New Wave Group Annual Report 2022 NWG_Annual_Report_2022_EN | Page 64

NWG // FINANCIAL INFORMATION

Corporate and Sports & Leisure segments . The group increased net sales in both sales channels and in all regions . In addition to higher net sales , the gross profit margin also continued to improve . The operating result increased by 52 % or SEK 136.7 million to SEK 397.8 million and the operating margin amounted to 17.8 %, which is the highest operating margin the group had during a quarter . On September 2 , New Wave Group AB acquired the British promo clothing company B . T . C . Activewear Ltd for SEK 398.7 million . The company is the third largest professional clothing wholesaler in Great Britain . The group had effective cost control , but during the quarter certain costs such as electricity and energy increased , which mainly affected the Gifts & Home Furnishings segment . Despite the continued unrest in the world , the group performance continued to improve with the ongoing efforts and investments , therefore ensuring success . Within Sports & Leisure and Corporate we saw increasing demand , but within Gifts & Home Furnishings we saw a certain slowdown in the retail trade .

The year ended with continued strong development . Both net sales and profit improved compared to the previous year . The growth occurred in the regions USA and Europe . The group increased net sales in both sales channels . This positive development is attributable to the Corporate and Sports & Leisure segments , while Gifts & Home Furnishings decreased . The reduction was largely related to the fact that in Sweden , which is the dominant market , during 2020 and 2021 , an extra tax deduction of SEK 2,000 per employee was available during the COVID-19 pandemic - however , was removed in 2022 . The gross profit margin has also continued to improve and is higher than the previous year . Costs increased , which was mainly related to the higher net sales and higher market activities . Operating result increased by SEK 143.9 million ( 36 %), to SEK 547.2 million , and this despite the fact that Gifts & Home Furnishing decreased SEK 21.4 million compared to the previous year . The operating margin for the quarter was 19.4 %, which is a new record .

Net sales for the year amounted to SEK 8,843.6 million , which was an increase of 32 % ( 24 % excluding currency changes ) compared to the previous year . The group ' s acquisition of B . T . C . Activewear Ltd had a positive impact of SEK 247.0 million or 4 %.

Both sales channels increased compared to last year . Corporate increased by 40 %, of which acquired operations had a positive effect of 8 %. The segment had strong development throughout the year as events , conferences and other company activities returned after the pandemic . At the same time , costs have been kept at a controlled level , which has increased the operating margin . Sports & Leisure also had strong sales increasing by 35 %. The segment increased in all regions , but mainly in the American and European regions , where the recovery from last year has been good . Investments in Craft have continued and the brand is developing well . Also in this segment , we had effective cost control and improved operating margin . Net sales for Gifts & Home Furnishings reduced by 5 %. The lower net sales was primarily related to Sweden in the fourth quarter . Companies in Sweden , which is the dominant market in the segment , had the benefit during the COVID-19 years 2020 and 2021 , of an extra tax-related gift deduction of SEK 2,000 per employee . This extra deduction was removed in 2022 and negatively affected sales . This segment also had higher costs related to market investments , energy costs and more employees .

The higher net sales , improved gross profit margin and solid cost control produced an operating result of SEK 1,505.1 million and an operating margin of 17.0 %. During the year , the group built up the inventory to meet forecasted demand and also made an acquisition in Great Britain . The inventory build-up and the acquisition have increased our indebtedness and this , together with higher interest rates , has resulted in a lower net financial position . The year ' s profit amounted to SEK 1,168.8 ( 760.0 ) million . The cash flow from operations was negative and amounted to SEK -360.0 ( 1,207.4 ) million , a result of a higher inventory , higher turnover and higher accounts receivable . The supply of goods has been well managed , although we had experienced some delays throughout the year . Investment activities increased due to the acquisition and amounted to SEK -522.2 ( -114.2) million . The equity ratio decreased and amounted to 53.8 ( 59.6 ) % and the group ' s net debt increased by SEK 1,260.8 million and amounted to SEK 2,329.6 ( 1,068.8 ) million as of December 31 .

064 // ANNUAL REPORT