XXL Share Trading Suspended: Swedish Tax Agency Claims NOK 139 Million in Taxes

The case is updated!

Oslo Børs announced on Thursday at 12 noon that trading in the XXL share has been suspended, pending a notification from the company.

A quarter of an hour later, XXL reports that the Swedish Tax Agency believes the company owes NOK 139 million in tax for the years 2015, 2016, 2017 and 2018.

XXL disputes the claim. The company writes that it will try to reduce the effect of this by adjusting taxable income in other jurisdictions, through mechanisms in relevant double taxation agreements between Norway and countries with a jurisdiction that can grant refunds.

XXLs internprisingsmodell

Through this move, the company expects that the net tax claim will be significantly reduced compared to the 139 million that the Norwegian Tax Agency believes XXL owes.

The increased tax requirement comes after the Swedish Tax Agency has looked at XXL’s transfer pricing model. This has meant that taxable income for the years 2015 to 2018 has been adjusted upwards, while it has been adjusted downwards for 2019.

XXL writes that it is in dialogue with the tax authorities.

Furthermore, the company has also stated the topic as a potential tax exposure in the notes to the company’s consolidated accounts, as well as a prospectus published earlier this year.

– Sales recommendation

The tax claim is reported the day after the company announced its results for the second quarter. Among other things, it was announced that the operating profit before depreciation (ebitda) would probably be negative in the order of NOK 25 to 75 million.

This triggered a short-term price collapse for the XXL share, which at most fell around 12 per cent. However, the share recovered towards the close of the stock exchange, so that the share summa summarum fell 0.85 per cent.

In connection with the results announcement, XXL pointed out that the market is characterized by full stocks throughout the value chain, which results in aggressive and exaggerated campaigns. It also affects XXL’s gross margin.

– We have a sell recommendation on the share and a price target of one krone. There is nothing unexpected here. We have said for a long time that we believe the company will break the terms of the loan and that it will need to replenish new equity, said analyst Øyvind Mossige at Sparebank 1 Markets to DN.

In his latest analysis, Mossige has argued that XXL needs to raise at least NOK 500 million, perhaps as much as NOK one billion, in equity.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.