FINANCIAL STATEMENT. January December, Operating revenues for the period increased by 13.8% to SEK 2,149.0 (1,889.0) million.

Transcription

1 FINANCIAL STATEMENT January December, 2004 Operating revenues for the period increased by 13.8% to SEK 2,149.0 (1,889.0) million. EBIT was SEK (166.1) million. Property and goodwill values were written down by SEK 36.8 million in the fourth quarter. EBIT excluding write-downs was SEK million. The EBIT margin stood at SEK 7.1 (8.8)% or 8.9% excluding write-downs. Net profit was SEK 85.2 (98.7) million. Earnings per share were SEK 5.52 (6.50). The Board of Directors is proposing a dividend of SEK 2.30 (2.30) per share. The Board of Directors is proposing the implementation of a 2:1 split.

2 january december SUMMARY PROFIT PERFORMANCE Oct Dec 2004 Oct Dec Operating revenues, SEK m , , ,450.0 EBIT, SEK m Profit after fin. items, SEK m Net profit, SEK m EBIT margin, % EPS after full dil n, SEK* * Net profit adjusted for convertible interest. Historical data has been converted for comparability after the 2:1 split consummated on 5 June Operating revenues increased by 13.8% to sek 2,149.0 (1,889.0) m, with 5.3 percentage points of this increase, or sek 99.5 m, attributable to acquisitions. Other revenues include capital gains from divestments of fixed assets of sek 6.2 (0.8) m, and exchange rate gains of sek 4.9 (1.7) m. Organic growth for the period was almost 9 percentage points. ebit amounted to sek (166.1) m after a weaker fourth quarter subject to sek 36.8 m of write-downs; the ebit margin was 7.1 (8.8)%. Expenses related to the closure and relocation of the Odense central warehouse to the group s central facility at Strängnäs of sek 11.8 m were redeemed against the restructuring reserve in the fourth quarter, which was thereby exhausted. Mekonomen s Swedish and Norwegian businesses continue to make positive progress with healthy sales growth and high margins. The re-profiling of the Danish business to a pure retail chain is now complete. A new management was appointed in Denmark on 1 November and intensive initiatives have begun, to decentralise profit centres to the store level to enhance productivity. Profit after financial items stood at sek (153.0) m. Net financial income and expenses were sek 6.7 ( 13.0) m, of which sek 0.6 ( 8.5) m comprises accounted exchange rate gains on receivables within the Norwegian subsidiaries. The previous year s results included sek 4.9 m capital gains on the divestiture of minority shares in store companies. eps (earnings per share) for the period were sek 5.52 (6.50). FOURTH QUARTER Operating revenues grew by 11.0% to sek (485.9) m, with 3.8 percentage points of this increase attributable to acquisitions. Organic growth was over 7 percentage points. ebit was sek 2.1 (25.7) m; the fourth-quarter ebit margin was 0.4 (5.3)%. The profit downturn was mainly caused by additional write-downs of sek 36.8 m. Excluding these write-downs, ebit was sek 38.9 m, equivalent to an ebit margin of 7.2%. The previous year s ebit was subject to an obsolescence write-down of sek 12 m in the Danish business. Fourth-quarter profit after financial items was sek 1.7 (32.3) m; financial income and expenses were sek 0.5 (6.6) m. OPERATIONS Mekonomen s sales performance remains positive across all markets, with profitability performance in Sweden and Norway remaining healthy. The accounted profitability of the Danish business was negative in the fourth quarter. The Danish business was realigned to a pure retail chain in the fourth quarter. The closure of the Odense warehouse in early October caused low delivery levels and extra expenses for overtime and temporary staff. This concentration of operations implies the elimination of a profitable wholesaling business from the Danish operation, and replacement with deliveries from the Strängnäs central warehouse. This has brought the Swedish wholesaling business new sales with higher profitability than that of the Danish wholesaling operation. The Strängnäs central warehouse is now supplying all stores with overnight-deliveries, and logistics are progressing well, with delivery standards improving, although not yet to intended levels. The co-ordination of suppliers, product ranges and item numbers is complete. Overall, these measures have resulted in the group enhancing its efficiency. A new ceo and management team has headed up the Danish operation since 1 November. Its efforts focus on rationalization measures at the store level, to cut costs. A new pricing and discounting system for the Danish market will be implemented in the second quarter of Additionally, an electronic spareparts catalogue, successful in Sweden and Norway, will be introduced in spring The fourth-quarter operating margins of the Swedish and Norwegian businesses were 12.9 and 8.9% respectively, while the Danish business posted a loss. The fourth quarter, along with the first, are weaker than Mekonomen s other quarters in profit terms. The 10,000 sq.m. extension of the Strängnäs central warehouse for tyre storage was concluded in mid-january Tyre deliveries from the new facility are scheduled to begin with summer tyres in spring At the end of the period, 886 (761) workshops in Sweden, Norway and Denmark were affiliated to the Mekonomen Service Centre concept. 2

3 SWEDEN Progress in Sweden remains positive; sales grew by 11.4% in the period to sek 1,342.9 (1,205.3) m. Full-year operating profit grew by 16.2% to sek (171.9) m; margins increased to 14.9 (14.3)%. A sek 7 m goodwill write-down was effected in the fourth quarter for a store acquired in Mekonomen had 112 (112) stores, 84 (81) of which were wholly owned. There were 549 (544) Mekonomen Service Centres at the end of the period; workshop contracts not fully consistent with the concept are being wound up on an ongoing basis. NORWAY Sales grew by 33.5% to sek (273.2) m. In Norwegian krone terms, sales growth was 44%. Operating profit almost doubled for 2004 to sek 44.8 (23.2) m, while margins increased to 12.3 (8.5)%. There were 37 (33) stores in Norway, of which 20 (16) are wholly owned. The number of Mekonomen Service Centres increased to 274 (217) at the end of the period. DENMARK Sales in Denmark grew by 17.8%, to sek (568.9) m. Operating profit stood at sek 6.9 (15.5) m for the full year; margins amounted to 1.0 (2.7)%. A comment on profit is provided above in the Operations section. All goods not part of Mekonomen s centrally warehoused range were subject to sek 11.8 m scrapping in the fourth quarter. The profit effect has been accounted against the restructuring reserve created coincident with the acquisition. There are no remaining restructuring reserves relating to Denmark. After the closure of the Danish warehouse, properties at Odense have been valued in anticipation of a divestment process resulting in the Board resolving on a sek 14.9 m write-down. After the now-concluded rationalization of the Danish business, the Board has resolved to write down goodwill. The portion of acquisition-related goodwill attributable to the Danish wholesaling business, some sek 40 m, has been ascribed to Mekonomen Grossist ab and the remaining portion of goodwill of approximately sek 10 m has been written down. No acquisition goodwill relating to Mekonomen Danmark a/s remains. In addition, a sek 4.8 m write-down on the goodwill arising from the purchase of net assets of a store acquired in 2004 was effected. During the fourth quarter, 42 employees concluded their employment, with redundancy expenses eliminated against the provision created in the first quarter Mekonomen s service centre concept on the Danish market, Mekonomen Autoteknik, is in its build-up phase; the number of affiliated workshops is increasing, and was 63 at year-end. There were 43 (44) stores in Denmark, all wholly owned. ACQUISITIONS AND START-UPS The majority of the shares of Åsensenteret as of Stavanger, Norway were acquired in January Mekonomen opened a new store in Bodø in March. One independent store and one co-operating store at Vetlanda, Sweden were acquired in February, and merged into a single unit. In the same month, an independent store in Sandviken, Sweden was acquired, which has been merged with the existing store, with the operations relocated to new premises. Three stores were acquired in Denmark, in Køge, Viborg and Silkeborg, which are being integrated with existing stores, and accordingly, have not influenced the number of stores. The co-operating store in Falköping, Sweden was acquired in April. An independent store with real estate, ba Bildelar & Däckservice ab in Ystad, Sweden, was acquired in July. The operations of the existing store have been relocated to the acquired unit. The former co-operating store at Vimmerby was acquired in July. One store in Fosie, Malmö, was opened in August, simultaneous with the closure of the Eriksfält, Malmö store. One store co-located with Mekonomen s head offices in Segeltorp, Stockholm, was opened in October. During November, Mekonomen in Norway acquired the previous two co-operating stores in Ski and Jessheim. At the end of the period, there were 192 (190) stores in the chain, 77 (75)% of which were wholly owned. INVESTMENTS Net investments in tangible fixed assets in the year amounted to sek (53.8) m, of which sek 73.3 (29.3) m comprises property in Sweden and Denmark. This amount includes sek 54 m for the extension of the Strängnäs central warehouse. Investments in new it systems amounted to sek 3.2 m. Corporate acquisitions were sek 59.5 m, one funded via a new issue. The property at Karlshamn was divested in September. Four properties were divested in the year in Denmark. These transactions generated no notable profit effect. FINANCIAL POSITION At the end of the period, liquid funds and short-term investments were sek 91.0 (81.9) m. The equity-assets ratio was 55.6 (53.5)%. CASH FLOW STATEMENT Cash flow after investments was a positive sek 9.1 (65.9) m in the year. Investments were high in the year; investments in subsidiaries were sek 59 m, the stock values at the Strängnäs central warehouse increased by some sek 35 m due to this unit becoming the main supplier of Mekonomen s Danish stores. Mekonomen invested some sek 54 m in the extension of the Strängnäs central warehouse, mainly in the second half-year

4 CONVERSION Mekonomen s convertible debenture matured on 20 April At maturity, 799,366 convertibles of a total 799,417 had been redeemed. Shareholders equity increased by a total of sek 35.0 m. EMPLOYEES January AVERAGE END OF PERIOD December number number women (%) Sweden Norway Denmark Total 1,219 1,135 1,258 1, PARENT COMPANY The parent company, which principally sells it and other administrative services to group companies, generated sales of sek 61.4 (41.2) m in the year. sek 61.4 (41.2) m in the year. The sales gains include factors such as invoicing of diagnostic instruments for workshops. This invoicing was previously from stores. Profit after financial items was sek 39.8 (-11.6) m excluding dividends from subsidiaries and write-downs on subsidiary shares in Denmark. The earnings increase is mainly due to the supplier bonus from 2004 being accounted in the parent company. In April, the Board of Directors resolved to issue 129,793 class b shares pursuant to authorisation from the Annual General Meeting of 8 May Rights to subscribe for the new shares, waiving shareholders preferential rights, were conferred to Köpingebro Förvaltnings ab, against the provision of all the shares of ba Bildelar & Däckservice ab of Ystad, Sweden. EVENTS AFTER THE END OF THE PERIOD There are no significant events to report after the end of the financial year. ANNUAL GENERAL MEETING AND ANNUAL REPORT Mekonomen s agm will be held at 4 p.m. on 10 May, at the Olympia conference facility, Salénhuset, Norrlandsgatan 15, Stockholm, Sweden. The Board of Directors intends to submit a proposal regarding renewed authorization to effect private placements to fund acquisitions. The Annual Report will be distributed to those shareholders that have indicated their wish to receive financial information in the week ending 30 April 2005, and will simultaneously be available at mekonomen.se and from Mekonomen s head office. The Board of Directors is proposing that the agm approves a 2:1 split of the Mekonomen share, i.e. the number of shares doubling, while halving the nominal value of each. DIVIDENDS The Board of Directors is proposing dividends of sek 2.30 (2.30) per share, before the split. ACCOUNTING PRINCIPLES From 1 January 2004 onwards, Mekonomen is adopting rr s (Redovisningrådet, the Swedish Financial Accounting Standards Council) recommendation rr 29 Employee Benefits (ias 19). This new recommendation did not have any impact on Mekonomen s consolidated profit and financial position. Largely, old-age and widow s pension commitments for salaried employees in Sweden are guaranteed through insurance policies from pension fund manager Alecta. A statement from rr s Emerging Issues Taskforce, ura 42, classifies this as a defined-benefit plan encompassing multiple employers. In the financial year 2004, the group did not have access to information enabling these schemes to be accounted as defined benefit. Accordingly, the itp (supplementary pensions for salaried employees) scheme guaranteed through an Alecta insurance policy has been accounted as a defined-contribution scheme. In Norway, Mekonomen has a defined-benefit scheme in one of its stores, which has been retained, although the related amount is insignificant. Apart from this, the group has definedcontribution pension schemes exclusively. Otherwise, the accounting principles and calculation methods applied are consistent with those used in Mekonomen s most recent Annual Report. For 2003 and 2004, profit for each segment is accounted including the contributions that segment generates through the wholesaling level, which enables a comparison between segments. ADOPTION OF IFRS From 2005 onwards, Mekonomen will adopt ifrs (International Financial Reporting Standards) and ias (International Accounting Standards) applicable to listed companies. The requirements pursuant to the stipulations of the Swedish Annual Accounts Act are additional. Mekonomen has already prepared a closing consolidated balance sheet as of 31 December 2004 with the intention of enabling comparisons between results for 2004 and Coincident with this process, previously reported quarterly figures for 2004 will be converted for comparability with the 2005 results. The transition from current accounting standards to ifrs will not imply any significant changes. After a review of ifrs, Mekonomen has concluded the following: QUANTITATIVE DIFFERENCES BETWEEN RR S PRINCIPLES AND IFRS The goodwill arising on the purchase of net assets and companies in Mekonomen s consolidated balance sheet will be no longer be reduced by annual depreciation. Annually, or when other indications of a need for write-downs arise, goodwill will be evaluated by comparing book values with the present value of future cash flows, through an impairment test pursuant to ias 36 Impairment of Assets. Pursuant to ifrs (ias 1 Presentation of Financial Statements) minority interests will be accounted as a part of shareholders equity in the Balance Sheet, implying that shareholders equity also includes the minority share of this item. Net profit in the Income Statement will be published pursuant to ifrs before deductions for potential minority interests. 4

5 QUANTITATIVE REVIEW OF THE MAJOR ITEMS RESULTING FROM THE TRANSITION Adjusted outgoing balances as of 31 December 2004 pursuant to ifrs are stated below. The opening balance as of 1 January 2004 does not differ from the Consolidated Balance Sheet as of 31 December 2003 as appearing in the Annual Report for If ifrs had been applied for 2004, then preliminarily, the following changes would have been made: GROUP (SEK 000) Consolidated Income Statement 2004 Net profit, pursuant to current principles 85,198 Reversal of goodwill amortization 22,288 Adjustment of write-downs on reversed amortization 7,476 Minority share of profits 7,942 Deferred tax 1,750 Net profit, pursuant to IFRS 106,202 Consolidated Balance Sheet Dec 31, 2004 Goodwill Pursuant to current principles 141,587 Reversal of goodwill amortization, acquisitions 16,225 Reversal of goodwill amortization, purchased net assets 6,063 Adjustment of write-downs on reversed amortization 7,476 Pursuant to current principles 156,399 Deferred tax liability Pursuant to current principles 80,948 Change 1,750 Deferred tax, pursuant to IFRS 82,698 Shareholders equity Shareholders equity, pursuant to current principles 817,667 Reversal of goodwill amortization 22,288 Adjustment of write-down on reversed amortization 7,476 A more comprehensive review of the effects of the adoption of ifrs and its impact on individual quarters in 2004, and key ratios will be published in a separate press release within two weeks. Owe Andersson ceo and President Mekonomen ab (publ) Stockholm, Sweden, 16 February 2005 More information is available at Inquiries to: Owe Andersson, ceo +46 (0) , mobile +46 (0) owe.andersson@mekonomen.se Börje Bengtsson, coo +46 (0) , mobile +46 (0) borje.bengtsson@mekonomen.se Jan Nilstadius, cfo +46 (0) , mobile +46 (0) jan.nilstadius@mekonomen.se This Report has not been reviewed by the company s auditors. FORTHCOMING FINANCIAL REPORTING DATES The First-quarter Interim Report will be published on 10 May Mekonomen s Annual General Meeting will be held on the same day. The Second-quarter Interim Report 2005 will be published on 16 August The Third-quarter Interim Report 2005 will be published on 9 November The Financial Statement for the financial year 2005 will be published in February Minority interest 23,125 Deferred tax 1,750 Shareholders equity, pursuant to IFRS 853,854 5

6 CONSOLIDATED INCOME STATEMENT & BALANCE SHEET, GEOGRAPHICAL DIVISION Aggregate, 31 December 2004 (amounts in SEK m) REVENUES Sweden Norway Denmark Eliminations & central items * * External net sales 1, , , ,881.2 Internal revenues Other revenues Total revenues 1, , , ,889.0 PROFIT Operating profit Non-operating items** EBIT OTHER INFO Assets , ,219.8 Un-classified assets Total assets , ,410.3 Liabilities Un-classified liabilities Total liabilities Investments (tangible assets) Investments (IT systems) Depreciation (tangible assets) Ave. no. of employees in the period No. of wholly owned stores No. of co-operating stores KEY RATIOS Margin, operating profit, % EBIT margin, % Sales growth, % Sales/employee (conv. to one-year balances where applicable) Operating profit/employee (conv. to one-year balances where applicable) Total * Adjusted for full dilution of convertible loan. ** Historical data based on the number of shares and convertibles has been converted for comparability after the 2:1 split consummated on 5 June 2003 DEFINITIONS OF KEY RATIOS Return on equity. Net profit as a percentage of average shareholders equity. Capital employed. Total assets less non-interest bearing liabilities and provisions including deferred tax. Return on capital employed. Profit after financial items plus interest expenses as a percentage of average capital employed. Equity-assets ratio. Shareholders equity including minority shares as a percentage of total assets. Gross margin. Gross profit, i.e. operating revenues less costs of goods for resale as a percentage of operating revenues. EBIT margin. EBIT after depreciation and amortisation as a percentage of operating revenues. Operating margin. EBIT less the effects of goodwill amortisation, intra-group expenses and extraordinary income and expenses as a percentage of total revenues. This quantity is applied by segment. Shareholders equity per share. Shareholders equity adjusted for convertible subordinated debenture, in relation to the number of shares at the end of the period. Earnings per share (EPS). Net profit in relation to the average number of shares. Value stated after full dilution, adjusted for convertible interest. 6

7 CONSOLIDATED INCOME STATEMENT (SEK 000) Operating revenues 1 Oct 31 Dec 2004 (3 mth) 1 okt 31 dec 2003 (3 mth) Net sales 536, ,219 2,132,074 1,881,251 1,442,921 1,061,300 Other income 2,858 1,675 16,305 7,760 7,041 4,760 Total operating revenue 539, ,894 2,149,009 1,889,011 1,449,962 1,066,060 Operating expenses Goods for resale 278, ,935 1,135,242 1,012, , ,840 Other external expenses 82,123 66, , , , ,477 Personnel expenses 120, , , , , ,048 Depreciation of tangible fixed assets 12,884 9,681 45,015 37,142 28,504 22,703 Goodwill amortisation (according to plan) 5,811 4,331 22,288 16,574 13,263 14,441 Write-down of goodwill and property (additional) 36,760-36,760-4,615 - EBIT 2,147 25, , , ,208 81,551 Net financial income-expenses 482 6,635 6,657 13,044 2,413 5,204 Profit after financial items 1,665 32, , , ,795 86,755 Tax 9,921 12,699 53,711 47,904 41,195 26,377 Minority share of profit/loss 1, ,942 6,436 6,424 6,238 Net profit 6,570 20,374 85,198 98,688 91,176 54,140 KEY RATIOS PER SHARE Number of shares, closing balance 15,434,411 14,869,150 15,434,411 14,869,150 14,770,452 14,573,252 Average number of shares in the period 1) 15,434,411 15,304,669 15,369,540 15,304,669 15,304,669 14,539,252 Earnings per share after dilution, SEK Earnings per share before dilution, SEK Shareholders equity per share, SEK ) Adjusted for full dilution of convertible loan. Historical data based on the number of shares and convertibles has been converted for comparability after the 2:1 split consummated on 5 Jun 2003 KEY RATIOS Return on equity, % Return on capital employed, % Equity-assets ratio, % Gross margin, % EBIT margin, % No. of stores in Sweden/of which wholly owned 112/84 112/81 113/79 114/76 No. of stores in Norway/of which wholly owned 37/20 33/16 33/14 24/13 No. of stores in Denmark/of which wholly owned 43/43 44/44 44/44 -/- Ave. no. of employees in the period 1,219 1,

8 CONSOLIDATED BALANCE SHEET 31 Dec Dec Dec Dec 2001 Assets Intangible fixed assets 145, , ,571 78,368 Tangible fixed assets 545, , , ,220 Financial fixed assets 15,078 9,168 5,594 4,579 Stock 472, , , ,108 Current receivables 242, , , ,521 Liquid funds and short-term investments 91,001 81,913 16, ,768 Total assets 1,512,452 1,410,291 1,270, ,564 Liabilities and shareholders equity Shareholders equity 817, , , ,544 Minority share 23,125 25,520 22,920 21,190 Provisions 80, , ,113 47,075 Long-term liabilities 266, , ,249 34,739 Current liabilities 324, , , ,016 Total liabilities and shareholders equity 1,512,452 1,410,291 1,270, ,564 Pledged assets and contingent liabilities 666, , ,409 2,957 STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (SEK 000) 31 Dec Dec Dec Dec 2001 Opening balance 728, , , ,636 Private placement 22, Recalculation of convertible interest in the year Conversions of shares in the year 19,073 4,322 8,628 2,975 Translation differences 2,327 2, ,925 Dividends 35,185 29,552 21,916 18,132 Net profit 85,198 98,688 91,176 54,140 Total shareholders equity 817, , , ,544 CASH FLOW STATEMENT (SEK 000) Cash flow from operations before change in working capital 190, , ,306 89,693 Cash flow from change in working capital 24,763 40,923 23,143 28,242 Cash flow from investment activity 185,575 67, ,773 54,541 Cash flow from financing activity 20,177 23,922 32,860 66,879 Cash flow for the period 9,088 65, ,750 59,969 Mekonomen AB (publ), Corporate ID no , Smista Allé 11, SE Segeltorp, Sweden Tel: +46 (0) , Fax: +46 (0) , Internet: mekonomen.se