the period Earnings per share before dilution, SEK Earnings per share after dilution, SEK Number of stores, end of period

2 CEO s statement MQ solidified its market position with somewhat higher sales in comparable stores than the market. MQ declined 2.3 percent, compared with the market s decline of 2.4 percent (according to the Swedish Retail Institute Index), despite MQ outperforming the market by 7.6 percent in the year-earlier period. Overall sales for the third quarter were in line with the year-earlier period. External uncertainty and disadvantageous weather for clothing retailers had a major impact on sales in April. April is also a weak month in terms of earnings, while we experience strong months in March and, primarily, in May. During the spring, we bolstered own investments in media, which impacted marketing costs compared with the preceding year. The increased investment in marketing is part of the proactive initiative being conducted in several areas to continue to strengthen the brand and capture market shares. During the quarter, the fifth store in Norway was opened in Kristiansand. The store was positively received. MQ now has a total of 116 stores. During the quarter, MQ launched its new website for Shop Online based on the new e-commerce platform, which also enables internationalisation. MQ Shop Online was well received by customers and we have noted a rapid increase in sales. Our savings programme, which is expected to generate cost savings of slightly more than SEK 30 million for the next financial year, is proceeding as planned. Mats Gärdsell, CEO 2

3 Operations The MQ Group is a retailer of women s and men s fashion in the Swedish and Norwegian markets. The product portfolio, which focuses on fashionconscious consumers, contains a mix of proprietary and external brands. Store network The stores are located in cities ranging from Ystad in the south to Luleå in the north of Sweden. MQ was launched in Norway in September 2010 and currently has five stores located in Oslo, Drammen, Skien and Kristiansand. All stores sell both women s and men s fashions. At the end of the period, the total number of stores was 116. Market The Swedish clothing retail sector has experienced an extended period of weak sales. Both the third quarter (March - May 2012) and the 12-month period (June May 2012) experienced a negative sales trend with a decline of 2.4 and 4.6 percent, respectively (according to the Swedish Retail Institute Index). Comments on financial performance Net sales Third quarter, March May 2012 Net sales amounted to SEK 347 million (347) during the quarter, which was equivalent to the sales level in the year-earlier period. MQ s sales in comparable stores declined 2.3 percent during the third quarter, compared with the market s decline of 2.4 percent. Sales of women s fashion fell 1.3 percent to SEK 172 million (174) and men s fashion rose 1.2 percent to SEK 175 million (173). Nine-month period, September May 2012 Net sales totalled SEK 1,148 million (1,129) during the nine-month period, up 1.7 percent as a result of more stores. MQ s sales in comparable stores fell 1.4 percent during the nine-month period, compared with the overall market decline of 4.4 percent. Sales of women s fashions rose 0.4 percent to SEK 541 million (538) and men s fashions advanced 2.9 percent to SEK 608 million (591). Earnings Third quarter, March May 2012 Gross profit totalled SEK 214 million (217), corresponding to a gross margin of 61.6 percent (62.5). To offset the prevailing external uncertainty and disadvantageous weather for clothing retailers, sales activities were implemented during the third quarter that impacted the gross margin. Other external costs and personnel expenses for the quarter amounted to SEK 180 million (174). The cost increase was attributable to larger investments in media. The increased investment in marketing is a part of the proactive initiative being implemented in several areas to continue to strengthen the brand and capture market shares. There were also additional costs for new stores and normal cost increases for rents, salaries and so forth. Operating profit for the quarter totalled SEK 25 million (32), corresponding to an operating margin of 7.2 percent (9.1). Depreciation/amortisation according to plan amounted to SEK 10 million (13). Net financial items amounted to an expense of SEK 4 million (0) for the third quarter. Profit after financial items amounted to SEK 21 million (32). Nine-month period, September May 2012 The gross profit was SEK 656 million (655), representing a gross margin of 57.1 percent (58.0). Operating profit for the nine-month period totalled SEK 77 million (100), corresponding to an operating margin of 6.7 percent (8.9). Depreciation/amortisation according to plan amounted to SEK 32 million (39). Net financial items amounted to an expense of SEK 11 million (expense: 11) for the nine-month period. Profit after financial items amounted to SEK 67 million (89). Expansion Efforts to find new store locations in Norway and Sweden are proceeding as planned. The development of MQ Shop Online is progressing. Cash flow MQ s cash flow from operating activities amounted to SEK 84 million (107) during the nine-month period. The decline in cash flow was attributable to lower year-on-year operating profit. Cash flow after investments was SEK 66 million (77). Inventories On 31 May 2012, the value of the company s inventory amounted to SEK 244 million (203). The increase was due to three factors: more summer products as opposed to a shortage of products in the year-earlier period, more new and earlier autumn products, and purchasing for new stores. Investments Investments of SEK 18 million (30) were made during the period and primarily involved investments in new and existing stores. Three stores were opened during the nine-month period, one of which was in Sweden (Västerås) and two in in Norway (Oslo and Kristiansand). One store was also renovated and adapted to MQ s new store concept, resulting in increased floor space of 80 sq.m. Financing and liquidity At 31 May 2012, interest-bearing net debt totalled SEK 317 million (317). At the end of the period, 3

4 cash and cash equivalents amounted to SEK 33 million (63). Interest-bearing net debt/ebitda was 2.2 (1.8) for the rolling 12-month period June May Events during the third quarter MQ opened a new store in Norway in Kristiansand in May. MQ launched a new website for Shop Online based on the new e-commerce platform, which will also enable internationalisation. Events after the end of the reporting period No significant events took place after the end of the reporting period. Employees The average number of full-time employees during the 12-month period (June May 2012) totalled 660 compared with 649 in the year-earlier period. Transactions with related parties No significant transactions were conducted with related parties during the period. Risks and uncertainties MQ s business is exposed to various risks that are fully or partly beyond the company s control, but which may impact on sales and earnings. The risks to which the company is exposed include economic trends, shifting fashion trends, interest risk and currency risk. MQ is dependent on consumer preferences in terms of trends, design and quality. The company works actively to develop its trend monitoring, information systems, forecasts, goods supply and short production lead-times to minimise risks associated with shifting fashion trends. Purchasing power among Swedish consumers is a precondition for growth in the retail sector. In particular, this is a key factor underlying growth in the upper price range collections featuring a high fashion content in the specialised retail segment and among brand specialists. Any change in economic growth in Sweden would impact consumer purchasing power and thus retail sector growth. Financial risk relates to fluctuations in the company s earnings and cash flow due to changes in exchange rates, interest rates, liquidity and credit risks. Management of the Group s financial risks is performed by the Group s finance department, which is tasked with identifying and minimising the risk of adverse effects on profits and improving the predictability of future earnings. For further information on financial instruments and risk management, refer to the Administration Report, Notes 22 and 23 in the 2011/2012 Annual Report. Parent Company The Parent Company s net sales for the nine-month period totalled SEK 8 million (13) and an operating loss of SEK 3 million (loss: 4) was reported. The Parent Company did not conduct any investments during the period. Accounting policies This condensed interim report for the Group was prepared in accordance with IAS 34 Interim Financial Reporting and the applicable provisions in the Swedish Annual Accounts Act. The interim report for the Parent Company was prepared in accordance with Chapter 9, Interim reports, of the Annual Accounts Act. For the Group and Parent Company, the same accounting and valuation policies have been applied as in the latest annual report, with the exception of what is indicated below. Reporting policies that have gained force and apply for the 2011/2012 financial year have not had any impact on the Group s financial statements. The CEO and other senior executives are encompassed by a combined share-matching and performance-share programme, which includes a requirement for personal investment and a threeyear vesting period. Participation in the programme requires that the participant actively purchases shares in the company ( Saving Shares ) at market price and locks in these Saving Shares over a three-year period. For each Saving Share acquired, the participant is allotted entitlement to receive one common share in MQ Holding AB (a Matching Share ) free of charge on a date set by the Board approximately three years after allotment, as well as entitlement to additional rights to receive additional shares in MQ Holding AB (a Performance Share ) free of charge on a date set by the Board approximately three years after allotment on condition that certain performance requirements have been fulfilled. The total number of Matching and Performance Shares may amount to a maximum of 525,000 shares. For the purpose of securing the delivery of shares, a hedging arrangement has been entered into with a bank. This is recognised as a share buyback against equity. The total cost of the programme is calculated at SEK 7 million, including social security expenses. The incentive programme is recognised in accordance with IFRS 2. The fair value is calculated at the allotment date and distributed over the vesting period. The fair value is recognised as personnel expenses with corresponding increases in equity. A provision is made for social security expenses based on the fair value at the time of reporting. 4

5 The Board of Directors and the Chief Executive Officer affirm that this interim report provides a true and fair view of the Parent Company s and the Group s operations, position and performance, and describes the material risks and uncertainties faced by the Parent Company and the companies in the Group. Gothenburg, 20 June 2012 Board of Directors MQ Holding AB Erik Olsson Chairman Göran Barsby Board member, Deputy Chairman Thomas Nyberg Board member Eva Redhe Ridderstad Board member Bengt Jaller Board member Christina Ståhl Board member Mats Gärdsell CEO Teleconference A teleconference will be held on 21 June at 9:30 a.m. for analysts, investors and the media. The presentation will also be webcast live on To participate, please call +46 (0) in Sweden and +44 (0) internationally. Reporting schedule Year-end report, September August October 2012 Interim report, first quarter, September December December 2012 Contact For further information, please contact: Mats Gärdsell, CEO: +46 (0) Tony Siberg, Deputy CEO and CFO: +46 (0) MQ Holding AB S:t Eriksgatan 5 Box SE GOTHENBURG, SWEDEN Corp. Reg. No This interim report has not been reviewed by the company s auditors. 5

6 Consolidated statement of comprehensive income Condensed consolidated statement of comprehensive income (SEK m) Sept- May Rolling 12 months June 11-May 12 Net sales ,148 1,129 1,506 1,487 Other operating income Total operating income ,151 1,132 1,510 1,491 Goods for resale Other external costs Personnel expenses Depreciation/amortisation Operating profit Financial income Financial expenses Profit after financial items Tax on profit for the period PROFIT FOR THE PERIOD attributable to Parent Company shareholders Other comprehensive income Translation difference Changes in fair value of cash-flow hedging TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS Earnings per share before dilution (SEK) Earnings per share after dilution (SEK) Average number of shares before dilution 34,631,507 35,156,507 34,631,507 35,156,507 34,631,507 35,156,507 Average number of shares after dilution 34,654,311 35,156,507 34,654,311 35,156,507 34,654,311 35,156,507 6

7 Consolidated balance sheet Condensed consolidated balance sheet (SEK m) 31 May May August 2011 ASSETS Fixed assets Intangible fixed assets 1,205 1,206 1,205 Tangible fixed assets Total fixed assets 1,290 1,302 1,303 Current assets Inventories Current receivables Cash and cash equivalents Total current assets TOTAL ASSETS 1,626 1,629 1,642 EQUITY AND LIABILITIES Equity Liabilities Interest-bearing long-term liabilities Non-interest-bearing long-term liabilities Interest-bearing current liabilities Non-interest-bearing current liabilities TOTAL EQUITY AND LIABILITIES 1,626 1,629 1,642 Statement of changes in equity Specification of changes in the Group s equity (SEK m) Equity, opening balance Total comprehensive income Buyback of own shares/incentive programme Dividend EQUITY, CLOSING BALANCE

8 Consolidated cash-flow statement Condensed consolidated cash-flow statement (SEK m) Cash flow from operating activities before changes in working capital Changes in working capital Cash flow from operating activities Cash flow from investing activities Acquisition of intangible fixed assets Acquisition of tangible fixed assets Cash flow after investing activities Financing activities Amortisation Dividend Utilisation of overdraft facility Cash flow from financing activities Cash flow for the period Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Key figures Rolling12 months June 11-May /2011 Growth in net sales, % Growth in net sales, comparable stores, % Gross margin, % Operating profit, SEK m Operating margin, % Profit after financial items Profit for the period Total depreciation/amortisation, SEK m Earnings per share after dilution, SEK Interest-bearing net debt, SEK m Interest-bearing net debt/ebitda, multiple Equity/assets ratio, % Equity, SEK m Average number of shares before dilution 34,631,507 35,156,507 34,631,507 35,156,507 34,631,507 35,156,507 Average number of shares after dilution 34,654,311 35,156,507 34,654,311 35,156,507 34,654,311 35,156,507 8

9 Shareholding structure Largest shareholder as of 31 May 2012 Name No. of shares Votes and capital, % CAPMAN BUYOUT VIII FUND A LP 4,608, JALLER KLÄDCENTER AB 2,512, CAPMAN EQUITY VII A LP 1,821, CAPMAN 1,806, LÄNSFÖRSÄKRINGAR FONDFÖRVALTNING AB 1,246, SVENSKA LÄRARFONDER 1,166, HANDELSBANKEN FONDER 1,117, ÖRESUND, INVESTMENT AB 1,078, DNB - CARLSON FONDER 1,077, CAPMAN EQUITY VII B LP 1,009, CATELLA FONDFÖRVALTNING 1,000, SKANDIA FONDER 694, MANEQ2005AB 679, CASE ASSET MANAGEMENT AB 677, FÖRSÄKRINGSAKTIEBOLAGET, AVANZA PENSION 500, Total 15 largest 20,996, Others 14,160, Total 35,156,

10 Parent Company income statement Condensed Parent Company income statement (SEK m) Rolling 12 months June 11-May 12 Net sales Other operating income Total operating income Goods for resale Other external costs Personnel expenses Other operating expenses Depreciation/amortisation Operating profit/loss Income from shares Financial income Financial expenses Profit/loss after financial items Tax on profit/loss for the period PROFIT/LOSS FOR THE PERIOD Parent Company balance sheet Condensed Parent Company balance sheet (SEK m) 31 May May August 2011 ASSETS Fixed assets Intangible fixed assets Tangible fixed assets Financial fixed assets 1,111 1,110 1,110 Total fixed assets 1,111 1,110 1,110 Current assets Inventories Current receivables Cash and cash equivalents Total current assets TOTAL ASSETS 1,121 1,164 1,116 EQUITY AND LIABILITIES Equity Liabilities Interest-bearing long-term liabilities Interest-bearing current liabilities Non-interest-bearing liabilities TOTAL EQUITY AND LIABILITIES 1,121 1,164 1,116 Pledged assets Shares in subsidiaries 1,110 1,110 1,110 MQ brand Contingent liabilities Guarantees related to subsidiaries completion of leasing contracts General surety, MQ Retail AB Total contingent liabilities

11 Definitions Gross margin Net sales less costs for goods sold as a percentage of sales. EBITDA Earnings Before Interest, Taxes, Depreciation and Amortisation. Equity Consists of share capital, other contributed capital, reserves and retained earnings, including the Group s profit for the year. Interest-bearing net debt/ebitda Interest-bearing liabilities divided by EBITDA for the most recent 12-month period. Operating margin Operating profit as a percentage of net sales for the period. Equity/assets ratio Equity as a percentage of total assets. Equity per share Equity divided by the number of shares on the closing date. Comparable sales All sales except sales in new stores are termed comparable sales. A new store becomes comparable when it has been open for one year. Interest-bearing net debt Interest-bearing liabilities less cash and cash equivalents. MQ is one of Sweden s leading retailers of fashion brands. Through a select mix of proprietary and external brands, MQ offers men s and women s clothes with a high fashion content in attractive stores. The store chain currently comprises 116 stores and the aim is to establish MQ as the leading retailer of fashion brands in the Nordic region. The MQ share has been listed on NASDAQ OMX Stockholm since 18 June For more information, please visit our website at 11