INTERIM REPORT
Q2:2019 JANUARY - JUNE SPORTAMORE AB (PUBL) ORG. NR. 556788-8614
Table of Contents
Summary of the period......................................................................................................................... 03 CEO’s comments.................................................................................................................................. 04 The Group’s business activities during the period............................................................................... 05 Operating income and total sales.................................................................................................. 05 Profit/loss and margins................................................................................................................... 05 Investments.................................................................................................................................... 05 Cash flow and financial position..................................................................................................... 06 The share........................................................................................................................................ 06 Authorisations................................................................................................................................. 06 Other significant information................................................................................................................ 07 Significant events during the period.............................................................................................. 07 Significant events since the end of the period............................................................................... 07 Statement about the future............................................................................................................. 07 Ongoing investment in automated facility...................................................................................... 07 Seasonal variations........................................................................................................................ 07 Significant risks and uncertainties in business activities............................................................... 07
Financial summary
Consolidated statement of comprehensive income............................................................................. 09 Consolidated statement of financial position – in summary................................................................. 10 Consolidated statement of changes in equity – in summary............................................................... 10 Consolidated cash flow statement – in summary................................................................................. 11 The Group’s key indicators.................................................................................................................. 12 Note 1 Accounting policies and valuation principles........................................................................... 13 Note 2 Reporting of segments............................................................................................................. 15 Note 3 Reconciliation of total sales to operating income..................................................................... 15 Note 4 Transactions with related parties.............................................................................................. 16 Note 5 Investments in Property, plant and equipment......................................................................... 16 Note 6 Warrant scheme ..................................................................................................................... 16 Note 7 Deferred tax.............................................................................................................................. 16 Note 8 Contingent liability.................................................................................................................... 16 Note 9 Pledged assets......................................................................................................................... 16 Parent company’s income statement................................................................................................... 17 Parent company’s statement of comprehensive income..................................................................... 17 Parent company’s statement of financial position – in summary......................................................... 18 Parent company’s statement of changes in equity – in summary........................................................ 18 Signatures and auditor’s audit............................................................................................................. 19
Other information
Financial calendar................................................................................................................................ 21 Financial statements............................................................................................................................. 22 Definitions of key indicators................................................................................................................. 23
Q2 - January - June 2019
Summary of the period 1 April – 30 June • Total sales1 totalled SEK 244.1 (206.4) million with a growth of 18.3 (19.4) per cent. • Operating income totalled SEK 240.5 (205.6) million. • Earnings per share before dilution totalled SEK -0.80 (-0.57). • Cash flow from operating activities was SEK -17.4 (-34.8) million. • EBIT totalled SEK -9.5 (-6.2) million.
1 January – 30 June • Total sales1 totalled SEK 481.8 (416.3) million with a growth of 15.7 (20.2) per cent. • Operating income totalled SEK 474.2 (415.3) million during the period. • Earnings per share before dilution totalled SEK -1.54 (-0.58). • Cash flow from operating activities was SEK -44.9 (-46.4) million. • EBIT totalled SEK -19.3 (-5,3) million.
Summary of financial results
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
Total sales1, SEK thousand
244,134
206,403
481,811
416,266
1,018,468
952,897
Sales growth, %
18.3%
19.4%
15.7%
20.2%
22.9%
25.6%
240,519
205,613
474,236
415,257
1,006,311
947,332
Growth operating income, %
17.0%
19.0%
14.2%
19.9%
21.6%
24.9%
Gross margin, %
37.6%
37.4%
37.1%
36.9%
36.4%
36.3%
EBIT, SEK thousand
-9,542
-6,194
-19,314
-5,290
-11,021
3,002
EBIT margin, %
-4.0%
-3.0%
-4.1%
-1.3%
-1.1%
0.3%
-17,400
-34,775
-44,899
-46,427
-18,132
-19,659
Number of visits, thousands
14,326
12,215
29,617
25,399
58,554
54,336
Proportion of visits on mobile devices
82.6%
76.2%
80.5%
75.6%
79.0%
76.6%
Number of orders, thousands
488
435
955
819
1,971
1,835
Active customers, thousands
1,041
869
1,041
869
1,041
975
Average number of orders per active customer
1.89
1.85
1.89
1.85
1.89
1.88
Average order value, SEK
500
474
504
508
517
519
13.2%
12.4%
12.6%
11.5%
11.8%
11.3%
Operating income, SEK thousand
Cash flow from operating activities, SEK thousand Key indicators
Marketing expenses (% of operating income) See definitions at the end of the report.
1. Own sales plus the total value of products sold from commission-based revenues, where own sales refers to operating income less provision from commission-based sales.
Sportamore AB (publ) | Interim report
03
Q2 - January - June 2019
Accelerating growth and improved gross margin During the second quarter of the year, Sportamore increased its rate of growth to 18.3 per cent and total sales1 reached SEK 244 (206) million. The gross margin is stronger, compared with both the previous quarter and the previous year, totalling 37.6 (37.4) per cent for the period. The acid test for the physical sports retail sector is continuing in the wake of the rapid transition to digital shopping, and despite good weather prospects the market has been characterised by a high level of campaign intensity. Sportamore is showing that we can control our gross margin even in these conditions. We expect, during the second half of the year, to further strengthen the gross margin compared with the previous year and at the same time to deliver growth in accordance with our financial goals.
Increasing value
We can confirm a significant improvement in the average order value, which increased by six per cent for the period. This trend is being driven by both an increasing number of items per order and a rising average sale price. Towards the end of the period we also introduced a minimum order limit for free delivery in all markets. This change was preceded by a detailed analysis of customer behaviour and is expected to have a number of positive effects. Not only is it expected to contribute to increasing the average order value in the quarters ahead, it will also free up resources from less profitable customer orders that we can use instead to improve our delivery offering and service level for our profitable customer orders. Another important aspect is that this change has the potential to drive rapid change in the cost structure per order, which is expected to make a positive contribution to Sportamore’s profitability trend.
New market - France
Towards the end of the period we launched Sportamore in France and are now starting work to grow and adapt this market. Through our focus on automation and scalable processes we have laid strong foundations for the opportunity to scale up our overall geographical market. The customer base is growing according to plan with an annual growth rate of around 175,000 customers and now totals 1,041,000 active customers, at the same time the average number of orders per active customer is increasing. Furthermore during the second quarter we invested in the development of both brand concept and a new platform for managing our existing customer base – an exciting project, the results of which will start to be implemented during the third quarter.
of the investments we made in infrastructure and automation for scalability and efficiency is growing.The benefits of these investments when net sales increase was seen not least in the fourth quarter of 2018. Scalability is also evident in the fact that operating expenses excluding product and marketing costs as a proportion of sales during the period developed positively during the period and fell from 28.8 per cent in the first quarter to 28.3 per cent in the second quarter as an effect of rationalisation and growth in net sales. We are now moving into a phase with profitability focus and are taking a number of measures to drive our development, the first of which is the implementation of a limit for free delivery. It is our assessment that continued rationalisation combined with a rising order value will contribute to an improved cost structure in the quarters ahead and that 2019 on a full-year basis will generate an improved profit compared with 2018, while at the same time the strong growth of the customer base increases the potential for the future.
Healthy finances and saleable stock
The Group’s financial position remains healthy, with cash in hand on the balance sheet date totalling SEK 25.5 (44.0) million, excluding an overdraft facility of SEK 40.0 million. The value of stock at the end of the period totalled SEK 275 (229) million, a planned reduction compared with both the turn of the year and the end of the previous quarter, which means that the stock turnover rate is now rising in accordance with previous communication. The stock remains saleable, with less than 18 per cent being more than six months old. We also maintain our ambition to increase the stock turnover rate during the second half of 2019.
Bromma, Sweden, July 2019, Johan Ryding, CEO, Sportamore
Scalability and efficiency for an improved full-year profit
During the period we have been significantly affected by increased freight costs as a consequence of capacity restrictions, exchange rate changes and rising oil prices. This had a negative impact on EBIT for the quarter that totalled SEK -9.5 (-6.2) million. With this background, the importance 1. Own sales plus the total value of products sold from commission-based revenues, where own sales refers to operating income less provision from commission- based sales.
Sportamore AB (publ) | Interim report
04
Q2 - January - June 2019
The Group’s business activities during the period Operating income and total sales
Operating income totalled SEK 240.5 (205.6) million, corresponding to an increase of 17.0 per cent compared with the same period in 2018. Operating income (SEK million) 350
1200
300 250 200 150 100
1000 800 600 400
50 0
200 15Q115Q215Q315Q416Q116Q216Q316Q417Q117Q217Q317Q418Q118Q218Q318Q419Q119Q2 Operating Income
Investments
Investments during the second quarter of 2019 totalled SEK 14.8 (9.6) million. The investments consist primarily (SEK 11.8 million) of IFRS 16 related right of use in respect of the head office in Bromma. The rental agreement for the head office in Bromma has in previous quarters been classified as a shortterm lease. During the second quarter in 2019 an agreement with the landlord was reached and the rental agreement was extended, accordingly an IFRS 16 related right of use were recorded during the second quarter 2019.
0
Operating income rolling 12
Total sales amounted to SEK 244.1 (206.4) million, corresponding to an increase of 18.3 per cent relative to the same period in 2018. The growth in total sales is driven primarily by an increase in active customer base and average number of orders per active customer. Sportamore has also seen an increase in commission-based sales within the commissionbased program.
Profit/loss and margins
Sportamore strengthened its gross margin compared with the previous quarter and the previous year, totalling 37.6 (37.4) per cent for the period. EBIT totalled SEK -9.5 (-6.2) million, affected by marketing expenses associated with increased brand awareness and increased freight costs. EBIT (SEK million) 30 20 10 0 -10 -20 -30 -40 -50
15 Q1 15 Q2 15 Q3 15 Q4 16 Q1 16 Q2 16 Q3 16 Q4 17 Q1 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 18 Q3 18 Q4 19 Q1 19 Q2
EBIT
EBIT rolling 12
Sportamore AB (publ) | Interim report
05
Q2 - January - June 2019
Cash flow and financial position
The Group’s cash in hand at the end of the period totalled SEK 25.5 (44.0) million, and total cash flow during the second quarter was SEK -25.2 (-35.7) million. Cash flow from operating activities totalled SEK -17.4 (-34.8) million during the quarter. The positive cash flow trend is primarily attributable to good and efficient stock management. Cash flow from investing activities totalled SEK -2.5 (-0.5) million, attributable to capitalized development expenses and inventories. Cash flow from financing activities totalled SEK -5.2 (-0.4) million and is attributable to repayment of lease liabilities in respect of the right of use in respect of the logistics facility in Kjula and the head office in Bromma.
Authorisations
At the 2019 AGM a resolution was passed in accordance with the Board’s proposal to authorise the Board, on one or more occasions before the next AGM, to take a decision on the issuing of shares, convertibles and/or warrants in Sportamore AB (publ). The shares, convertibles and/or warrants are to be issued with or without preferential rights for Sportamore’s shareholders and with the issuing of, conversion to or new subscription to no more than the number of shares, and representing the share capital, that corresponds to ten per cent of the number of shares at the time when the authorisation to issue is exercised for the first time. Payment shall be possible not only in cash, but also by payment in kind, through offsetting or otherwise in accordance with the terms and conditions.
The Group has interest-bearing liabilities totalling SEK 196.3 (58.6) million, of which SEK 30.1 (7.5) million are current liabilities. The increase compared to the same quarter last year is attributable to the expansion of the warehouse automation facility and the IFRS 16-related right of use in respect of the logistics facility in Kjula and the head office in Bromma. The debt/equity ratio the end of the period was 37.3 (51.2) per cent.
The share
Share capital at the end of the period was SEK 1,337 thousand. The number of shares at the end of the period totalled 9,694,351.
Largest shareholders Name
No. of shares & votes
Proportion (%)
J3 BRUNKEBERG INVEST AB
1,215,073
12.53%
AB, TAJETE
1,186,382
12.24%
KALIN SETTERBERG AB
869,584
8.97%
SWEDBANK ROBUR SMÅBOLAGSFOND SVERIGE
630,000
6.50%
AMF AKTIEFOND SMÅBOLAG
416,815
4.30%
AKTIA NORDIC MICRO CAP
380,000
3.92%
NORDEA LIVFÖRSÄKRING SVERIGE AB
357,060
3.68%
UNION BANCAIRE PRIVEE, UBP SA
355,000
3.66%
HANDELSBANKEN LIV FÖRSÄKRINGSAKTIEBOLAG
335,000
3.46%
ERIK MITTEREGGER FÖRVALTNINGS AB
250,000
2.58%
OTHERS
3,699,437
38.16%
Total
9,694,351
100%
Confirmed as of 30 juni 2019
Sportamore AB (publ) | Interim report
06
Q2 - January - June 2019
Other significant information Significant events during the period
In April, the Board of Directors of Sportamore AB (publ) adopted updated financial goals. See below section Financial goals.
Significant events since the end of the period No significant events occurred after the period end.
Statement about the future
The overarching focus on an annual basis will be to improve the underlying profitability. This, in combination with our ambition to improve the stock turnover rate, means that 2019 on a full-year basis is expected to generate both improved profit and operational cash flow compared to 2018. We also make the assessment that continued efficiency improvements in combination with growth and recently introduced minimum limit for free delivery in all markets will contribute to an improved cost structure for the coming quarters. Sportamore intends to continue its efforts to increase brand awareness and to attract additional customers to further enhance its position in the Nordic markets. Financial goals The Board of Directors of Sportamore AB (publ) decided in April 2019 on updated financial goals for the Group. Sportamore’s financial goals, which are described below, should not be considered to constitute a forecast, but rather an ambition that the Board and management believe represents reasonable long-term expectations for Sportamore. The Board of Directors of Sportamore has confirmed the following financial goals: Growth To achieve annual growth in sales for the Group of 15-25 per cent. Total sales include own sales and the full product value in connection with commission-based sales. EBIT margin The Group shall have a positive, increasing EBIT margin over the period as a consequence of increased operational efficiency and economies of scale. The margin shall be five per cent by 2022 at the latest. To achieve an EBIT margin in excess of five per cent for markets outside the Nordic region in the medium term following a launch.
Ongoing investment in automated facility
During 2019, the extension of the automated warehouse facility will be completed. The extension aims to increase the proportion of orders being automated and to add additional capacity for storage and order processing. The facility has been extended on an ongoing basis in four stages during 2018, with a smaller part of it to be completed in 2019. The total investment in automation, including parts already completed in 2017 and 2018, is estimated to total approximately SEK 110 million over three years (2017-2019). The increased investment is being financed on equivalent leasing terms as the automation investment in 2017.
Seasonal variations
The weather has an effect on sales of sports items. Early and clearly defined seasonal changes tend to benefit sales. A mild autumn and winter normally have a negative impact on sales, while a warm, early spring normally contributes to higher sales figures. Sales of sports items also vary with the seasons, and as a rule the second and fourth quarters are the strongest. Revenue in the fourth quarter exceeds the other quarters because of Black Friday and Christmas trade.
Significant risks and uncertainties in business activities
There are a number of factors that can affect Sportamore’s financial results and activities. Most of these can be managed through internal procedures and guidelines, while others are governed by external factors and conditions. Risks include weather patterns, fashion trends and the Christmas trade. The weather is a factor that has a significant impact on demand in the sports industry. Currency risk is another risk for the Group, which arises through future business transactions, recorded assets and liabilities, and net investments in foreign businesses. The Group has sales in the other Nordic countries via branches, in the local currency in each of the countries. In addition to this there are risks and uncertainty factors in areas including IT operations, suppliers and other seasonal variations, but there can also be a change in consumer behaviour in e-commerce, the economic situation, etc. Please refer to the annual report for 2018 for a more detailed description of risks and uncertainty factors.
Dividend In connection with the updating of the financial goals, the Board of Directors is adopting an updated dividend policy, which states: A dividend shall be paid when free cash flow exceeds attractive investments in profitable growth.
Sportamore AB (publ) | Interim report
07
Financial summary
Q2 - January - June 2019
Consolidated statement of comprehensive income (SEK thousand)
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
232,897
199,757
457,422
401,672
978,199
922,449
7,622
5,856
16,814
13,585
28,112
24,883
240,519
205,613
474,236
415,257
1,006,311
947,332
Operating income Net sales Other operating income Operating expenses Goods for resale
-150,105
-128,745
-298,472
-261,826
-640,220
-603,574
Other external expenses
-66,409
-56,351
-128,477
-105,568
-257,928
-235,019
Costs of employee benefits
-25,865
-24,346
-51,792
-47,371
-98,245
-93,823
-282
-203
-1,319
-1,608
-1,998
-2,288
-7,401
-2,162
-13,489
-4,174
-18,940
-9,625
-250,061
-211,807
-493,550
-420,547
-1,017,332
-944,330
-9,542
-6,194
-19,314
-5,290
-11,021
3,002
2
5
4
7
8
11
Other operating expenses Depreciation of tangible and intangible non-current assets
Operating profit/loss Profit/loss from financial items Financial income Financial expenses
-829
-214
-1,644
-420
-2,157
-932
-827
-210
-1,640
-412
-2,149
-921
-10,369
-6,404
-20,954
-5,702
-13,170
2,081
2,587
1,064
6,021
246
4,849
-926
-7,782
-5,340
-14,933
-5,457
-8,321
1,155
Earnings per share before dilution, SEK
-0.80
-0.57
-1.54
-0.58
-0.87
0.12
Earnings per share after dilution, SEK
-0.80
-0.57
-1.54
-0.58
-0.87
0.12
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
-7,782
-5,340
-14,933
-5,457
-8,321
1,155
435
319
656
584
362
290
-7,347
-5,021
-14,277
-4,872
-7,959
1,445
Earnings after financial items Income tax Earnings for the period
(SEK thousand) Earnings for the period Translation differences for the period when translating foreign business activities Other comprehensive income
The profit/loss and comprehensive income for the period are attributable in full to the parent company’s shareholders.
Sportamore AB (publ) | Interim report
09
Q2 - January - June 2019
Consolidated statement of financial position – in summary (SEK thousand) Intangible non-current assets Property, plant and equipment Financial assets
2019 30 Jun
2018 30 Jun
2018 31 Dec
8,652
4,004
6,371
200,737
68,407
103,245
41,596
36,471
35,575
274,962
229,285
280,018
Current receivables
35,780
33,631
56,030
Cash and cash equivalents
25,508
44,043
80,664
Total assets
587,233
415,841
561,903
Equity
218,827
212,830
233,676
Non-current liabilities
166,183
51,101
81,824
Inventories
Current liabilities
202,223
151,910
246,403
Total equity and liabilities
587,233
415,841
561,903
Consolidated statement of changes in equity – in summary (SEK thousand)
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
2018 Jan-Dec
Opening amount
226,776
217,533
233,677
217,067
217,067
-7,347
-5,021
-14,277
-4,872
1,445
Total comprehensive income for the period New share issue, net Warrants Share-based compensation Translation difference Closing amount
-
-
-
-
13,421
-7
-
1,778
-
-
318
318
636
636
1,271
-912
-
-2,987
-
472
218,827
212,830
218,827
212,830
233,676
Sportamore AB (publ) | Interim report
10
Q2 - January - June 2019
Consolidated cash flow statement – in summary (SEK thousand) Cash flow from operating activities before change in working capital
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
2,215
-3,604
-6,713
-309
7,404
13,268
Change in working capital
-15,185
-31,171
-38,726
-46,118
-25,536
-32,928
Cash flow from operating activities
-17,400
-34,775
-44,899
-46,427
-18,132
-19,659
-1,968
-209
-3,561
-858
-4,994
-2,291
Investments intangible non-current assets Investments property, plant and equipment Cash flow from investing activities New share issue, net Warrants
-542
-280
-994
-414
-3,353
-2,775
-2,510
-489
-4,555
-1,272
-8,347
-5,066
-
-
-
-
13,421
13,421
-7
-
1,779
-
1,779
-
Repayment of lease liability
-5,236
-444
-7,482
-521
-7,256
-295
Cash flow from financing activities
-5,243
-444
-5,703
-521
7,944
13,126
-25,154
-35,708
-55,157
-48,220
-18,535
-11,599
Cash and cash equivalents at beginning of period
50,662
79,751
80,664
92,263
44,043
92,263
Cash and cash equivalents at end of period
25,508
44,043
25,508
44,043
25,508
80,664
Cash flow for the period
Sportamore AB (publ) | Interim report
11
Q2 - January - June 2019
The Group’s key indicators (KSEK)
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
Total sales1
244,134
206,403
481,811
416,266
1,018,468
952,897
18.3%
19.4%
15.7%
20.2%
22.9%
25.6%
Sales growth, % Operating income
240,519
205,613
474,236
415,257
1,006,311
947,332
Growth operating income, %
17.0%
19.0%
14.2%
19.9%
21.6%
24.9%
Gross margin, %
37.6%
37.4%
37.1%
36.9%
36.4%
36.3%
Marketing expenses (% of operating income)
13.2%
12.4%
12.6%
11.5%
11.8%
11.3%
EBIT
-9,542
-6,194
-19,314
-5,290
-11,021
3,002
EBIT margin, %
-4.0%
-3.0%
-4.1%
-1.3%
-1.1%
0.3%
EBITDA
-2,142
-4,032
-5,825
-1,116
7,919
12,627
EBITDA margin, % Cash flow, operating activities
-0.9%
-2.0%
-1.2%
-0.3%
0.8%
1.3%
-17,400
-34,775
-44,899
-46,427
-18,132
-19,659
Cash flow from operating activities per share, SEK
-1.8
-3.7
-4.6
-4,9
-1.9
-2.0
Equity per share, SEK
22.6
22.7
24.1
22.7
22.6
24.1
-
-
-
-
-
-
Share dividend paid per share, SEK Net liability (+), cash in hand (-)
170,797
14,580
170,797
14,580
170,797
17,049
Equity/assets ratio, %
37.3%
51.2%
37.3%
51.2%
37.3%
41.6%
Investments
14,815
9,625
113,262
10,726
155,028
52,492
134
124
138
125
131
156
Number of shares on balance sheet date
9,694,351
9,392,351
9,694,351
9,392,351
9,694,351
9,694,351
Average number of shares before dilution
9,694,351
9,392,351
9,694,351
9,392,351
9,565,277
9,415,518
Average number of shares after dilution
9,764,351
9,770,351
9,764,351
9,770,351
9,565,277
9,485,518
Earnings per share before dilution, SEK
-0.80
-0.57
-1.54
-0.58
-0.87
0.12
Earnings per share after dilution, SEK
-0.80
-0.57
-1.54
-0.58
-0.87
0.12
2
Average number of employees
1. Own sales plus the total value of products sold from commission-based revenues, where own sales refers to operating income less provision from commissionbased sales. 2. Calculation of net debt: Interest-bearing liabilities (196.3) minus cash and cash equivalents (25.5).
Sportamore AB (publ) | Interim report
12
Q2 - January - June 2019
Note 1 Accounting policies and valuation principles Accounting policies These consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU that were presented in the Group’s annual report for 2018, with the exception of new and revised standards and interpretations that came into force on 1 January 2019. The Group’s functional currency is the Swedish krona, which is also the reporting currency for the Group. This report has been prepared in accordance with IAS 34 Interim Financial Reporting, the Swedish Annual Accounts Act and RFR 1 Complementary Accounting Rules for Groups. The report applies ESMA’s guidelines in respect of alternative key indicators. The Group applies the same accounting policies, valuation principles and calculation methods in this interim report as those described in the annual report for 2018. The subsidiary company Sportamore Incentive AB is dormant. The parent company The parent company Sportamore AB (Publ) prepares financial statements in accordance with the Swedish Annual Accounts Act and the Swedish Securities Market Act, which is in accordance with the provisions set out in RFR 2 Accounting for Legal Entities. All lease contracts are recorded operationally in the parent company. New standards, amendments and interpretations that have been applied by the Group as of 1 January 2019 IFRS 16 Leases In January 2016, the IASB published the new standard IFRS 16 Leases, which was approved by the EU in November 2017 and is to be applied as of the financial year 2019. IFRS 16 Leases and associated interpretations IFRIC 4, SIC-15 and SIC-27 replace IAS 17 Leases. The standard requires assets and liabilities attributable to leases, with the exception of short-term lease agreements or agreements with underlying assets of low value, to be recorded in the balance sheet. This recording standard is based on the view that the lessee has a right to use an asset over a specific period of time and at the same time an obligation to pay for this right. This will mean that Sportamore will record a small number of operational lease agreements in the balance sheet from January 2019 in addition to existing agreements. Transition method and effects Sportamore has chosen to use the simplified method, limited retroactivity, which means that there is no recalculation of the financial year 2018 in order to create a comparative year. Recalculation takes place from 1 January 2019.
Leases that are classified as financial lease agreements in accordance with IAS 17 Leases are reclassified in accordance with IFRS 16 at the amount at which they were recorded the day immediately before the application of the new standard, and have therefore had no effect on Sportamore’s opening balance and the financial position and profits. In 2018, Sportamore completed a full review of all the Group’s lease agreements. Sportamore’s lease portfolio consists of approx. 10-15 agreements relating to offices and warehouses, vehicles and office equipment. This review showed that Sportamore can apply both the rule on relief for short-term leases and lease agreements with assets of low value, and Sportamore has chosen to apply these as of the transition date. The current rental agreement for the office in Bromma expires in November 2019 and therefore has a lease term of less than 12 months at the starting date. An assessment was done that the options to extend in the rental agreement would not be exercised, which means that the exception for short-term leases can be used. Until such time as another agreement is reached with the landlord, these lease agreements will continue to be recorded as an expense on a straight-line basis over the term of the lease (please see section Investments). The most significant lease contract that is affected by IFRS 16 relates to the Group’s rental agreement for the warehouse premises in Kjula. The effect in respect of the lease liability as of 1 January 2019 totals SEK 95.7 million, with the recording of a corresponding asset held with a right of use. The marginal loan rate has been estimated at two per cent. Below is an explanation of the difference between them operational leasing commitments reported in accordance with IAS 17 as of December 31, 2018 and leasing liabilities reported according to IFRS 16 on the first day of application on January 1, 2019. (SEK millions)
Amount
Operational lease agreements in accordance with Note 32 in the annual report for 2018
87.3
Discounted in accordance with the Group’s marginal loan rate of 2%
-9.6
Supplement for financial lease liabilities as of 31/12/2018
97.7
Deduction for short-term leases recognised as expenses on a straight-line basis
-2.5
Addition/deduction for adjustment associated with changes in lease period.
17.9
Recorded lease liability as of 01/01/2019
190.8
Sportamore as a lessor Sportamore sublets approximately 25 per cent of the warehouse premises. In the transition to IFRS 16, Sportamore has reassessed whether the operational lease agreement under IAS 17 for subletting should be classified henceforth as an operational lease agreement or a financial one in accordance with IFRS 16. Sportamore has made the assessment that it should henceforth be classified as an operational lease agreement as the letting arrangement only relates to part of the total term of the lease for the Group’s asset held with right of use for the warehouse premises in Kjula.
Sportamore AB (publ) | Interim report
13
Q2 - January - June 2019 IFRIC 23 Uncertainty over Income Tax Treatments IFRIC 23 Uncertainty over Income Tax Treatments is being applied by Sportamore as of 1 January 2019. The interpretative statement considers how uncertainty in respect of amounts of income tax should be recorded, for example how a tax asset should be recorded when the amount has been appealed and a discussion is being conducted with a tax authority. IFRIC 23 has no effect on Sportamore’s financial statements, and the opening balances as of 1 January 2019 have therefore not been adjusted.
Sportamore AB (publ) | Interim report
14
Q2 - January - June 2019
Note 2 Reporting of segments
The Group’s activities are divided into the segments Sweden, Norway, Finland, Denmark and France. Because of the Group’s major investments in an automation facility and the implementation of IFRS 16, there has been a significant increase in depreciation and the segments are being monitored at EBIT level. Warehousing activities and product costs are primarily in the Sweden segment, which charges this segment’s gross margin and EBIT to a much greater extent than the other segments. 2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
143,358
120,594
281,474
246,685
587,202
552,413
18.9%
14.4%
14.1%
15.2%
17.6%
18.3%
-11,367
-6,684
-25,056
-9,320
-27,156
-11,834
14,815
9,625
113,262
10,726
155,028
52,492
4,403
2,162
8,000
4,174
13,451
9,625
Operating income, external customers
36,992
33,390
70,870
62,646
155,886
147,663
Growth operating income, %
10.8%
36.6%
13.1%
22.8%
29.7%
35.9%
-523
-438
450
635
994
1,175
1,164
-
2,049
-
2,049
-
Operating income, external customers
44,933
39,037
91,516
81,275
198,479
188,239
Growth operating income, %
15.1%
19.6%
12.6%
30.7%
24.0%
33.6%
EBIT
2,501
1,097
5,171
3,433
14,104
12,366
Depreciations
1,361
-
2,573
-
2,573
-
Operating income, external customers
15,236
12,592
30,376
24,651
64,742
59,018
Growth operating income, %
21.0%
22.1%
23.2%
30.3%
34.6%
39.3%
-153
-169
121
380
1,037
1,295
473
-
867
867
-
Operating income, external customers
0
-
0
-
0
-
Growth operating income, %
-
-
-
-
-
-
EBIT
-
-
-
-
-
-
Depreciations
-
-
-
-
-
-
(SEK thousand) Sweden Operating income, external customers Growth operating income, % EBIT Investments Depreciations Norway
EBIT Depreciations Finland
Danmark
EBIT Depreciations France
Total for segments Operating income, external customers
240,519
205,613
474,236
415,257
1,006,311
947,332
Growth operating income, %
17.0%
19.0%
14.2%
19.9%
21.6%
24.9%
EBIT
-9,542
-6,194
-19,314
-5,290
-11,021
3,002
Investments
14,815
9,625
113,262
10,726
155,028
52,492
7,401
2,162
13,489
4,174
18,940
9,625
Amortisations & depreciations
Distribution of revenue The Group’s revenue from agreements with customers relates to goods for resale. Revenue is divided into categories broken down by geographical market and corresponds to the Group’s reporting of segments. Revenue recognition takes place when the products are delivered to delivered to an independent freight forwarder.
Note 3 Reconciliation of total sales to operating income (SEK million) Operating income Less: Provisions from commission-based sales Own Sales Plus: The total value of products sold from commission-based revenues Total Sales
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
240.5
205.6
474.2
415.2
1,006.3
947.3
-1.7
-0.5
-2.9
-0.6
-5.1
-2.8
238.8
205.1
471.3
414.6
1,001.2
944.5
5.3
1.2
10.5
1.6
17.3
8.4
244.1
206.4
481.8
416.3
1,018.5
952.9
Sportamore AB (publ) | Interim report
15
Q2 - January - June 2019
Note 4 Transactions with related parties
There were no transactions with related parties during the reporting period.
Note 5 Investments in Property, plant and equipment
For the second quarter in 2019 investments in Property, plant and equipment amounted to 12,8 MSEK. The investments consist primarily (SEK 11,8 million) of IFRS 16 related right of use in respect of the head office in Bromma. The rental agreement for the head office in Bromma has in the previous quarter been classified as a short-term lease. During the second quarter in 2019 an agreement with the landlord was reached and the rental agreement was extended, accordingly an IFRS 16 related right of use was recorded.
Note 6 Warrant scheme
The total number of outstanding warrants on the balance sheet date is 370,000, corresponding to the same number of shares. If all warrants are exercised to subscribe to shares, the number of shares will increase by 370,000 in total, from 9,694,351 shares to 10,064,351 shares, and the dilution effect will be at the most approximately 3.68 per cent. A description of the terms and conditions for previously issued option schemes may be found in the annual report for 2018, which is available on Sportamore’s website.
Note 7 Deferred tax
A deferred tax asset relating to tax loss carryforwards is recorded to the extent that it is probable that the deficits can be offset against future profits for tax purposes. Following the Swedish Parliament’s decision to gradually reduce the 2018 tax rates in future, the Group has revalued the deferred tax asset in the balance sheet using the new tax rates.
Note 8 Contingent liability
The Group has a commitment to a supplier (see also under “Ongoing investment in automation facility”) attributable to the extended construction of the warehouse’s automation facility. Construction took place on an ongoing basis during 2018 and is continuing during 2019. The amount of the contingent liability is estimated at SEK 5 million. When the automation facility becomes operational and is capitalised, the contingent liability will be converted into a lease liability.
Note 9 Pledged assets
Pledged assets consist of blocked bank funds to the order of SEK 9.6 (9.6) million in respect of a rental deposit. There are mortgaged floating charges of SEK 53.5 million, of which SEK 5.2 million is held by the Norwegian Tax Administration and Swedbank SEK 40.0 million.
Sportamore AB (publ) | Interim report
16
Q2 - January - June 2019
Parent company’s income statement (SEK thousand)
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
232,897
199,757
457,422
401,672
978,199
922,449
7,622
5,856
16,814
13,585
28,112
24,883
240,519
205,613
474,236
415,257
1,006,311
947,332
Operating income Net sales Other operating income Operating expenses Goods for resale
-150,105
−128,745
-298,472
-261,826
-640,220
-603,574
Other external expenses
-72,429
−58,338
-139,743
-109,382
-272,742
-242,381
Payroll expenses
-25,946
-24,400
-51,937
-47,467
-98,508
-94,039
-282
-203
-1,319
-1,608
-1,998
-2,288
Other operating expenses Depreciation of tangible and intangible non-current assets
Operating loss
-1,115
-604
-2,018
-1,148
-3,358
-2,488
-249,877
-212,290
-493,489
-421,432
-1,016,827
-944,770
-9,358
-6,677
-19,251
-6,175
-10,516
2,562
Profit/loss from financial items Other interest income and similar income statement items Interest expenses and similar profit/loss items
Earnings after financial items Income tax Earnings for the period
2
5
4
7
8
11
-1
-2
-3
-6
-5
-8
1
3
2
1
3
3
-9,358
-6,674
-19,251
-6,174
-10,513
2,564
2,109
1,203
-3,545
867
335
-2,342
-7,249
-5,471
-15,707
-5,306
-10,178
222
Parent company’s statement of comprehensive income (SEK thousand) Earnings for the period Translation differences for the period when translating foreign business activities Other comprehensive income
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
Rolling 12 month
2018 Jan-Dec
-7,249
-5,471
-15,707
-5,306
-10,178
222
435
319
656
584
362
290
-6,814
-5,152
-15,050
-4,722
-9,816
512
Sportamore AB (publ) | Interim report
17
Q2 - January - June 2019
Parent company’s statement of financial position – in summary (SEK thousand) Intangible non-current assets Property, plant and equipment
2019 30 Jun
2018 30 Jun
2018 31 Dec
8,652
4,004
6,371
5,247
5,493
5,426
37,753
37,143
34,209
274,962
229,285
280,018
Current receivables
46,985
40,747
63,013
Cash and bank balances
25,458
43,994
80,614
Total assets
399,056
360,666
469,650
Equity
216,687
212,547
232,309
Current liabilities
182,369
148,119
237,341
Total equity and liabilities
399,056
360,666
469,650
Financial assets Inventories
Parent company’s statement of changes in equity – in summary (SEK thousand)
2019 Apr-Jun
2018 Apr-Jun
2019 Jan-Jun
2018 Jan-Jun
2018 Jan-Dec
Opening amount
224,101
217,381
232,309
216,633
216,633
-6,814
-5,152
-15,050
-4,722
512 13,421
Total comprehensive income for the period New share issue, net Warrants Share-based compensation Translation difference Closing amount
-
-
-
-
-7
-
1,778
-
-
318
318
636
636
1,271
-911
-
-2,987
-
472
216,687
212,547
216,687
212,547
232,309
Sportamore AB (publ) | Interim report
18
Q2 - January - June 2019
This information is information that Sportamore AB (publ) is obligated to disclose pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted, through CEO Johan Ryding, for publication on July 19th 2019 at 08:00 CET.
Signatures and auditor’s audit This report has not been audited by the Group’s auditors. Jan Friedman Birgitta Stymne Göransson Mariette Kristenson Chair Board member Board member
Emil Ahlberg Thomas Ekman Board member Board member
Sportamore AB (publ) | Interim report
19
Other information
Q2 - January - June 2019
Financial calendar 22/10/2019 (08:00): Interim Report, January-September 2019 21/02/2020 (08:00): Year-end accounts bulletin, January-December 2019
Financial statements The annual report and interim reports are available on the website: http://www.sportamore.se/ir
For further information please contact: Johan Ryding, CEO tel.: +46 705 56 22 26 Sportamore AB (publ) Gustavslundsvägen 151E SE-167 51 Bromma Reg. office: Stockholm Corp. ID no.: 556788-8614
Sportamore AB (publ) | Interim report
21
Q2 - January - June 2019
Definitions of key indicators
These are key indicators Sportamore uses from time to time.
Definitions
Purpose
The total number of customers who placed at least one order in the last 365 days counting from the last day of the period, excluding returns.
This measure provides a good picture of active customers and development of the Group’s customer base.
An investment where the expected return exceeds the risk-adjusted return requirement.
The measure shows when an investment is favorable for the Group.
Average number of employees
Number of employees in the Group converted into full-time equivalents, i.e. number of full-time equivalents who performed work during the year/period.
Relevant measure in the e-commerce sector. This measure shows how many fulltime equivalents performed work during the year or the period.
Average number of orders per active customer
The total number of orders during the last 365 days counted from the last day of the period divided by the number of active customers.
This measure is very important for monitoring changes associated with orders placed by active customers between different periods.
Average order value
Total sales divided by the number of orders.
This measure is very important for monitoring changes in average order values between different periods.
Cash flow from operating activities per share
Cash flow from operating activities in relation to weighted average number of shares before dilution during the period.
A measure that provides a good picture of the contribution per share from operating activities in the cash flow.
Operating profit/loss after depreciation/amortisation and impairments.
Indicates the Group’s operating profit/loss after depreciation/ amortisation and impairments.
Operating profit/loss after depreciation/amortisation and impairments divided by income for the period.
Shows the Group’s operating profit/loss as a percentage after depreciation/amortisation and impairments divided by income for the period.
Operating profit/loss before depreciation/amortisation, impairments and interest.
Shows the Group’s operating profit/loss before depreciation/ amortisation and interest.
Operating profit/loss before depreciation/amortisation and interest, divided by income for the period.
Shows the Group’s operating profit/loss as a percentage before depreciation/amortisation and interest divided by income for the period.
Alternative key indicators Active customers
Attractive investment
EBIT
EBIT margin, %
EBITDA
EBITDA margin, %
Sportamore AB (publ) | Interim report
22
Q2 - January - June 2019 Equity as a percentage of the balance sheet total.
A traditional measure to show financial risk, ability to pay in the long term.
Equity per share
Equity in relation to the number of shares on the balance sheet date, adjusted for share issues and conversions.
This measure shows equity per share on the balance sheet date.
Free Cash Flow
Cashflow from operating activities plus cash flow from investment activities.
Measures the amount of cash and cash equivalents left after the group’s net amount of cash spending’s for operating purposes and after the net amount of cash spending’s after investment activities.
Gross profit/loss as a percentage of operating income during the period.
The gross margin provides a picture of what proportion of sales revenue remains when the purchase price has been deducted. The remaining amount has to cover other expenses.
Trend in total operating income in relation to the same period in the previous year.
This measure is very important for monitoring growth in operating income driven by changes in volume, price and product mix between different periods.
Direct and indirect expenses for marketing, excluding personnel costs, divided by the operating income in the period.
This measure shows in percentage terms how much is spent on marketing in relation to operating income.
Net liability/cash in hand
Interest-bearing liabilities minus cash and cash equivalents. Net liability is a positive figure. Net cash in hand is a negative figure.
This measure shows whether the Group has more cash in hand than liabilities and the ability to repay interest-bearing lease liabilities.
Number of orders
The total number of orders placed by customers during the period excluding returns but including cancellations. All visits to the Group’s websites during the period, regardless of whether the visitor is new or repeat. Non-unique visitors.
This measure shows order input and is a relevant measure of order growth for Sportamore.
See definition of EBIT.
See definition of EBIT.
Sum of the segments Norway, Finland and Denmark.
Used to gain a good picture of the segments in the Nordics.
Operating income less provisions from commission-based sales.
Measures Operating income without the provision from commissionbased revenues.
Equity/assets ratio
Gross margin
Growth in Operating Income
Marketing expenses
Number of visits
Operating profit/loss (EBIT) Other Nordic countries Own Sales
This measure shows all visits to the Group’s sites. Provides a good picture of awareness of the Group and its reach.
Sportamore AB (publ) | Interim report
23
Q2 - January - June 2019
Number of visitors via smartphones and tablets in relation to total number of visits.
This measure provides a good picture of what kind of devices the Group’s customers are using to visit the Group’s sites.
Sales Growth
Trend in Total Sales in relation to the same period in the previous year in percentage.
This measure is very important for monitoring growth in Total Sales between different periods.
Total Sales
Own Sales plus the total value of products sold from commissionbased revenues, less VAT and returns.
Measures the Groups Operating income as if Sportamore owned the products sold from commissionbased revenues.
Proportion of visits on mobile devices
IFRS key indicators Earnings per share before dilution
Earnings per share after dilution
Definitions Earnings per share before dilution is calculated as the profit/loss for the period divided by the average number of outstanding shares. Earnings per share after dilution is calculated by adjusting the average number of shares to include all potential dilution of shares. Potential dilution exists when the redemption price for warrants issued is lower than the current market price. Potential ordinary shares give rise to dilution only if a conversion of them generates a lower profit per share or a higher loss per share.
Sportamore AB (publ) | Interim report
24
Follow us For more information visit www.sportamore.se