New Wave Group AB Q3_Nov_06_EN_HQ | Page 7

New Wave Group's first ever Capital Market Day, held at the showroom in Stockholm on August 21. JANUARY - SEPTEMBER NET SALES Net sales amounted to SEK 4,879.3 million, which was 12 % higher than the previous year (SEK 4,347.2 million). Exchange rate effects had a positive impact on sales of SEK 212.4 million, corresponding to 5 %. to SEK -969.0 (-945.8) million. Accounting in accordance with IFRS 16 has reduced external costs by SEK 94.9 million. Excluding IFRS 16, costs have increased, which is mainly related to previously decided sales and marketing initiatives such as increased storage capacity and improved service level as well as marketing. The higher net sales have also increased volume- related costs. Personnel costs increased by SEK 87.2 million and amounted to SEK -852.2 (-765.0) million, which is related to more employees in primarily warehousing and sales, but also in areas such as marketing, product development and customer service. Exchange rate changes have increased the above costs by SEK 86.0 million. Net sales in Sweden increased by 8 % and the improvement was achieved in the retail sales channel. The US grew by 17 % and both sales channels had good growth. The exchange rate change when translated to SEK had a positive impact on sales and sales in local currency increased by 7 %. The Nordic region excluding Sweden increased by 8 % and both sales channels increased. Net sales in Central and Southern Europe increased by 9 % and 16 % respectively, which is related to both promo and retail sales channels. Again, exchange rate changes have had a positive impact and sales in local currencies have improved by 6 % and 13 %, respectively. Other countries increased by 16 %, which is related to operations in Asia and Canada as well as the promo sales channel. Amortizations, depreciations and write-downs were higher compared to last year and amounted to SEK -159.5 (-56.3) million. The increase is primarily a result of IFRS 16, which affected depreciations by SEK -87.7 million. OPERATING RESULT GROSS PROFIT Operating result improved by SEK 21.2 million and amounted to SEK 294.6 (273.4) million. However, the operating margin decreased compared to the previous year and amounted to 6.0 (6.3) %. The decrease is related to the Group's higher costs due to sales and marketing activities. The gross profit margin was slightly lower than last year and amounted to 46.3 (46.7) %. Corporate as well as Gifts & Home Furnishings had a slightly lower margin than last year, while Sports & Leisure was at the same level. OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES NET FINANCIAL ITEMS AND TAX Net financial items amounted to SEK -46.9 (-28.2) million. Accounting in accordance with IFRS 16 affected financial expenses by SEK -13.9 million. The Group has slightly higher interest expenses due to a higher net debt. Other operating income decreased by SEK 0.9 million to SEK 45.6 (46.5) million. Other operating income is mainly attribu- table to the operating currency gains, but also other remunerations and must be set against the result row Other operating expenses, where primarily the operating currency losses are reported. Other operating expenses decreased by SEK 7.9 million and amounted to SEK -27.2 (-35.1) million. The net of the above items amounted to SEK 18.4 (11.4) million and the improvement is attributable to other remunerations. The tax expense for the period is on a par with last year and amounted to SEK -43.5 (-44.1) million. RESULT FOR THE PERIOD Result for the period amounted to SEK 204.1 (201.1) million and earnings per share amounted to SEK 3.13 (3.06). COSTS AND DEPRECIATIONS External expenses increased by SEK 23.2 million and amounted 7