New Wave Group AB Q1_2018_EN | Page 5

COMMENTS SUMMARY OF THE QUARTER JANUARY - MARCH Net sales in the first quarter amounted to SEK 1,272.8 million, which was 1 % (3 % in local currency) higher than last year (SEK 1,264.2 million). The quarter’s sales have been affected by the fact that Easter this year, unlike the previous year, was in the first quarter (the so called calendar effect). The Corporate Promo segment increased its sales by 5 %. The improvement occurs mainly in USA and Other countries (Canada and Asia) and it is the promo sales channel that is increasing. Sports & Leisure sales decreased by 4 % and occur mainly in Sweden, Nordic countries (excl. Sweden) and USA. USA was affected negatively by exchange fluctuations when converted into SEK and sales in local currency have increased. The Sport & Leisure segment had an increase in the promo sales channel while retail decreased. Gifts & Home Furnishings sales was on par with last year and even here it is the promo sales channel that increased while retail decreased. Of our sales channels, promo increased by 7 % and retail decreased by 7 %. Operating result amounted to SEK 18.6 million, which was SEK 24.6 million lower compared to last year (SEK 43.2 million). The decrease is attributable to the higher costs in relation to invest- ments in sales and marketing. Financial expenses have decreased which is attributable to an improved interest net. Our gross profit margin improved and amounted to 46.8 (45.2) %. We have a good level of service and the margin for each segment shows improvement in Corporate Promo and Sports & Leisure but Gifts & Home Furnishings has a lower margin. Inventories increased by SEK 256.2 million to SEK 2,810.3 (2,554.1) million. The increase is related to an extended product range and our new warehouse in Canada. Cash flow from operating activities was lower compared with last year and amounted to SEK 6.6 (33.6) million. This is attributable to the lower operating result. Net debt decreased slightly and amounted to SEK 1,692.2 (1,714.3) million. The net debt to equ ity ratio decreased by 6.1 percentage points and as of March 31 amounted to 54.5 (60.6) %. The Group's external costs have increased compared to last year, which is related to investments in sales and marketing. The invest- ments are primarily done in North America but the Group is also continuing its activities in the Nordic countries and Central Europe. The increase in personnel costs is related to more employees, primarily in sales. These costs will increase in the coming quarters as we get the full-year effect of earlier employments. 5