THE SUBSIDIARY QLIRO AB TO BE LISTED, CDON BEING PREPARED FOR DISTRIBUTION TO OWNERS AND NELLY IMPLEMENTS ACTION PLAN
|Operating profit before depreciation||-18.5||35.1||4.7||19.0|
|Operating margin before depreciation||-2.0%||3.3%||0.2%||0.6%|
1Operations are recognized excluding the effects of IFRS 16. Some income has been reclassified from interest income to commission income in Qliro AB and commission income is now included in consolidated net sales. The comparative figures are adjusted with SEK 9.3 million for the quarter and SEK 31.7 million for the year. Lekmer and HSNG are recognized as discontinued operations in the consolidated comparative figures for 2018.
SUBSIDIARY QLIRO AB TO BE LISTED, CDON BEING PREPARED FOR DISTRIBUTION TO OWNERS AND NELLY IMPLEMENTS ACTION PLAN
Our strategy since June 2018 is to split the group into three separate companies. As previously announced, this is expected to occur in the first half of the year. As we now enter the final phase, we want to describe how the split up is planned and the strategy for the group's continued operations. The plan is to list the subsidiary Qliro AB. The process of distributing CDON shares to Qliro Group’s shareholders has also been initiated. According to this plan, Nelly will remain in the group. The goal is to give the companies the opportunity to focus fully on their own operations and thereby strengthen their competitiveness.
The subsidiary Qliro AB to be listed on Nasdaq Stockholm in the first half of the year
As previously announced, we plan to list Qliro AB on Nasdaq Stockholm’s main list. Qliro AB is currently well-established as a provider of financial services to e-merchants and consumers in the Nordics. Today, the company has a relationship with 2.1 million consumers in the Nordics. The company has a well-functioning engine for deepening relationships with consumers by gradually offering more comprehensive financial services.
Given the company’s strong position, our assessment is that an initial public offering provides a good basis for future opportunities, including access to the capital market. To enable continued rapid growth, a new share issue is planned in connection with the IPO. Following the listing, Qliro Group will remain a co-owner for a limited period to facilitate a successful IPO.
Qliro AB’s loan book grew 39 percent to over SEK 2 billion. Total operating income rose by 8 percent to SEK 88 million. Initiatives for continued growth and credit losses impacted operating profit before depreciation, amortization and impairment, which amounted to SEK -14 million.
The next step is to distribute CDON shares to Qliro Group’s shareholders
In recent years, digital marketplaces have become an increasingly dominant channel for e-commerce. We are therefore proud that CDON has established itself as the leading Nordic marketplace, with nearly 1.8 million customers. CDON has proven its ability to grow the marketplace. The model is scalable with limited capital requirements.
CDON had a positive operating profit before depreciation of SEK 23 (20) million in the quarter and SEK 15 (-19) million for the year. This means that CDON met its financial targets for growth for the quarter and the year and met the previously announced estimate of positive operating profit before depreciation for the full year. In addition, inventory levels decreased by 41 percent. For full year 2020, the assessment is that the gross merchandise value of the external merchants will increase significantly faster than the target and that the operating margin target will be met.
The company has in many aspects exceeded our expectations and is ready for growth outside the Qliro Group. We are therefore preparing to distribute CDON’s shares (trough a so-called Lex Asea procedure) to our shareholders and to list the share on First North.
Nelly focuses on its operations in the Nordics
Nelly is a “digital native” with one of the strongest fashion brands for young women in the Nordics. More than 40 percent of its sales are from own brands and the customer base shows strong loyalty.
Unfortunately, financial performance has not been satisfactory. For the quarter, Nelly’s sales decreased by 1 percent, gross profit amounted to SEK 75 million and operating profit before depreciation, amortization and impairment decreased to SEK -13 (19) million. The company reduced overstock from previous quarters through clearance sales, which reduced the inventory by 20 percent during the quarter. This had a negative impact on the product margin, however.
We are, of course, not satisfied and are taking active measures. Nelly is focusing its operations on the Nordic market, and outside the Nordics we will reduce our own sales efforts and drive sales through other channels, such as Zalando. We will also continue to reduce inventory levels and will reduce the administrative organization with about 25 full-time employees. These measures will take us back to profitable growth. Our assessment for 2020 is that net sales will increase, but not in line with the target and that the operating margin before depreciation, amortization and impairment will be 2-4 percent.
Qliro Group’s future operations
Qliro Group will remain listed and will run the remaining business, which in the current plan will be Nelly. In connection with this, Qliro Group plans to change its name to Nelly Group. Following a listing of Qliro AB, the group will continue to own a shareholding in Qliro AB for a limited period to facilitate a successful IPO.
In parallel with these preparations, discussions are ongoing with stakeholders about possible divestments or structural deals that could affect which company ultimately remains in the group.
In connection with the split of the Group, my assignment for Qliro Group is completed so I will be leaving the Group after four intensive years. All three subsidiaries are now well positioned with strong boards and management groups. I look forward to following their progress in the coming years.
President and CEO
Stockholm, February 5, 2020
Analysts, investors and the media are invited to a conference call today at 10 a.m. To participate in the conference call, please dial:
Sweden: 08 5033 6573
UK: +44 330 336 9104
US: +1 929 477 0630
The pin code to access this call is 639334.
The presentation material and webcast will be published at www.qlirogroup.com.
For additional information, please visit www.qlirogroup.com or contact:
Niclas Lilja, Head of Investor Relations
About Qliro Group
Qliro Group is a Nordic e-commerce group that operates CDON.COM, the leading Nordic online marketplace, the fashion brand Nelly and fintech company Qliro AB, offering financial services to merchants and consumers. In 2019 the Group had sales of SEK 2.9 billion. Qliro Group’s shares are listed on the Nasdaq Stockholm MidCap segment under the ticker symbol QLRO.
This information is information that Qliro Group AB is required to disclose under the EU Market Abuse Regulation. The information was released for publication through the agency of the above-mentioned contacts at 8:00 a.m. on February 5, 2020.