ANNOUNCEMENT OF FINANCIAL RESULTS FOR THE FIRST SIX MONTHS OF 2014/2015 FOR BOCONCEPT HOLDING A/S

Revenue and same-store-sales grew by 6.0% and 9.2% in the first six months of the financial year. However, high costs incurred in the collection switch-over and poor performance in parts of the chain reduced profits, so BoConcept will be launching a strategic transformation of the business model to reorganise the chain, consolidate its franchise model and reduce the complexity. These measures will necessitate extraordinary write-downs and provisions totalling DKK 70 million in 2014/2015.

| Source: BoConcept Holding BoConcept Holding

Second quarter of 2014/2015 (1 August 2014 to 31 October 2014)

  • Revenue was DKK 292.8 million, up by 3.9% from the previous year
  • Same-store-sales (order intake) rose by 7.9%
  • Extraordinary write-downs and provisions in the amount of DKK 57.8 million
  • The gross profit margin was 38.5%, compared with 42.3% last year
  • EBIT was in the amount of DKK (57.2) million, (DKK 0.3 million before extraordinary expenses)
  • 7 new brand stores opened and 7 closed. The chain now consists of 262 stores 

First six months of 2014/2015 (1 May 2014 to 31 October 2014)

  • Revenue was DKK 560.0 million, up 6.0% on the same period last year
  • Same-store-sales (order intake) rose by 9.2%
  • The gross profit margin was 40.2%, compared with 42.2% last year
  • EBIT was in the amount of DKK (62.8) million (DKK (5.3) million before extraordinary expenses)
  • 11 stores opened and 15 closed in the year to date
  • The balance sheet total was DKK 561.7 million at 31 October 2014
  • Cash flow before instalments on long-term debt was a cash outflow of DKK 38.9 million, compared with a cash outflow of DKK 56.2 million last year

Strategic transformation of business model launched

After a significant upgrade of BoConcept's concept and collection, management is now implementing an adjustment of its business base and model. 35-50 of the worst performing stores will either have new franchisees or be closed, the group will adopt a narrower focus on its market portfolio and improve efficiency, and the franchise model will be optimised. The adjustments will increase the group's EBIT to 5-7% in the 2016/2017 financial year, but will necessitate extraordinary provisions and write-downs of DKK 70 million in 2014/2015. Of this amount, DKK 57.8 million was charged to the income statement for the second quarter of 2014/2015. 

To ensure that these operational adjustments receive maximum backing and can be executed, the group will make the following internal changes to BoConcept's supervisory board: Peter Thorsen will be appointed chairman and Viggo Mølholm deputy chairman. In addition, the board has decided to extend the executive board with a COO as head of logistics and production.

Downward adjustment of forecast for the 2014/2015 financial year

With the positive contribution of growth in same-store sales, revenue will grow in the remainder of the financial year, but closing stores will reduce revenues more than previously predicted. Growth in profit from ordinary activities in the remainder of the financial year will offset losses from ordinary activities in the first half of 2014/2015, and the strategic transformation process will result in extraordinary expenses. We are therefore making a downward adjustment of our predictions for the 2014/2015 financial year as follows:

  • Revenue growth of about 3-5% (previously 5-8%)
  • A break-even operating income (EBIT) before extraordinary expenses (previously 2-3% EBIT margin)
  • Extraordinary operating expenses of DKK 70 million

Attachments

fo051214_14_uk.pdf