BoConcept Holding A/S. LD markets Tuesday 6 October 2009

Transcription

1 BoConcept Holding A/S LD markets Tuesday 6 October 2009

2 Agenda Market status Latest financial development Q1 2009/10 Strategic focus points for FY2009/10 Short term outlook and long term objectives Contacts: Viggo Mølholm, President & CEO Hans Barslund, EVP & CFO

3 Challenging market conditions remain Market for consumer durables still heavily affected by slowdown in private spending and increased uncertainty No clear signs of macro economic improvement but early signs of a stabilisation in sales conditions are showing Visibility continues to be low Expected time-lack between macro economic recovery and higher demand for consumer durables

4 Revenue in Q1 affected by crisis, but on par with expectations Revenues (DKKm, LTM) Revenue at DKK 209m (-21% YoY) Positive currency effect of DKK 3.6m Phasing out studios has negative impact of DKK 11.3m Brand store revenues down by DKK 48.9m (-18,0%) 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006/ / 20/ / Stores Studios % ofsales YoY France % 9% Germany % -10% USA % -28% Spain % -31% Japan % -10% Denmark % -38% Norway 42 4% -37% UK 8 5 5% -18% Sweden 8 1 5% -14% China 11 1% -33% A markets total % -18% Most A-markets suffers Growth in France Strong German foothold reduces revenue decline Spain, USA and Scandinavia still dramatically hit by economical crisis Satisfactory status on stores 246 brand stores (-1 compared to Q4 20/09, +12 YoY) C % % 109 studios B&C markets % -18% Total % -18%

5 Significant drop in traffic affects same-store-sales 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Same-store-sales Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006/ / 20/ /10 Development in # of stores Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006/ / 20/ /10 Same-store-sales remain in the red Measured on invoicing same-storesales down by 18.3% (YoY) (-22.6% i Q4 20/09) Trafic reduced by 25% Same-store-sales measured on order-intake down 13% (YoY) (- 27% in Q4 20/09) Strengthened marketing efforts to increase traffic introduced Sale and world wide collectionlaunch campaigns More events and focussed support to stores Expected drop in net-openings, but high quality in pipeline Opened Seven openings and eight closings in closed Q1 2009/10 # of new stores affected by financial climate and stricter requirements from BoConcept 10 brand stores in pipeline as of 31/7

6 Very satisfactory development in gross profit 45% 43% 41% 39% 37% 35% Gross margin Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006/ / 20/ /10 Own vs. sourced production Sourcing Own production 30% 26% 20% 42% 65% 70% 74% 80% 58% 35% Targeted programme has introduced significant cost flexibility Gross margin in Q1 2009/10 at 41.7% vs. 40.8% last year Negatively impacted by lower contribution ratio from trafic generating campaigns and indirect production cost surcharged to inventories Positively boosted by efficency enhancements introduced in FY20/09 and indkøbsbesparelser Gross margin was 39.1% i Q4 20/09 75% of group revenue was sourced in Q1 2009/ / / / 20/09

7 Restructuring has reduced costs and losses EBIT (DKKm, LTM) EBIT-margin (LTM) Revenue decline has negative effect 10,0% on EBIT which was DKK-1.7m in Q1 8,0% 2009/10 vs. DKK 15.8m last year Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006/ / 20/ /10 6,0% 4,0% 2,0% 0,0% -2,0% -4,0% EBIT-margin down from 6.0% to -0.8% (YoY) In Q4 20/09 EBIT was DKK -26.0m and EBIT-margin -18% EBIT also impacted by Losses and provisions on debt at 20/ /10 Deviation DKK 2.8m (DKK 1.7m last year) Restructurings cost at DKK 1.1m Revenue 265,2 2,6-56,6 Pre-tax profit 13,8-3,7-17,5 Losses on bad debt -1,7-2,8-1,1 Restructurering 0,0-1,1-1,1 30,9% Pre-tax loss of DKK 3.7m against last years profit of DKK 13.8m Marginal result deviation -15,3 27,0%

8 Strong focus on reducing working capital Inventories, DKKm Total assets of DKK 504.6m reduced by DKK 17.7m since Q4 20/ sep nov jan mar maj sep nov jan mar maj Gross investments of DKK m Trade receivables, DKKm sep nov jan 09 mar 09 maj Substantial improvement in working capital Inventories down by DKK 14.4m Receivables down by DKK 6.8m debtor days reduced from 45 in Q4 20/09 to 42 No changes to non-interest bearing debt sep nov jan mar maj sep nov jan mar maj sep nov Non interest bearing debt, DKKm sep nov jan mar maj sep 07 nov 07 jan mar maj jan 09 mar 09 maj 09 sep nov jan mar maj

9 Strong cash flow due to reduction in NWC Cash flow, DKKm Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006/ / 20/ /10 CFFO of DKK 23.0m in Q1 2009/10 Focus on working capital has reduced capital tied up in NWC considerably Net-investments in Q1 2009/10 at DKK 7.1m as budgeted Cash flow before instalments on noncurrent debt at DKK 15.8m Interest bearing debt, DKKm Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006/ / 20/ /10 Per 31 July 2009 BoConcept had unused credit facilities totalling DKK 49.7m Interest bearing debt reduced by DKK 13.5m in Q1 2009/10 to DKK 203.1m Long term debt is DKK 74.8m and short term debt totals DKK 128.3m

10 Strategic focus areas for FY2009/10 Optimize sales platform and sales channels Strengthen franchise model and same-store-sales to help improve franchisees' (and group) profitability Continue optimisation at group level to secure profitability, reduce risks (financial and operational) and improve cash flow Retain financial strength and capital base to ensure protection of franchise chain values and possibility to act on business opportunities post-crises

11 Sales and store expansion strategy unchanged Intensified individual support to brand store where needed Reorganisation fully implemented and performing strongly Special attention to crisis-strucked brand stores Continues hands-on evaluation of poor performing stores and franchisees to determine turn-around potential. If too low, they will be shut down to maintain overall chain quality Focus remains on re-establish same-store-sales in existing stores and markets Growth opportunities will be pursued according to plan On existing markets and with existing franchisees (solid pipeline) On new markets (strong interest) Via multi channel retailing (e-commerce)

12 Highly commercial 2010-collection launched Collection still affordable luxury, but more commercial cial than before Price entry level in all product categories Price reductions Focus on traffic creating activities and visual merchandising Targets upper end of middle segment, but

13 most new products in low end of price range

14 Launched via 115 parties in 27 countries

15 Road back to profitability established and additional capital secured All restructuring initiatives from 20/09 are in place and kicking in to improve profitability revenue break-even point reduced by 15% Strong focus on reducing capital tied up in WC to remain asset light and facilitate strong cash flow In September 2009 BoConcept completed a share offer as an accelerated bookbuilding which was oversubscribed 3x 238,374 new B-shares (9.99% of existing B-shares) 103,713 existing B-shares held by BoConcept Post-offer 240,000 A-shares / 2,622,119 B-shares Post-offer equity ratio of 35% (target 30-40%) Gross proceeds of DKK 37.6m will be used to Strengthen capital base by reducing interest bearing debt Facilitate an optimal base for protection franchise chain values Realise the full potential of BoConcept-s business model within the framework of the existing long term strategy

16 Forecast for 2009/10 reiterated after Q1 Global economic recession causes challenging business climate with low visibility indications however that a sustainable level has been reached BoConcept will focus efforts on securing franchisee's income, re-establish group profitability and continue optimising asset light model Considerable resource allocation towards traffic and sales generating activities Increase gross margin as a function of increased sourcing, lower purchasing prices and reduced capacity costs Reduce WC by bringing down inventories and receivables Strengthen franchise concept to prepare for post-crises business opportunities Guidance Revenue Same-store-sales Losses on bad debt Pre-tax profit Cash flow Investments Net chg. # Brand Stores FY2009/10E FY20/09R -10 to -15% DKK 1,005m (-12%) -5 to -10% (invoiced) DKK 20m Break even + 2-3% of revenues DKK 20m Net reduction of % (invoiced) DKK 30.5m Loss of DKK 29.6m DKK -48.1m ( 5%) DKK 38.7m +23

17 Long term investment case intact BoConcept's franchise model, concept and core competencies remains attractive to both customers and franchisees Solid market position in high end of global mid-market Attractive franchise model has proven its sustainability and comes out even stronger after having being fine-tuned during the economical crisis Restructuring initiatives to counteract impact from global recession has improved efficiency, restored path to profitability, strengthened capital base and reduced operational and financial risks When market conditions improve and visibility returns, BoConcept will be in a favorable position to utilize post-crisis business opportunities, grow same-store-sales and the number of stores On that basis BoConcept's long term objective is to deliver an EBIT margin of 12% and a cash flow of at least 6% of revenues

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