Interim report January June 2013

Transcription

1 Interim report June Strong quarter for ICA Gruppen ICA Gruppen s consolidated financial statements include ICA AB as a wholly owned subsidiary with effect from 27 March when acquisition of Ahold s shares in ICA AB was completed. Second quarter of in summary Comparative figures are pro forma and show the second quarter of as if ICA and Hakon Invest had been consolidated. Consolidated net sales amounted to SEK 25,025 million (25,395) in the second quarter. Excluding the sold ICA Maxi stores in Norway and adjusted for currency fluctuations, consolidated net sales rose by 2.4% in the second quarter. Operating profit amounted to SEK 694 million (616). Operating profit excluding nonrecurring items amounted to SEK 678 million (684). Excluding the sold Norwegian ICA Maxi stores, which were included last year, and costs of terminating incentive programmes this year, the Group s earnings were 8% higher than in the previous year. Profit for the period amounted to SEK 320 million (244). Earnings per share amounted to SEK 1.88 (1.45). Strong sales in the Swedish ICA stores. ICA Gruppen s SEK 5 billion new issue fully subscribed. In June, ICA Gruppen issued bonds worth SEK 5 billion. Pro forma 1 Pro forma 1 June Pro forma 1 June June 2 June Group Net sales 25, ,395 26,908 1,288 48,666 49,305 Operating profit (EBIT) excl. non-recurring items ,242 1,226 Operating profit (EBIT) , ,131 1,164 Profit before tax , Profit for the period , Cash flow from operating activities 1, , Operating margin excl. non-recurring items, % 2.7% 11.3% 2.7% 2.7% 12.3% 2.6% 2.5% Operating margin, % 2.8% 25.5% 2.4% 35.0% 19.6% 2.3% 2.4% Return on capital employed, % 3.6% 5.4% 6.9% 5.3% Return on equity, % 3.3% 3.3% 3.5% 4.5% Earnings per ordinary share, SEK Earnings per C share, SEK Pro forma as if the acquisition of ICA AB had taken place at 1 January, excluding non-recurring acquisition effects. 2 ICA AB has been consolidated in the consolidated financial statements with effect from 27 March. ICA Gruppen Interim report June 1

2 CEO s comments ICA Gruppen reports a strong performance in the second quarter. Consolidated net sales increased by 2.4% compared with pro forma for the same quarter last year, adjusted for the sold Maxi stores in Norway and currency fluctuations. Operating profit excluding non-recurring items rose by 8% during the quarter on the same calculation basis. The acquisition of the remaining shares in ICA makes interpretation of ICA Gruppen s interim report rather complicated and to facilitate an assessment of the Group s development, in this interim report we have chosen to focus on the performance of the individual segments. ICA Sweden continued to see favourable profitability development during the quarter, mainly driven by a strong sales trend in the Swedish ICA stores. The second quarter of was the ninth consecutive quarter in which sales development in the ICA stores outperformed the market. The strong retail sales, combined with a higher proportion of private label sales, contributed to the improvement in ICA Sweden s operating profit. In June, we decided to extend the distribution centre in Helsingborg and close the warehouse in Arlöv. This marks a key step in our long-term strategic plan for a more efficient and modern logistics structure. ICA Norway continued to see a weak sales and profitability development in the second quarter. Our planned co-operation with Norgesgruppen relating to sourcing and logistics had to be postponed in April pending a review of this co-operation by the Norwegian Competition Authority. ICA Norway appealed against this decision and in July was given a temporary go-ahead for joint sourcing pending the final decision, which is preliminarily scheduled for 30 September. Rimi Baltic continued to report favourable development in the second quarter. Sales in local currency increased by 3.7% and operating profit rose 24%. The Baltic countries are a region where we see good growth opportunities going forward. ICA Bank increased its marketing activities during the quarter and incurred higher costs due among other things to new regulations. This led to a lower operating profit than in the previous year. ICA Real Estate showed stable development during the quarter, adjusted for the sold Norwegian Maxi properties. The portfolio companies are now reported as a single segment in the Group. Net sales in this segment were lower for the quarter than in the previous year due to the divestment of operations in Forma. At the same time, operating profit improved slightly compared with last year. As announced earlier, an evaluation of the portfolio companies is underway in view of the new circumstances that now prevail. The major transaction this spring, when ICA became wholly integrated in ICA Gruppen, has been very favourably received. This can be seen in particular through the major confidence shown by our owners in conjunction with the new issue in May when we raised SEK 5 billion. Borrowing via our MTN programme in June could also be carried out in an optimum manner. These financing measures, combined with a good cash flow in operations, contributed to a planned continued reduction in our debt during the quarter. Taken overall, we are well on our way to delivering in accordance with the strategic priorities we set for. Good growth in Sweden, combined with the positive performance for our private labels, are clear examples of this as is the fact that our preparations for the roll-out of online sales in Sweden during 2014 are proceeding according to plan. Per Strömberg CEO ICA Gruppen Important events during the second quarter of April New Executive Management The Board of Directors appointed Per Strömberg as the new CEO of ICA Gruppen, after the acquisition of the remaining shares in ICA was completed. Per Strömberg and other members of ICA Gruppen s Executive Management took up their positions in conjunction with the Annual General Meeting on 20 May. April and July Norwegian Competition Authority temporarily suspends planned co-operation. Norwegian Ministry(FAD) gives temporary go-ahead to joint sourcing pending a final decision. The Norwegian Competition Authority decided to temporarily suspend ICA Norway s co-operation with Norgesgruppen, which was planned to start in April, while the Authority carried out its review. The suspension applied until 30 September. At the beginning of July, the Norwegian Ministry of Government Administration, Reform and Church Affairs (FAD) gave ICA Norway permission to start implementation of the sourcing agreement pending a final decision, but stated that the logistics co-operation must await the Authority s decision which is preliminary scheduled for 30 September. May ICA Gruppen carried out SEK 5 billion new issue In May, ICA Gruppen made a new issue with preferential rights for existing shareholders amounting to SEK 5 billion. The new issue was part of the financing of the remaining shares in ICA completed in March. June Decision to expand distribution centre in Helsingborg ICA Sweden decided to expand the distribution centre in Helsingborg and close the warehouse in Arlöv as a step in the development towards a more efficient and modern logistics structure. These changes will be carried out starting in spring ICA Real Estate will acquire the warehouse property in Helsingborg together with Alecta via a joint venture. The agreed property value amounts to SEK 931 million. The acquisition was completed on 15 August. June ICA Gruppen issues bonds In June, ICA Gruppen issued bonds under the company s MTN programme. In total, bonds were issued in Swedish kronor for SEK 5 billion, split into two tenors of five and two years. The proceeds were used to repay part of the bridge financing relating to the acquisition of ICA. ICA Gruppen Interim report June 2

3 Group performance ICA Gruppen s consolidated financial statements include ICA AB as a wholly owned subsidiary with effect from 27 March, when the acquisition of Ahold s shares in ICA AB was completed. The figures for the previous year relate to the Hakon Invest Group, where ICA AB was included as a joint venture and reported according to the equity method. The Group s performance for the second quarter as well as the period January-June as formally reported is set out below. The Group s pro forma earnings development is presented on page 4. Net sales and earnings Second quarter Consolidated net sales amounted to SEK 25,025 million (662). Operating profit in the Group amounted to SEK 694 million (169). Operating profit excluding non-recurring items amounted to SEK 678 million (75). Profit for the period was SEK 320 million (159) and earnings per share amounted to SEK 1.88 (1.09). Six-month period June Consolidated net sales amounted to SEK 26,908 million (1,288). Operating profit in the Group amounted to SEK 9,406 million (253). A non-recurring effect of the acquisition of the remaining shares in ICA is included with SEK 8,652 million. Operating profit excluding non-recurring items amounted to SEK 739 million (159). Profit for the period was SEK 9,050 million (253) and earnings per share amounted to SEK (1.73). Profit for the period excluding the effects of the acquisition of the remaining shares in ICA was SEK 398 million and earnings per share SEK Net financial items and tax ICA Gruppen s net financial items amounted to SEK 196 million ( 10) in the second quarter. In the period June net financial items amounted to SEK 183 million (8). The less favourable net financial items are due to increased interest expenses in conjunction with the acquisition of the remaining shares in ICA. ICA Gruppen s tax expense amounted to SEK 178 million (0) in the second quarter. In June the tax expense was SEK 173 million (8). Financial position ICA Gruppen s total assets amounted to SEK 72,035 million at 30 June (SEK 9,763 million at 31 December ). The equity/assets ratio was 31.2% at 30 June (86.1% at 31 December ). ICA Gruppen s net debt, excluding pension liabilities, liabilities attributable to sale & leaseback and ICA Bank, amounted to SEK 13,211 million at 30 June (net cash SEK 1,199 million at 31 December ). The Group s interest-bearing liabilities mainly comprise a bridging loan related to the acquisition of the remaining shares in ICA and the bonds issued in June. Cash flow Cash flow from operating activities amounted to SEK 1,744 million (739) in the second quarter. Excluding ICA Bank cash flow from operating activities amounted to SEK 1,455 million (739). In the period June cash flow from operating activities was SEK 1,494 million (591). Cash flow from investing activities amounted to SEK 449 million ( 124) during the quarter and SEK 15,059 million ( 130) in June, of which SEK 15,739 million related to the acquisition of the remaining shares in ICA. Cash flow from financing activities amounted to SEK 2,175 million ( 517) during the quarter. In the period June cash flow from financing activities was SEK 16,870 million ( 416). Consolidated cash and cash equivalents and short-term investments amounted to SEK 3,610 million (293) at 30 June. Investments During the first half of the year the Group s investments totalled SEK 16,296 million (19). This includes acquisition of the remaining shares in ICA during the first quarter with SEK 15,739 million. Financing The Group s net debt, excluding pension liabilities, liabilities attributable to sale & leaseback and ICA Bank, decreased to SEK 13,211 million at 30 June. In May, a new issue was carried out with preferential rights for existing shareholders amounting to approximately SEK 5 billion. The proceeds from the new issue were used to repay parts of bridge financing. In June, ICA Gruppen also issued bonds for SEK 5 billion, under the company s MTN programme. The bonds have a split tenor of five and two years. The proceeds from the bond issue were used to replace parts of bridge financing with other longterm financing. As a result of the issue, ICA Gruppen s lenders under agreements on bridge financing and operating credits, have released their pledges. This means that the loans under these agreements are on equal footing (pari passu) with issued MTNs. At the end of the second quarter, the Group s bridge financing had decreased to SEK 7 billion. The bridge financing is expected to be replaced by other long-term debt financing during At the end of the second quarter of, the Group s debt amounted to 2.7 times EBITDA (calculated on pro forma EBITDA on a rolling 12-month basis at 30 June). ICA Gruppen Interim report June 3

4 Pro forma net sales and earnings in summary The acquisition of the ICA Group was completed on 27 March which means that subsequently ICA is fully consolidated in the financial statements. A pro forma compilation per quarter for the full year and for the first half of shows ICA and Hakon Invest as if they had been consolidated and appears as follows. Jan March Jan March July Sep Oct Dec Net sales, 23,641 25,025 23,910 25,395 24,387 25,843 99,535 Operating profit excluding non-recurring items, ,061 Operating profit *, ,000 Operating margin excluding non-recurring items, % 2.4% 2.7% 2.3% 2.7% 3.9% 3.5% 3.1% Operating margin* 1.8% 2.8% 2.3% 2.4% 3.9% 3.5% 3.0% * Excluding effects of acquisition Second quarter of Consolidated net sales amounted to SEK 25,025 million (25,395) in the second quarter. This is a decrease of 1.4% compared with the previous year. Excluding the sold Norwegian ICA Maxi stores, which were included in net sales last year, and adjusted for currency fluctuations, the Group s net sales were 2.4% higher than in the previous year. Operating profit in the Group amounted to SEK 694 million (616). Operating profit excluding non-recurring items amounted to SEK 678 million. Excluding the sold Norwegian ICA Maxi stores, which were included last year, and costs of terminating incentive programmes this year, the Group s earnings were 8% higher than in the previous year. The improved operating profit is mainly explained by higher earnings in ICA Sweden and Rimi Baltic, which was partly offset by lower earnings for ICA Norway and ICA Bank. ICA Gruppen s net financial items amounted to SEK 196 million ( 207) in the second quarter. Profit for the period was SEK 320 million (244) and earnings per share amounted to SEK 1.88 (1.45). Six-month period June Consolidated net sales amounted to SEK 48,666 million (49,305) in June. Excluding the sold Norwegian ICA Maxi stores, which were included in net sales last year, and adjusted for currency fluctuations, the Group s net sales were 2.6% higher than in the previous year. Operating profit in the Group excluding acquisition effects amounted to SEK 1,131 million (1,164). Operating profit excluding non-recurring items amounted to SEK 1,242 million (1,226). Profit for the period excluding acquisition effects was SEK 398 million (483) and earnings per share amounted to SEK 2.53 (3.03). ICA Gruppen Interim report June 4

5 Segment performance ICA Gruppen s operations are conducted in six segments: ICA Sweden, ICA Norway, Rimi Baltic, ICA Bank, ICA Real Estate and Portfolio Companies. In order to increase comparability with earlier periods, the segments are presented on pages 5 8 of this interim report as they were previously reported in ICA AB and Hakon Invest s interim reports. The Group s segment reporting is presented in Note 2 on Page 16. ICA Sweden June June Net sales, 17,177 16,698 33,219 32,068 65,750 Operating profit excl. nonrecurring items, ,348 1,213 2,872 Operating margin excl. nonrecurring items, % 4.2% 4.0% 4.1% 3.8% 4.4% Private label share of sales, % 21.2% 20.2% 19.6% Number of employees 7,471 7,098 7,229 ICA Sweden conducts grocery retail in co-operation with independent ICA retailers. The retailers own and manage their own stores but have agreements with ICA Sweden in areas such as co-ordinated purchasing, logistics, marketing communications and retail development. ICA Sweden also conducts pharmacy operations in Cura. ICA Sweden also includes ICA Maxi Special which among other things conducts sales of non-food items at Maxi ICA Hypermarkets. Second quarter ICA Sweden s net sales amounted to SEK 17,177 million (16,698) in the second quarter, an increase of 2.9% compared with the previous year. Higher sales within wholesale, Maxi Special and Cura pharmacies contributed to the increase. ICA Sweden s operating profit excluding non-recurring items rose to SEK 719 million (673). The improvement is explained by higher sales, improved margins within wholesale due to a higher proportion of private labels, efficiency improvements within logistics and improved earnings for the Cura pharmacies. Six-month period June ICA Sweden s net sales amounted to SEK 33,219 million (32,068) in June, an increase of 3.6%. Higher wholesale sales and improved sales in Cura pharmacies contributed to the increase. Operating profit excluding non-recurring items for ICA Sweden improved to SEK 1,348 million (1,213) during the six-month period. Higher sales, improved wholesale margins due to a higher proportion of private labels, efficiency improvements in logistics and improved earnings for the Cura pharmacies contributed to the improved earnings. ICA store sales Sales in the Swedish ICA stores increased by 2.6% in the second quarter and by 3.5% in the first half of the year. Both average purchases and number of customers increased this year compared with. Adjusted for price and calendar effects sales increased by 1.8% in the second quarter and by 1.7% in the first half of the year. Store sales in Sweden Store sales excl. VAT June all stores like-forlike Change, all stores like-forlike Maxi ICA Hypermarket 7, % 2.3% 14, % 3.5% ICA Kvantum 6, % 0.9% 11, % 2.3% ICA Supermarket 8, % 2.8% 15, % 3.6% ICA Nära 3, % 1.8% 7, % 2.3% TOTAL 25, % 2.1% 49, % 3.1% Number of stores in Sweden, incl. retailer-owned stores Store format December New Converted Closed June Maxi ICA Hypermarket ICA Kvantum ICA Supermarket ICA Nära ICA To Go TOTAL 1, ,324 ICA Gruppen Interim report June 5

6 ICA Norway June June Net sales, 4,151 4,957 8,289 9,974 19,050 Operating profit excl. non-recurring items, Operating margin excl. non-recurring items 4.6% 3.6% 5.3% 3.0% 3.1% Private label share of sales, % 9.8% 10.3% 9.6% Number of employees 3,959 5,008 4,646 ICA Norway sells groceries in Norway in wholly owned and franchise stores in the Norwegian market. The store formats are Rimi, ICA Supermarked and Matkroken. Store sales in Norway Store shares excl. VAT NOKm June all stores Second quarter ICA Norway s net sales amounted to SEK 4,151 million (4,957) in the second quarter. Net sales decreased due to divestment of the ICA Maxi stores and closure of a number of unprofitable units. Conversion of all ICA Naer stores is underway and expected to be completed in the autumn. Operating loss excluding non-recurring items amounted to SEK 193 million ( 180). Lower sales volumes and a lower gross margin had a negative impact on earnings. The cost-cutting measures initiated in the previous year have had some impact in the form of lower administrative expenses. like-forlike NOKm all stores like-forlike Rimi 2, % 0.7% 4, % 2.1% ICA Supermarked 1, % 2.8% 2, % 4.4% ICA Naer % 7.5% % 7.8% Matkroken % 3.7% % 2.2% TOTAL 4, % 1.7% 8, % 3.1% Six-month period June ICA Norway s net sales amounted to SEK 8,289 million (9,974) in June. Net sales decreased due to divestment of the ICA Maxi stores and closure of a number of unprofitable units. Operating loss excluding items affecting comparability amounted to SEK 439 million ( 300). Lower sales volumes and a lower gross margin had a negative impact on earnings. The cost-cutting measures initiated in the previous year have had some impact in the form of lower administrative expenses. Action programme In January, ICA Norway and Norgesgruppen announced a co-operation agreement within sourcing and logistics. This collaboration is intended to improve ICA Norway s purchasing power through joint sourcing as well as achieving more efficient logistics in the supply chain in central and northern Norway. This co-operation markets a key step in ICA Norway s action plan for achieving profitability. However, the Norwegian Competition Authority has decided to review this co-operation and pending completion of its review, ICA Norway and Norgesgruppen are prevented from starting their co-operation within logistics. In June the Norwegian FAD ministry announced that sourcing co-operation could start pending a final decision, which is preliminarily scheduled for 30 September. Number of stores in Norway, incl. retailer-owned stores Store format December New Converted Closed June Rimi ICA Supermarked ICA Naer Matkroken TOTAL ICA Gruppen Interim report June 6

7 RIMI Baltic June June Net sales, 2,581 2,589 4,947 5,007 10,050 Operating profit excl. non-recurring items, Operating margin excl. non-recurring items, % 2.8% 2.3% 2.3% 1.8% 2.6% Private label share of sales, % 13.8% 12.7% 12.6% Number of employees 8,102 8,122 8,078 Rimi Baltic conducts grocery sales in wholly owned stores in Estonia, Latvia and Lithuania. The store formats are Rimi Hypermarket, Rimi Supermarket and the discount chains Säästumarket and Supernetto. Rimi Baltic also includes the properties owned by the Group in the Baltic countries. Second quarter Rimi Baltic s net sales amounted to SEK 2,581 million (2,589) in the second quarter. Sales in local currency increased by 3.7%. Operating profit excluding non-recurring items amounted to SEK 72 million (60). The improvement is mainly due to higher sales and improved gross margins. Six-month period June Rimi Baltic s net sales amounted to SEK 4,947 million (5,007) in June. Sales in local currency increased by 3.0%. Operating profit excluding non-recurring items amounted to SEK 112 million (89). The improvement is mainly due to higher sales and improved gross margins. Store sales in the Baltic countries Store shares excl. VAT EURm June all stores like-forlike EURm all stores like-forlike Estonia % 1.7% % 2.6% Latvia % 3.1% % 3.0% Lithuania % 2.0% % 0.7% TOTAL % 1.4% % 0.5% Number of stores in the Baltic countries Country December New Closed June Estonia Latvia Lithuania TOTAL ICA Gruppen Interim report June 7

8 ICA Bank June June Revenues, Operating profit excl. non-recurring items, Operating margin excl. non-recurring items, % 15.8% 27.6% 20.4% 23.8% 22.2% Number of employees Business volume, 24,313 22,028 23,272 Capital adequacy ratio ICA Bank offers a full range of financial banking services to private individuals in Sweden. The goal is to increase customer loyalty to ICA and to reduce transaction costs for ICA stores and ICA Gruppen. Second quarter ICA Bank s revenues amounted to SEK 203 million (210) in the second quarter. A lower repo rate than last year reduced net interest income, which was partly counteracted by higher net commissions. Business volume rose by 3% during the quarter. Operating profit excluding non-recurring items amounted to SEK 32 million (58). Higher costs primarily for marketing, adjustment to new regulatory requirements and IT were charged against earnings for the quarter. Six-month period June ICA Bank s revenues amounted to SEK 422 million (408) in June. Higher business volumes (10%) contributed to increased commission income. Net interest income also rose as a result of the divestment of a bond portfolio at the start of the year as well as increased lending volumes, which compensated for reduced deposit margins due to the lower repo rate. Operating profit excluding non-recurring items amounted to SEK 86 million (97). Higher costs primarily for marketing, adjustment to new regulatory requirements and IT were charged against earnings for the period. ICA Real Estate June June Net sales, ,118 1,149 2,252 Operating profit excl. non-recurring items, Operating margin excl. non-recurring items, % 41.3% 45.8% 42.7% 45.3% 43.7% Number of employees Number of properties owned Number of square metres owned 755, , ,000 ICA Real Estate s mission is to satisfy ICA Gruppen s future needs for premises in the right marketplaces in Sweden and Norway. The real estate company both develops shopping centres from scratch and buys strategic properties with existing ICA stores. ICA Real Estate is an active seller and buyer of properties in the Swedish and Norwegian markets. Second quarter ICA Real Estate s net sales amounted to SEK 557 million (577) in the second quarter. Operating profit excluding non-recurring items decreased to SEK 230 million (264). The decrease is mainly attributable to the loss of earnings related to the divested Norwegian Maxi properties. Six-month period June ICA Real Estate s net sales amounted to SEK 1,118 million (1,149). Operating profit excluding non-recurring items amounted to SEK 477 million (520). The decrease is mainly attributable to the loss of earnings related to the divested Norwegian Maxi properties. Acquisition of warehouse property ICA Real Estate has signed an agreement to acquire the warehouse property in Helsingborg via a joint venture with Alecta. The agreed property value amounts to SEK 931 million. The acquisition was completed in August. ICA Gruppen Interim report June 8

9 Portfolio companies June June Net sales, ,179 1,288 2,726 Operating profit excl. non-recurring items, Operating margin excl. non-recurring items, % 5.7% 5.7% 8.1% 8.5% 4.5% Number of employees 1,100 1,100 1,100 The portfolio companies are the five companies that ICA Gruppen owns wholly or partly in addition to ICA s operations: Forma, Kjell & Company, Cervera, Hemtex and inkclub. Starting in the second quarter of, the portfolio companies are reported as a single segment in ICA Gruppen. Store sales Second quarter The portfolio companies net sales totalled SEK 613 million (662) in the second quarter, a decrease of 7.4% compared with the previous year. The decrease is mainly due to the divestment of Forma Contract and the Finnish magazine operations in the second quarter of. Kjell & Company and Hemtex report increased sales, while sales were unchanged in inkclub and slightly lower in Cervera. The portfolio companies operating loss excluding non-recurring items amounted to SEK 35 million ( 38). Hemtex and Forma report improved earnings, while earnings declined for the other companies. June like-forlike like-forlike Store sales excl.vat all stores all stores Cervera % 2.7% % 0.8% Hemtex % 3.8% % 3.2% Kjell & Co % 1.8% % 4.4% TOTAL 605 1,177 Six-month period June The portfolio companies net sales totalled SEK 1,179 million (1,288) in June, a decrease of 8.5% compared with the previous year. The decrease is mainly due to the divestment of Forma Contract and the Finnish magazine operations in the second quarter of. The other portfolio companies report increased sales in the first half of the year. The portfolio companies operating loss excluding non-recurring items amounted to SEK 95 million ( 110). Hemtex and Forma report improved earnings, while earnings declined for the other companies. Number of stores, incl. franchise stores December Store format New Closed June Cervera Hemtex Kjell & Co TOTAL Other Seasonal variations Grocery retail sales are affected by national holidays and when these occur. Christmas and Easter in particular are key holidays for groceries. For a large part of the retail sector the fourth quarter is seasonally the strongest quarter of the year due to Christmas sales. Risks and uncertainties ICA Gruppen works at Group level to systematically identify and manage the risks associated with its operations. The risk management process is an integrated part of the strategy and budget work of each unit. Risks are consolidated and risk management is reported to and monitored by ICA Gruppen s Executive Management and Board of Directors. The key risk areas are legal risks, market risks, sustainability and product safety risks, brand risks and continuity risks. ICA Gruppen has significant exposure to the Nordic and Baltic grocery sector. Economic downturns and political decisions are factors which could have a negative impact on the Group s sales and earnings. ICA Gruppen s finance policy stipulates how financial risks should be managed and curtailed. The policy also provides a framework for the Group s treasury management. More information about risk management is provided on pages and of Hakon Invest s Annual Report for and on pages and of ICA AB s Annual Report for. Related-party transactions No significant transactions took place between ICA Gruppen and related parties during the period. ICA Gruppen Interim report June 9

10 Parent Company performance The Parent Company s net sales amounted to SEK 2 million (0) in the second quarter and SEK 2 million (0) in June. Loss before tax amounted to SEK 169 million (+777) in the second quarter. During the six-month period profit before tax was SEK 639 million (784). The changes in earnings are due to the dividend from ICA AB which was received in the first quarter this year and in the second quarter last year as well as higher interest expenses after the acquisition of the remaining shares in ICA on 27 March. Share information Share capital in ICA Gruppen amounts to SEK 502,866,988 distributed among 201,146,795 shares, each with a quota value of SEK At the end of the period the number of C shares amounted to 82,067,892 and the number of ordinary shares amounted to 119,078,903, of which 141,655 ordinary shares are held by ICA Gruppen. Ordinary shares and C shares carry the same voting rights but a different dividend entitlement. While ordinary shares have an unlimited dividend entitlement, C shares do not carry entitlement to cash profit distribution. All C shares will be converted into ordinary shares on 1 January 2016, which means that thereafter the company will only have one class of share in the form of ordinary shares with dividend entitlement. The total number of shares will remain unchanged after the conversion. New rights issue In May, ICA Gruppen carried out a new issue with preferential rights to existing shareholders amounting to SEK 5 billion. The new issue only related to ordinary shares. Each ordinary share carried entitlement to one subscription right and four subscription rights gave entitlement to purchase one new ordinary share at a price of SEK 121. The ordinary shares subscribed for by ICA-handlarnas Förbund (the Association of ICA Retailers) on the basis of its C shares were subscribed for at a price of SEK 129 per ordinary share. The issue proceeds have been used to repay parts of the Group s bridge financing. Ownership structure Largest shareholders in ICA Gruppen at 30 June Number of shares Capital and voting rights, % ICA-handlarnas Förbund 103,163, AB Industrivärden 20,125, AMF 3,686, Handelsbanken Funds 2,625, Lannebo Funds 2,442, SEB Investment Management 1,989, Swedbank Robur Funds 1,894, JPM Chase 1,865, Leif Jönsson 1,254, Robur Försäkring 1,209, Ten largest shareholders total 140,257, Other shareholders 60,889, Total 201,146, Source: Euroclear Sweden AB Annual General Meeting ICA Gruppen s Annual General Meeting was held on 20 May. The Meeting resolved, among other things, on the change of name to ICA Gruppen. In addition, the Meeting re-elected Board members Peter Berlin, Cecilia Daun Wennborg, Andrea Gisle Joosen, Magnus Moberg and Jan Olofsson for period until the next annual general meeting has been held. Göran Blomberg, Fredrik Hägglund, Bengt Kjell, Claes-Göran Sylvén and Margot Wallström were elected as new members of the Board. Claes-Göran Sylvén was elected as Chairman of the Board by the Annual General Meeting. A detailed presentation of the Board of Directors is available at New Executive Management In conjunction with the Annual General Meeting held on 20 May, ICA s CEO Per Strömberg took up the position of CEO of ICA Gruppen. The other members of Executive Management which comprise ICA s former Group Management as well as Stein-Petter Ski, SVP Portfolio Companies, took office following the Annual General Meeting. ICA Gruppen Interim report June 10

11 Financial statements Condensed consolidated statement of comprehensive income Note June June Net sales 2 25, ,908 1,288 2,726 Cost of goods sold 21, , ,494 Gross profit 3, , ,232 Other operating income Selling expenses 2, , ,147 Administrative expenses Share of profits from joint ventures Effects of acquisition 3 8,652 Profit/loss from investments in group companies Operating profit 2, , Financial income Financial expense Change in fair value of financial instruments Profit before tax , Tax Profit for the period , Other comprehensive income, items that may be reclassified to profit or loss Change in translation reserve, net after tax Change in fair value reserve, net after tax Change in hedging reserve net after tax Total items that may be reclassified to profit or loss Comprehensive income for the period , Profit/loss for the period attributable to Owners of the parent , Non-controlling interests Comprehensive income for the period attributable to Owners of the parent , Non-controlling interests Earnings per share before and after dilution, SEK Ordinary share C share ICA Gruppen Interim report June 11

12 Condensed consolidated statement of financial position Note 30 June 30 June 31 Dec ASSETS Non-current assets Goodwill 3 14, Trademarks 3 13,163 1, Interests in companies recognised according to the equity method ,695 5,721 Deferred tax assets Non-current receivables ICA Bank 5,998 Land and buildings 3 18,265 Other non-current assets 3, Total non-current assets 55,952 7,564 7,589 Current assets Inventories 4, Short-term investments 0 1,056 1,155 Current receivables ICA Bank 2,932 Other current assets 5, Cash and cash equivalents ICA Bank 3,002 Cash and cash equivalents Total current assets 16,083 2,135 2,174 TOTAL ASSETS 72,035 9,699 9,763 EQUITY AND LIABILITIES Equity 22,466 8,373 8,403 Provisions 2, Non-current liabilities Deferred tax liabilities 4, Non-current interest-bearing liabilities 12, Non-current liabilities attributable to sale & leaseback 3,685 Other non-current liabilities Total non-current liabilities 20, Current liabilities Deposits ICA Bank 10,573 Current interest-bearing liabilities 1, Current liabilities attributable to sale & leaseback 189 Other current liabilities 13, Total current liabilities 26, TOTAL EQUITY AND LIABILITIES 72,035 9,699 9,763 ICA Gruppen Interim report June 12

13 Condensed consolidated statement of cash flows Note January- June January- June Operating profit excluding acquisition effects Depreciation and impairment Other non-cash items Income tax paid Cash flow from operating activities before change in working capital Change in working capital Inventories Current receivables Current liabilities ICA Bank s net of deposits, lending and investments 44 Cash flow from operating activities 1, Cash flow from investing activities 15, Cash flow from financing activities 16, Cash flow for the period 6 3, Cash and cash equivalents at 1 January Exchange differences in cash and cash equivalents Cash and cash equivalents at the end of the period 6 3, Condensed consolidated statement of changes in equity Note Attributable to owners of the parent Attributable to noncontrolling interests Total Opening equity, 1 January 8, ,403 Acquired NCI 8 8 New issue 5,037 5,037 Comprehensive income for the period 9, ,018 Closing equity, 30 June 22, ,466 Note Attributable to owners of the parent Attributable to noncontrolling interests Total Opening equity, 1 January 8, ,613 Dividend Comprehensive income for the period Closing equity, 30 June 8, ,373 ICA Gruppen Interim report June 13

14 Condensed Parent Company income statement Note April-June April-June January- June January- June Net sales Gross profit Administrative expenses Operating profit/loss Financial income 1 5 Financial expenses Profit/loss from financial investments Profit/loss before tax Tax Profit/loss for the period ICA Gruppen Interim report June 14

15 Condensed Parent Company balance sheet Note 30 June 30 June 31 Dec ASSETS Non-current assets Investments in group companies 24,267 1,198 1,255 Interests in joint ventures 2,960 2,960 Deferred tax assets Non-current receivables group companies Other non-current assets 27 1, Total non-current assets 25,212 5,158 5,189 Current assets Short-term investments 1,056 1,155 Current receivables group companies 800 Other current assets Cash and cash equivalents Total current assets 913 1,308 1,318 TOTAL ASSETS 26,125 6,466 6,507 EQUITY AND LIABILITIES Equity 12,034 6,335 6,343 Provisions Non-current liabilities Non-current interest-bearing liabilities 11,970 Other non-current liabilities 1 1 Total non-current liabilities 11,971 1 Current liabilities Current interest-bearing liabilities Current liabilities to group companies 2, Other current liabilities Total current liabilities 2, TOTAL EQUITY AND LIABILITIES 26,125 6,466 6,507 ICA Gruppen Interim report June 15

16 Notes NOTE 1, ACCOUNTING PRINCIPLES This interim report is prepared according to the rules for interim reporting in the Swedish Annual Accounts Act and IAS 34 Interim Financial Reporting. The accounting principles and calculation methods applied are the same as those used in the most recent annual accounts and consolidated financial statements. In order to prepare financial reports in accordance with IFRS, management is required to make assessments and estimates and to make assumptions that affect the application of the accounting principles and the carrying amounts in the income statement and balance sheet. Estimates and assumptions are based on historical experience and are regularly reviewed. The results of these estimates and assumptions are then used to determine the carrying amounts of assets and liabilities. Fair value may deviate from these estimates. New accounting principles The main change in amended IAS 19 is that the corridor method is eliminated. This means that all actuarial gains and losses are recognised in other comprehensive income when they arise. For ICA, this change means that the opening balance for has been recomputed with an effect on equity of SEK 424 million. No other new or amended, or EU endorsed, IFRS standards, which have a material impact on ICA Gruppen s financial statements will start to apply in. NOTE 2, Segment Net sales per segment, April June April June June June ICA Sweden 17,177 18,115 ICA Norway 4,151 4,373 Rimi Baltic 2,581 2,717 ICA Bank ICA Real Estate Portfolio companies ,179 1,288 2,726 Other Intra-group sales Net sales ,908 * 1,288 2,726 * ICA AB is included as a wholly owned subsidiary with effect from 27 March. Operating profit/ loss before non-recurring items per segment April June April June June June ICA Sweden ICA Norway Rimi Baltic ICA Bank ICA Real Estate Portfolio companies ICA Other Operating profit before nonrecurring items * * ICA AB is included as a wholly owned subsidiary with effect from 27 March. NOTE 3, ACQUISITION OF ICA On 27 March, Hakon Invest acquired the remaining 60% of the shares in ICA from Ahold for a cash consideration of SEK 20 billion. ICA is reported as a subsidiary in the Hakon Invest Group with effect from 27 March. In conjunction with the Annual General Meeting held on 20 May, the name Hakon Invest was changed to ICA Gruppen. ICA Gruppen s 40% holding in ICA was revalued on the acquisition date at SEK 13.3 billion, which results in a positive one-time effect of SEK 8.6 billion being recognised in profit or loss. At the acquisition of the remaining shares in ICA, in the preliminary purchase price allocation, differences have been identified between fair value and carrying amount of properties. In addition, at the acquisition the ICA and Rimi Baltic trademarks are measured at fair value and recognised as intangible assets. Since the purchase price exceeds the net of all acquired assets and liabilities recognised at fair value, goodwill is recognised. This goodwill amounts preliminarily to SEK 13.5 billion. ICA s operations in relation to the Swedish ICA retailers are regulated through various agreements. Partly through a negotiated business model which handles supply chains, customer relationships and ICA s central costs, and partly through agreements which regulate royalties and profit sharing as well as leases. The business model which regulates the relationship between the individual ICA retailer and ICA is based on the experiences, skills and relationships which have been developed over almost 100 years. The business models with all their agreements and relationships are interdependent which makes it impossible to separate one or more agreements or parts from the whole. This whole in the form of ICA s business model is recognised as goodwill. If the acquisition of the remaining shares in ICA had taken place on 1 January, net sales in ICA Gruppen would have amounted to SEK 48,666 million and operating profit would have amounted to SEK 9,783 million, of which the effects of the acquisition amount to SEK 8,652 million, in January-June. Preliminary purchase price allocation (PPA) ICA Carrying amounts in ICA Values according to PPA Trademarks ,200 Land and buildings 12,005 18,105 Other non-current assets 9,313 9,313 Other current assets 12,688 12,688 Cash and cash equivalents 4,261 4,261 Non-controlling interests 8 8 Provisions 2,372 2,372 Non-current liabilities 4,267 4,267 Deferred tax liabilities Current liabilities 25,502 25,502 Acquired, identifiable net assets 6,005 19,792 Goodwill 13,541 Acquired identifiable net assets including goodwill 33,333 Cost 20,000 Revaluation of earlier holding 13,333 Consideration transferred 33,333 Cost 20,000 Cash and cash equivalents in acquired company 4,261 Change in consolidated cash and cash equivalents 15,739 ICA Gruppen Interim report June 16

17 NOTE 4, INTERESTS IN COMPANIES RECOGNISED ACCORDING TO THE EQUITY METHOD Book value, 30 June Share of profits June ICA AB 0 5, Bra förlag AB Trade Press AS Kjell & Co Elektronik AB Ancore Fastigheter AB Other 9 1 Total 771 5, NOTE 6, CONSOLIDATED CASH FLOW STATEMENT Group ICA Bank Group excl. ICA Bank Change flow from operating activities before change in working capital Change in working capital Inventories Current receivables Current liabilities ICA Bank s net of deposits, lending and investments Cash flow from operating activities 1, ,205 NOTE 5, NON-RECURRING ITEMS April June April June June June Operating profit excl. non-recurring items Capital gains on sale of non-current assets Portfolio companies, Forma ICA Real Estate Other 1 Impairment Rimi Baltic 1 1 Other non-recurring items Effects of acquisition 8,652 Operating profit , Cash flow from investing activities 15,059 2,713 17,772 Cash flow from financing activities 16,870 16,870 Cash flow for the period 3,305 3, Cash and cash equivalents at the beginning of the period Exchange differences in cash and cash equivalents Cash and cash equivalents at the end of the period 3,610 3, NOTE 7, FINANCIAL INSTRUMENTS IFRS 13 classifies financial instruments measured at fair value at different levels depending on how fair value is determined. At 30 June financial assets measured at fair value in ICA Gruppen amounted to SEK 1,955 million. Financial liabilities measured at fair value amount to SEK 0m at 30 June. Financial instruments consist of bonds and commercial papers and are measured at fair value according to level 2. For financial instruments recognised at amortised cost there is no significant difference between carrying amount and fair value. ICA Gruppen Interim report June 17

18 Key figures for ICA Gruppen June June Operating margin excl. non-recurring items, % 2.8% 25.6% 35.0% 19.6% 9.4% Operating margin, % 1.3% 24.0% 33.6% 19.6% 11.2% Net margin, % 3.6% 5.4% 3.6% Return on capital employed, % 3.3% 5.4% 3.6% Return on equity, % 3.3% 3.3% 3.9% Equity/assets ratio, % 31.2% 86.3% 86.1% Operating profit before depreciation, 1, Net debt, 13, ,199 Share data Earnings per ordinary share continuing operations, SEK Earnings per C share continuing operations, SEK Share price at the end of the period, SEK Dividend per ordinary share, SEK Dividend, Dividend payout ratio, % Equity per share, SEK Cash flow per share, SEK Number of common shares 119,078,903 78,597, ,078,903 78,597,674 78,597,674 Number of C shares 82,067,892 82,067,892 82,067,892 82,067,892 82,067,892 Total number of shares at the end of the period 201,146, ,665, ,146, ,665, ,665,566 Average number of shares 174,159, ,665, ,412, ,665, ,665,502 Average number of shares after dilution 174,159, ,776, ,412, ,704, ,704,924 Definitions of key figures Capital adequacy ratio Refers to ICA Bank. The bank s capital base in relation to capital requirement. Capital employed Total assets less non-interest bearing liabilities and provisions. Cash flow per share Cash flow for the period divided by the average number of shares outstanding. Earnings per C share Same definition as Earnings per ordinary share, since ordinary shares and C shares provide entitlement to equity participation in earnings and equity. C shares do not carry entitlement to a cash dividend, which is the case for ordinary shares. Earnings per ordinary share Profit for the period, excluding non- controlling interests, divided by the average number of shares outstanding. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation). Operating profit, excluding acquisition effects, before depreciation and impairment. Equity/assets ratio Equity including non-controlling interests as a percentage of total assets. Equity per share Equity, excluding non-controlling interests, divided by the total number of shares outstanding. Net debt Interest-bearing liabilities excluding pensions, liabilities attributable to sale & leaseback and ICA Bank. Operating margin Operating profit as a percentage of net sales. Return on capital employed Profit after financial income, excluding acquisition effects, as a percentage of average capital employed. ICA Bank s operations are totally excluded from both the income statement and balance sheet when calculating return on capital employed. Return is calculated on the basis of a rolling 12-month period. Return on equity Profit after tax, excluding acquisition effects, as a percentage of average equity. ICA Bank s operations are totally excluded from both the income statement and balance sheet when calculating return on equity. Return is calculated on the basis of a rolling 12-month period. Glossary Hard discount Discount stores with limited selection. MTN A medium-term note is a continuously offered debt note with a predetermined maturity date. Private labels Own brand products. Joint venture Co-operation project, a joint venture company. Non food Items that are not food, such as clothing and footwear. ICA Gruppen Interim report June 18

19 This six-month report provides a true and fair view of the Parent Company s and the Group s operations, financial position and earnings as well as describing material risks and uncertainties faced by the Parent Company and the companies in the Group. Stockholm, 21 August Claes-Göran Sylvén Chairman of the Board Peter Berlin Göran Blomberg Cecilia Daun Wennborg Andrea Gisle Joosen Board Member Board Member Board Member Board Member Fredrik Hägglund Bengt Kjell Magnus Moberg Jan Olofsson Board Member Board Member Board Member Board Member Margot Wallström Magnus Rehn Jonathon Clarke Board Member Employee representative Employee representative Per Strömberg, CEO The information in this interim report is such that ICA Gruppen must disclose pursuant to the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at CET on Wednesday, 21 August. This interim report has not been reviewed by the company s auditors. For further information, please contact: Per Strömberg, CEO ICA Gruppen, tel Sonat Burman-Olsson, Deputy CEO and CFO ICA Gruppen, tel Pernilla Grennfelt, IR ICA Gruppen, tel ICA Gruppen press service, tel Press and analyst meeting ICA Gruppen is arranging a press and analyst meeting at Berns, Berzelii Park, Stockholm on Wednesday, 21 August at CET. CEO Per Strömberg and Deputy CEO and CFO Sonat Burman-Olsson will present the interim report. The meeting will be webcast and can be followed at Financial calendar 13 November Interim report September 12 February 2014 Year-end report ICA Gruppen Interim report June 19

20 ICA Gruppen AB (publ) is one of the Nordic region s leading retail companies, with around 2,400 of its own and retailer-owned stores in Sweden, Norway, Estonia, Latvia and Lithuania. The Group includes the retail companies ICA Sweden, ICA Norway and Rimi Baltic, ICA Real Estate, which owns and manages properties and ICA Bank, which offers financial services to Swedish customers. The Group also includes the fully-owned portfolio companies Forma Publishing Group and inkclub and partly owned portfolio companies Cervera, Hemtex and Kjell & Company. For more information see ICA Gruppen AB (publ) Svetsarvägen 16 SE Solna Tel Reg. no