Based on the current forecast, management estimates that the
Group will be able to meet these key figures with a satisfactory
margin.
PERSONNEL AND ORGANISATION
The number of employees as of 31 December was 2,579 (2,566), of
which 52% were women and 48% were men. Of the total number of
employees, 588 (604) work in production. The production within
the New Wave Group is attributable to AHEAD (embroidery),
Cutter & Buck (embroidery), Dahetra, Kosta Boda, Orrefors,
Paris Glove, Seger, Termo and Toppoint.
INTANGIBLE ASSETS
The Group’s intangible assets with indefinite useful life consist
of goodwill and trademarks. The useful lives are assessed to be
indefinite because they are well established strategic brands in
respective markets which the Group intends to maintain and
develop further. The brands with greater value, listed at their
acquisition values, are well-known brands such as Orrefors and
Kosta Boda within Gifts & Home Furnishings as well as mainly
Cutter & Buck within Sports & Leisure. The value of the Group’s
goodwill and trademarks, which are based on local currency and
can give rise to currency translation effects in the consolidated
financial statements, have been allocated between the cash-ge-
nerating units they are considered to belong to. These units are
also the Group’s segments. The value of these intangible assets
is reviewed annually to ensure that the value does not deviate
negatively from book value, but can be tested more frequently
if there are indications that the value has decreased. In order to
assess whether there are indications of impairment, the reco-
verable amount needs to be determined by a calculation of the
respective cash-generating unit’s value in use. The value in use is
based on established cash flow projections for the next five years,
and a long-term growth rate, so-called terminal growth. The most
important assumptions in determining the value in use include
growth rate, operating margin and discount rate (WACC). When
calculating the discount rate, an assessment of financial factors
such as interest rates, borrowing costs, market risk, beta values
and tax rates will be carried out. As the cash generating units have
different characteristics, each unit is assessed after its commercial
factors. The estimated cost of capital (WACC) is considered to be
representative of all cash-generating units.
INVESTMENTS, FINANCING
AND LIQUIDITY
This quarter’s cash flow from operating activities amounted to
SEK 286.7 (174.4) million. The improved cash flow is mainly
attributable to higher operating result and lower merchandise
purchases. Cash flow from investing activities amounted to SEK
-42.2 (-39.7) million.
Cash flow from operating activities for the full year amounted to
SEK 99.5 (222.6) million. The lower cash flow is mainly related
to the timing of payments of the Group's merchandise purchases.
Cash flow from investing activities was slightly lower than last year
and amounted to SEK -148.7 (-163.2) million.
Net debt increased by SEK 1,133.8 million, of which SEK 803.8
million is related to IFRS 16, and amounted to SEK 2,964.8
(1,831.0) million. The remainder of the increase is mainly due
to financing of our expanded product range and thus higher
inventory. The net debt to equity ratio and net debt in relation
to working capital amounted to 78.6 (53.3)% and 77.1 (57.0)%
respectively, see also Note 8 regarding the effect of IFRS 16 on
page 29.
The equity ratio decreased by 3.7 percentage points compared to
the previous year and amounted to 44.9 (48.6)%. The decrease
is attributable to IFRS 16, which reduced the equity ratio by 4.8
percentage points.
The cash-flow forecasts that are basis for the impairment tests are
based on the five year forecast adopted by the Board (2020-2024)
and thereafter a terminal growth of 3.0 (3.0 %). In calculating the
present value of expected future cash flows, a weighted average cost
of capital (WACC) of 10.2 (10.2) % before tax is used.
In September, the Group signed a supplement to the existing
financing agreement and increased its total credit limit by an addi-
tional SEK 500 million. As of 31 December, the Group's total
credit limit thus amounted to SEK 3,212 million, of which SEK
2,150 million runs until March 2022, USD 24 million through
January 2024 and SEK 339 million has maturity extending until
August 2027. The other SEK 500 million has a term between
three months and six years. The credit limit is limited in amount
to and dependent on the value of certain underlying assets. The
financing agreement means that key ratios (covenants) must be
met for maintenance of the credit limit.
Based on the tests and analyzes that have been carried out, there
is currently no need for impairment in the Corporate and Sport
& Leisure segments. Gifts & Home Furnishings recorded an
impairment of goodwill during the fourth quarter of SEK -11.4
million.
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