The interim report for FNG Nordic AB (Ellos Group) is published today.

THE THIRD QUARTER

• Net sales totalled SEK 778.0 million.
• The gross margin amounted to 32.5 %.
• The operating profit/loss amounted to SEK -98.5 million. The operating margin was -12.7%.
• Adjusted EBITA amounted to SEK 85.0 million. The adjusted EBITA margin stood at 10.9%.
• Adjusted EBITDA amounted to SEK 108.3 million. The adjusted EBITDA margin stood at 13.9%.
• Cash flow from operating activities amounted to SEK 79.1 million.
• Operating cash flow, that is, cash flow from operating activities and cash flow from investing activities, totalled SEK 75.1 million.
• Cash and cash equivalents amounted to SEK 263.4 million.

NINE MONTHS 2020

• Net sales totalled SEK 2,181.6 million.
• The gross margin amounted to 45.1%.
• The operating profit/loss amounted to SEK -17.5 million. The operating margin was -0.8%.
• Adjusted EBITA amounted to SEK 190.7 million. The adjusted EBITA margin stood at 8.7%.
• Adjusted EBITDA amounted to SEK 259.7 million. The adjusted EBITDA margin stood at 11.9%.
• Cash flow from operating activities amounted to SEK 42.1 million.
• Operating cash flow, that is, cash flow from operating activities and cash flow from investing activities, totalled SEK 23.0 million.
• Cash and cash equivalents amounted to SEK 263.4 million.

SIGNIFICANT EVENTS

• FNG Nordic AB is party to an ongoing arbitration procedure where the previous owners of Ellos Group have made claims against the buyer FNG NV in Belgium but also against FNG Nordic AB which is the company that made the acquisition of Ellos Group. The matter concerns the value of the payment which partly was made up of shares in FNG NV but also demand for prepayments of the part made up of certain loan instruments to the sellers of Ellos Group. The claims are material and if the decision would go against FNG NV and FNG Nordic AB the effects would be significant. However, the company have made the assessment that no reservation is necessary.

Comment from the CEO of FNG Nordic AB (publ)

Ellos Group reported a strong quarter, similar to the preceding quarter, showing both strong sales and a strong underlying result. We have been seeing for a long time a structural change in the market where customers to a larger extent choose to shop online instead of in the physical store. Since Q2, in the wake of the ongoing pandemic, this development has accelerated, which is favorable for Ellos Group. The largest effect is primarily within the Home Interior segment, but also in other categories linked to spending more time at home and leisure / sports activities.

We see the positive development throughout all our four strong brands: Ellos, Jotex, Stayhard and Homeroom. New customer growth is significant, and we also see an increasing trend among our existing customers as they, from what we can see, choose to spend more time and a larger part of their wallet on our e-commerce platforms.

During the fourth quarter, we will meet two of the year's biggest market events - Black Friday / Black Week and Christmas shopping. As a result of 'a second wave' of the ongoing pandemic and increasing restrictions, there is a general expectation that more customers will choose to shop their Christmas gifts online and thus we expect a shift from strong to very strong growth for the overall online channel.

strong development in Q4. At the same time and depending on the total volume in this very important period, there are risks in the system: e.g. possible increased sick leave in production, lack of capacity in transport, delivery points and home deliveries which can affect e.g. delivery times and customer satisfaction.

In line with the development that we see in the market, the project continues to take Ellos Group out to Europe and it is progressing according to plan. Jotex brand will be launched in Germany, Poland, the Netherlands and Austria at the end of 2020 and the beginning of 2021. Already now, so-called "teaser pages" have been launched, where customers can sign up for newsletters. Given the growth Jotex has experienced in recent years and the strong home interior trend we are seeing, it will be very exciting to see how the brand is met on the continent.
We already sell our self-designed products on other platforms, and in Europe for example via Westwing. As part of reaching even more customers with our self-designed offer, we opened sales on Amazon.se during the third quarter.

Ellos Group’s positive development of sales and revenue in combination with a healthy inventory position means that the underlying business generates a positive cash flow.

As previously announced during the year, Ellos Group has made a prepayment on goods within the framework of purchases within FNG of EUR 10.0 million and a payment of a start-up cost of EUR 5.0 million. In the report for the second quarter, we flagged that a write-down may be relevant as a consequence of the bankruptcies within the rest of FNG Group. For precautionary reasons, Q3 therefore contains a reserve for the entire amount. This reserve has a negative effect on operating profit/loss of SEK 158.6 million and is the reason for the quarter's negative reported operating profit/loss.

Operating cash flow in the quarter is positive by SEK 75.1 million, which gives a net debt amounting to SEK 1,187.9 million in September, compared with SEK 1,245.6 million in June and SEK 1,171.5 million at the beginning of the year. As the business generates a positive cash flow, thus the net debt decreases somewhat during the first 9 months of the year despite the previously mentioned payments. The operating credit with a bank is still unutilized and instead there is cash and cash equivalents amounting to SEK 263.4 million.

FNG Nordic AB is party to an ongoing arbitration procedure where the previous owners of Ellos Group have made claims against the buyer FNG NV in Belgium but also against FNG Nordic AB as the company that made the acquisition of Ellos Group. The matter includes among other things the value of the payment for Ellos Group. This is an ongoing proceeding which primarily is handled by FNG NV in Belgium. FNG Nordic disputes all the claims brought forward by the previous owners.

We expect that the structural shift, albeit accelerated during the pandemic, will be of a lasting nature. This, together with a strong position in the market for our brands and significant new customer growth, provides Ellos Group with a strong starting point for a continued positive development.

In conclusion, Ellos Group stands strong, and we are hopeful for the end of the year.

Paul Lembrechts, CEO of FNG Nordic AB (publ).
For more information: Johan Stigson, CFO, Telephone. +46 (0)33 16 08 05

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This information is information that FNG Nordic AB (publ) is legally obliged to disclose in accordance with the EU Market Abuse Regulation and the Swedish Securities Market Act. Through the agency of the contact persons shown above, the information was released for publication on 30th of Nov 2020 at 18.45 CET.

ABOUT ELLOS GROUP
The Ellos Group, which includes Ellos, Jotex, Stayhard, and Homeroom, is the Nordic region’s leading e-commerce group. Working closely with our millions of customers, we are constantly striving to develop and offer attractive and sustainable fashion and household items for the entire family. Our focus is always on the customer. We continuously work to develop our business through innovation, creativity, and sustainability. The Ellos Group, headquartered in Borås, Sweden, and with operations in all Nordic countries, has around 550 employees. www.ellosgroup.com