PERSONNEL AND ORGANISATION
The number of employees as of 31 December 2018 amounted to
2,605 (2,495) of whom 52 % were female and 48 % were men.
Of the total number of employees 603 (631) work in production.
The production contained within New Wave group is attributable
to Ahead (embroidery), Cutter & Buck (embroidery), Dahetra,
Orrefors Kosta Boda, Paris Glove, Seger, Termo and Toppoint.
INTANGIBLE ASSETS
The Group's intangible assets with indefinite useful life consists
of goodwill and trademarks whose 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 are listed at their
acquisition values and are well-known brands such as Orrefors
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-
generating units, they are considered to belong, which is 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 write-down requirement, the recoverable
amount needs to be determined by a calculation of the respective
cash-generating unit's useful value. The useful value is based
on established cash flow projections for the next five years, and
a long-term growth rate, so-called terminal period. The most
important assumptions in determining the useful value include
growth, operating margin and discount rate (WACC). When
discounting, 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 174.4 (134.5) million. The slightly higher cash flow is mainly
attributable to an improved operating result. Cash flow from
investment activities amounted to SEK -39.7 (-37.7) million.
The cash flow from operating activities for January-December
improved somewhat and amounted to SEK 222.6 (207.8)
million. This is partly due to a higher operating result but also
a higher influx of goods resulting in an increased debt to supp-
liers. Cash flow from investment activities amounted to SEK
-163.2 million, which is SEK 52.6 million higher than last year
(SEK -110.6 million). The increase is mainly due to investments in
distribution centers and IT.
Net debt increased by SEK 193.7 million and amounted to SEK
1,831.0 (1,637.3) million. However, the decline in the net debt to
equity ratio and net debt in relation to working capital amounted to
53.3 (54.1) % and 57.0 (57.4) % respectively.
The equity ratio decreased somewhat compared to last year and
amounted to 48.6 (50.9) %.
The Group signed a new funding agreement as of 11 April.
The total credit line under this agreement amounted to SEK
2,765 million as of 31 December, of which SEK 2 000 million
runs until and including March 2022 and USD 30 million has
a maturity which runs until and including January 2024. The
other SEK 500 million has a term of between three months and
six years. The credit facility amount is limited to and dependent
on the value of some underlying assets. The funding agreement
means that financial ratios (covenants) must be fulfilled in order
to maintain the credit facility.
The cash-flow forecasts which are made in the examination are
based on the five-year forecast adopted by the Board (2019 - 2023)
and thereafter a terminal growth of 3 (3) %. In calculating the
present value of expected future cash flows, a weighted average cost
of capital (WACC) of 10.2 (10.3) % before tax is used.
Based on the tests and analyses carried out, there is, in the current
situation, no write-down requirement. Nor were there any
write-down requirements for the comparison year.
Based on the present forecast, management estimates that the
group will be able to meet these ratios with a satisfactory margin.
11