BRIO AB: Financial Statement January - December 2008

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BRIO AB (STO:BRIOB):

REPORT PERIOD OCTOBER – DECEMBER 2008

Net sales amounted to SEK 303.7 million (323.7 m)
The operating loss was SEK 58.6 million (6.1 m)
The loss after tax was SEK 71.5 million (-8.0 m)
EPS before and after dilution was SEK -7.66 (-7.48)

PERIOD JANUARY – DECEMBER 2008

Net sales amounted to SEK 892.5 million (930.1 m)
The operating loss was SEK 44.8 million (-52.7 m)
The operating loss excluding capital gains was SEK 126.8 million (-52.7 m)
The loss after tax was SEK 75.3 million (-82.6 m) EPS before and after dilution was SEK -8.07 (-7.88)

SIGNIFICANT EVENTS DURING AND AFTER THE REPORT PERIOD

  • The board deems that BRIO will shortly face an acute liquidity shortage. The board also deems that the company needs a considerably stronger long-term capital base. Against this background, the board is working to secure BRIO’s capital supply in the short and long term and intends to submit a proposal by 13 March 2009 on refinancing, which can be carried out by means such as a new share issue and loans from shareholders. Due to the lack of profitability, one-off costs and the existing need for refinancing, the board deems it necessary for BRIO to receive a capital injection of a minimum of SEK 300 million.
  • During the report period BRIO initiated a rationalisation scheme aimed at cutting costs by around SEK 40 million a year, achieving full effect in 2010. One-off costs of SEK 15.5 million pertaining to initiated rationalisation impacted the report period and one-off costs of an additional SEK 24.5 million are expected to impact Q1 2009.
  • BRIO’s tied up working capital rose by an unexpected high amount for the season during the report period. BRIO therefore took out a short-term loan of SEK 60 million from main owner, Proventus.
  • Andreas Sbrodiglia took over as BRIO’s new President and CEO on 1 January 2009. Meanwhile, CFO Håkan Johansson was also appointed as deputy CEO.
  • The new management is working in conjunction with the board on an action plan for the coming years in order to achieve profitability. * The board proposes that no dividend be paid for 2008.
  • The board is making no estimates for the financial results for 2009.

COMMENTS BY THE BOARD

BRIO is in a serious situation and the board deems that the Group will shortly face an acute liquidity shortage. The board also deems that the company needs a considerably stronger long-term capital base.

The situation and capital needs that have arisen have been driven by a number of different factors:

BRIO has suffered from significant structural problems over the past decade. The Group has also, for many years, under invested in product development and has lost market shares markets despite its strong brand. More resources and time has been required than initially estimated to remedy the internal problems and to establish BRIO’s new position on the market. This has resulted in the Group’s shareholders equity being all but utilised.

BRIO has a pessimistic outlook in terms of consumer trends over the coming years. This will probably put extra pressure on the entire industry, which will lead to an increased operating capital requirement for BRIO. The high rate of debt inhibits BRIO’s possibility of successfully carrying out the restructuring and development necessary.

In order to manage this situation and successfully continue developing BRIO requires a completely different capital base. The board therefore deems it necessary for BRIO to receive a capital injection of SEK 300 million.

The board is working to immediately secure BRIO’s capital supply in the short and long term and intends to submit a proposal by 13 March 2009 on refinancing, which can be carried out by means such as a new share issue and loans from shareholders.

Malmö, 17 February 2009

BRIO’s Board

This information is published by BRIO AB (publ) in accordance with Swedish Law regarding the securities market and/or the law regarding trading in financial instruments. The information was submitted for publication at 8.30 a.m. on 17 February 2009.

BRIO is a Swedish company that develops and sells toys, prams, children’s car seats and children’s furniture. The company was formed in 1884 and is today an international Group with the BRIO, SIMO and Alga brands. The Group also includes Scanditoy, an extensive toy wholesale business in the Nordic region. The company has about 400 employees, is represented in over 50 countries and has been listed on the O-list of the OMX Nordic Exchange Stockholm since 1985.

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