BoConcept Holding A/S

Danske Markets EquitiesSmall & Midcap seminarThursday, 3 December 2009

Agenda

Introduction to BoConcept

Restoring profitability and strengthening the business modelRestoring profitability and strengthening the business model

Latest financial developments

Looking ahead – preparing for future growth

Short-term outlook and long-term objectivesShort term outlook and long term objectives

Contacts:Contacts:Viggo Mølholm, President & CEOE-mail: vm@boconcept.com

Hans Barslund, EVP & CFOE il hb@bE-mail: hb@boconcept.com

Introduction to BoConcept

BoConcept at a glance

International retail-oriented concept holder within furniture and lifestyle products for private homes

Development, support and supply to global franchise-based retail chain which operates in 51 countries

- 245 BoConcept Brand Stores- Primary sales channel- Individual franchise stores- BoConcept products exclusively

- 105 BoConcept Studios105 BoConcept Studios- Shop-in-shops- BoConcept's products

supplements other brands

B C t t iBoConcept core competencies:- Design and branding- 'Best practice' in store management- SCM and sourcing- Production of board furniture

• A truly global concept with the most commercial and coordinated products on the market in terms of design

• Positioned in the high end of the middle market to reduce exposure to price competitionp p p

Our vision and missionVision

To make BoConcept no. 1 brand within urban interiorsinteriors

MissionThrough passionate and persistent performance we make customized and coordinated design f it d i furniture and accessories affordable to the urban-minded customer

Strong brand and highly commercial collection

Affordable luxury, but more commercial than beforeFocus on traffic-generating activities and visual merchandisingg g gTargets upper end of middle segment

Revenue splitAug.-Nov. 2009

Revenue splitAug.-Nov. 2008

Award-winning franchise model with strong deliverables from BoConcept to franchiseep

Coordinated product and accessories collection with centralized warehouse handling, offering millions of product combinations to customers

Centralized branding and marketing g gplatform

BoConcept offers franchisees massive support to increase same-store-sales by

Facts about the franchise model• Based on growth-driven earnings, high

turnover rate and fast track to positive cash support to increase same store sales by optimising performance- Support organisation structured to

continuously assess and increase growth and earnings potential and to offer individually tailored support

turnover rate and fast track to positive cash flow for franchisee

• Strong growth in # of BoConcept Brand Stores since 2004

• 150 franchisees run 245 Brand Stores –several franchisees are considering opening individually tailored support

- Continued training and education of sales staff via BoConcept University

- Full IT platform

g p gbrand store no. 2 and 3

• Average turnover in brand stores is EUR 1.1m p.a. (significant spread)

Structured roadmap to bringing potential BC franchisee through pipelineBC franchisee through pipeline

3-6 months

Phase 1

Initiating Exchange of Execution of

Phase 2 Phase 3

•Preparation of business plan

•Confidentiality agreement

•Potential franchisee fills out an

li ti f

contact information contract

•Selection of location and preparation of project plan

•Budgets approved•Lease signed,

t i d

•Structured interview, presentation of BoConcept and personality test of franchisee

application form on www.boconcept.com

•Application evaluated by BC HQ

agreement signed and entrance fee paid

•Completion of opening check list

•Opening

franchisee

•Intent to proceed fee is paid

G /N G d i i

•Local Master meetswith potential franchisee for a further talk

•Opening•Go/No-Go decision

Strong pre-crisis financial performance

R t i fit bilit d Restoring profitability and strengthening the business model

Updating tools to restore traffic, order intake and brand store growthintake and brand store growth

Adapting collection and marketing to new demand patterns

As-Is & To-Be Mapfor BoConcept

Interior decoration implemented with huge success

Tactical marketing closely aligned with Tactical marketing closely aligned with Blue Ocean Strategy

- (New) structured market communications platform

- Unique shopping experienceq pp g p- Staff knowledge and friendliness

Local activities (low cost)

Working the new brand store pipeline, but imposing stricter requirements for business plans and financing

Re-thinking support to brand storesGeneral changes

Re-arrange support functions to meet individual brand stores' needs in order to increase efficiency

- Establish Brand Store Chain management group to increase focus- Establish Brand Store Chain management group to increase focus- Access to local generalists and global specialists- Specially trained store opening team

Increase overall quality in chain by focusing on poor performersIncrease overall quality in chain by focusing on poor performersPoor-performing brand stores closely monitored to determine turn-around potentialMain evaluation criteria:

• Location (+/ )• Location (+/-)• Franchisee (+/-)• Concept/financials (+/-)

Special BoConcept task force focusing on the development of individual business case assigned to stores/franchisees with positive potentialcase assigned to stores/franchisees with positive potentialStores with negative or no potential will be closed to maintain overall quality of portfolio

Strong focus on own-prod. consolidation, cost reductions and maintaining asset light modelg g

Closing down furniture production in Herning in Jan. 2009 brought annual savings of min. DKK 10m p.a.

Further cost reductions in Q3+Q4 2008/09 to obtain more cost-effective group structure still capable of providing stores and franchisees with a high level of service in all areasg- A total of 90-100 head count reductions in FY2008/2009- Stronger focus on reducing cost prices and better terms of delivery

I iti ti h d d l it t b i DKK 50 Initiatives has reduced annual capacity cost by min. DKK 50m and lowered break-even revenues point 15%

Securing asset light model by increasing sourcing and reducing Securing asset light model by increasing sourcing and reducing working capital considerably

Latest financial developments

Challenging market conditions remain, but...Market for consumer durables and private household spending still affected by financial slowdown and uncertainty

Visibility continues to be modest

However, early signs of a stabilisation in sales conditions are showing, y g g

Time-lack between macro economic recovery and higher demand for consumer durables to be expected

Revenue still affected by crisis, but on a par with expectationsp p

Revenue at DKK 459m (-19% YoY) - Positive currency effect of DKK 1.1m

Phasing out of studios has negative

Revenues (DKKm, LTM)

1.200- Phasing out of studios has negative

impact of DKK 22.2m- Brand store revenues down by DKK

82.9m (-16,0%)0

200400600800

1.000

Most A-markets in the red- Growth in France due to increased

number of stores- Strong German foothold reduces 31.10.2009 Stores Studios % ofSales YoY

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42006/07 2007/08 2008/09 2009/10

- Strong German foothold reduces revenue decline, and US is improving

- Spain and Denmark still dramatically hit by financial crisis

Frankrig + 30 20% 4%Tyskland + 15 7 12% -10%USA + 24 11 9% -22%Spanien + 28 3 6% -42%Japan + 20 6% -13%

Net addition to brand store portfolio- 245 brand stores (-1 compared to Q1

2009/2010, +16 YoY)- 105 studios

Danmark 11 6% -42%Norge 41 4% -41%England 9 5 6% -13%Sverige 9 1 5% -14%Kina 13 1% -34% 105 studiosA markeder total 159 68 75% -19%

B&C markeder 86 37 25% -18%Total 245 105 100% -19%

Low traffic impacts same-store-salesS t l

Same-store-sales still suffering, but recent quarters are showing gradual improvement

- SSS (invoiced) down by 18% in 1H

Same-store-sale

10%

20%

SSS (invoiced) down by 18% in 1H and 17% in Q2

- SSS (order-intake) down 10% in 1H and 8% in Q2

New collection and communications l tf ll i d h -30%

-20%

-10%

0%

platform well received – have together selected price reductions strengthened competitivenessStore net-openings continue and pipeline with high quality

30%Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2006/07 2007/08 2008/09 2009/10

Development in # af stores pipeline with high quality- 15 openings and 17 closings in 1H

2009/2010 (eight openings and nine closings in Q2)

- Openings both in new and existing k t

10152025

Openedmarkets

- Net-openings affected by stricter requirements from BoConcept

- Eight brand stores in pipeline as of 31 Oct. 2009

-15-10-505

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

p

Closed

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2006/07 2007/08 2008/09 2009/10

Gross profit still developing well

Gross margin in 1H 2009/2010 at 41.1% vs. 40.0% last year (40 6% vs 39 2% in Q2)45%

Gross margin

(40.6% vs. 39.2% in Q2)

Lower contribution ratio from traffic-generating campaigns 38%

39%40%41%42%43%44%

g g p gand indirect production costs surcharged to inventories (DKK 4.4m)

35%36%37%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2006/07 2007/08 2008/09 2009/10

Previous cost-cuttings, efficiency initiatives and more own stores has positive impact on gross profit

Own vs. sourced productionSourcing Own production

on gross profit

75% of group revenue was sourced in 1H 2009/201070% 74% 80%

65%42%

30% 26% 20%

sourced in 1H 2009/201035%

58%70%

2005/06 2006/07 2007/08 2008/09

Profitability restored despite revenue decline

EBIT came in at DKK 11.6m in 1H 2009/2010 vs. DKK 34.6m last year

- EBIT-margin down from 6.2% to 2.5% (YoY)

- EBIT-margin in Q2 2009/2010 was 5.3% vs. 6.3% last year and -0.8% in Q1 2009/2010in Q1 2009/2010

Losses and provisions on debt was DKK 7.0m in 1H 2009/2010 (DKK

/ )6.0m in 1H 2008/2009)

Satisfactory pre-tax profit of DKK 7.9m in 1H 2009/10 (DKK 11.6m in

PTP Development; DKKm

507.9m in 1H 2009/10 (DKK 11.6m in Q2 2009/2010) on a par with expectations

7,9

21,9

10

20

30

40

0

10

1H 08/09 GM% Cap.cost Finance Revenue Restruct. Bad debt 1H 09/10

Continued reduction in working capital

100

150

200

Inventories, DKKm

Total assets of DKK 514m – reduced by DKK 8.4m since

0

50

jul‐0

6

sep‐06

nov‐06

jan‐07

mar‐07

maj‐07

jul‐0

7

sep‐07

nov‐07

jan‐08

mar‐08

maj‐08

jul‐0

8

sep‐08

nov‐08

jan‐09

mar‐09

maj‐09

jul‐0

9

sep‐09

reduced by DKK 8.4m since beginning of FY

Gross investments of DKK 25.6m influenced by strategic acquisition

100

150

200

Receivables, DKKminfluenced by strategic acquisition of master rights in Spain

Continued improvement in WC, but

0

50

jul‐0

6

sep‐06

nov‐06

jan‐07

mar‐07

maj‐07

jul‐0

7

sep‐07

nov‐07

jan‐08

mar‐08

maj‐08

jul‐0

8

sep‐08

nov‐08

jan‐09

mar‐09

maj‐09

jul‐0

9

sep‐09

expect some ramping up going forward

- Inventories down by DKK 34.4m- Receivables up by DKK 6.0m due to

‐50

0jul‐0

6

sep‐06

nov‐06

jan‐07

mar‐07

maj‐07

jul‐0

7

sep‐07

nov‐07

jan‐08

mar‐08

maj‐08

jul‐0

8

sep‐08

nov‐08

jan‐09

mar‐09

maj‐09

jul‐0

9

sep‐09

Non‐interest bearing debt, DKKmp y

launch of collection, but debtor days reduced to 40 from 45 in Q4 2008/2009

‐200

‐150

‐100

Strong cash flow due to reduction in NWC

CFFO of DKK 69.1m in 1H 2009/2010 vs. DKK -24.3m last year

Focus on working capital has reduced - Focus on working capital has reduced capital tied up in NWC considerably

Cash flow before instalments on non-t d bt t DKK 43 5current debt at DKK 43.5m

As of 31 Oct. 2009 BoConcept had unused credit facilities totalling DKK Interest bearing debt, DKKm g119.1m

Interest-bearing debt reduced by DKK 70 4m to DKK 149 4m due to 200

250

300

g ,

DKK 70.4m to DKK 149.4m due to strong operational performance and share issue

- Long-term debt is DKK 83.7m and short-term debt totals DKK 65 6m0

50

100

150

short term debt totals DKK 65.6mQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2006/07 2007/08 2008/09 2009/10

L ki h d Looking ahead - preparing for future growth

Sales and store expansion strategy to take advantage of pending market uptakeadvantage of pending market uptake

Focus remains on re-establishing same-store-sales in existing stores and markets

Attractive growth opportunities exists in the current market, and these opportunities will be pursued opportunistic

k d h f h ( l d l )- In existing markets and with existing franchisees (solid pipeline)- In new markets (strong interest)- Via multi channel retailing (e-commerce)

Intensified individual support to brand store where needed- Reorganisation fully implemented and performing strongly- Special attention to crisis-strucked brand stores continuesp

Increasing frequency of collection updates

Bi-annual updates (autumn and spring) from 2009Most new products in low end of price rangep p gNo compromise on design + quality

News 2011

Efficient and cost-optimising structures in placep

All restructuring initiatives from 2008/2009 are in place and kicking in to improve profitability

Strong focus on reducing working capital to remain asset light and facilitate strong cash flow

New distribution centre in Shanghai, China, to replace existing facility in Tokyo, Japan, by 2H 2009/2010- More efficient and competitive location in terms of sales, delivery and

costs for existing markets in China and Japancosts for existing markets in China and Japan- Able to service Hong Kong, Singapore etc. from one central Asian location- Support general build-up and penetration of new Asian markets with

existing candidates

Strong capital base secured

On 17 September 2009 BoConcept completed a share offer as an accelerated bookbuilding which was oversubscribed 3x- New class B-shares (9.99% of existing class B-shares)- Sale of existing class B-shares held by BoConcept- Equity ratio of 36.4% as of 31 Oct. 2009

G d f DKK 37 6 ill b d t Gross proceeds of DKK 37.6m will be used to - Strengthen capital base by reducing interest-bearing debt- Facilitate an optimal base for the protection of franchise chain values- Realise the full potential of BoConcepts business model within - Realise the full potential of BoConcepts business model within

the framework of the existing long-term strategy

Sh t t tl k dShort-term outlook andlong-term objectives

Forecast for 2009/2010 maintainedGlobal economic recession with no clear signs of recovery in consumer spending causes challenging business climate – indications however that a sustainable level has been reachedBoConcept will focus efforts on developing a stronger brand store portfolio, re-establishing group profitability and 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 crisis business opportunities

Revenue

- Strengthen franchise concept to prepare for post-crisis business opportunities

-10 to -15% DKK 1,005m (-12%)

FY2009/2010E FY2008/2009RGuidance

Same-store-salesProvis./losses on bad debtPre-tax profitCash flow

-5 to -10% (invoiced)DKK 20mBreak-even+ 2-3% of revenues

-16% (invoiced)DKK 30.5mLoss of DKK 29.6mDKK -48.1m (∼5%)

InvestmentsNet chg. # Brand Stores

DKK 20mNet reduction of 10-20

DKK 38.7m+23

Attractive long-term investment case with upside potential as market gradually improveupside potential as market gradually improve

BoConcept's franchise model, concept and core competencies remains attractive for both customers and franchisees

- Solid market position in high end of global middle market- Attractive franchise model has proven its sustainability and comes out even stronger

after having been fine-tuned during the financial crisis

Restructuring initiatives to counteract impact from global recession has imp o ed efficienc esto ed path to p ofitabilit st engthened capital base and improved efficiency, restored path to profitability, strengthened capital base and reduced operational and financial risks

As market conditions improve, BoConcept will take advantage of favorable position to utilize post crisis business opportunities grow same store sales and position to utilize post-crisis business opportunities, grow same-store-sales and the number of stores

Growth is not capital intensive, and BoConcept will therefore operate an asset light model with a target equity ratio of 30 40% and an aligned dividend policylight model with a target equity ratio of 30-40% and an aligned dividend policy

BoConcept's long term objective is to deliver an EBIT-margin of 12% and a cash flow of at least 6% of revenues

THANK YOU FOR YOUR TIME

For further information visit our website

www.boconcept.com