Interim report – H1 2016/17

Matas A/S
Half Year financial report

Interim report – H1 2016/17

Company announcement no. 28 2016/17

Allerød, 2016-11-09 07:47 CET (GLOBE NEWSWIRE) -- Weak revenue and profit
performance – guidance revised 

Q2 2016/17 revenue was DKK 771.6 million, representing a 1.5% year-on-year
decrease. H1 2016/17 revenue was DKK 1,619.7 million. The underlying
like-for-like store-sales growth rate was minus 1.5% in Q2 2016/17. The
like-for-like growth rate for H1 2016/17 was 0.8%. 

EBITA was DKK 97.5 million in Q2 2016/17, equivalent to an EBITA margin of
12.6%, down from 15.7% in the year-earlier period. EBITA for H1 2016/17 was DKK
234.4 million, representing an EBITA margin of 14.5%. 

The guidance for 2016/17 has been revised. Matas now expects like-for-like
revenue growth to be 0 - 2% and an EBITA margin of around 16%. 

Statement by Terje List, Chief Executive Officer: “Our Q2 revenue and profit
performance was unsatisfactory. The main reasons were growing competition
within mass beauty products and higher strategy implementation costs. At the
same time, we are seeing a positive development in high-end beauty and the
Vital area and strong growth in online sales. The new store concept and the new
version of Club Matas are also performing well. 

Despite the upcoming Christmas season and more business days in Q4 2016/17, we
revise our full-year guidance. In order to strengthen our market position, also
in the short term, we will further sharpen our strategy in terms of activities
targeting sales growth and increased earnings. In this connection, we are
initiating a cost cutting programme in the range of DKK 25 - 30 million. The
programme will be phased in during Q4 2016/17 to take full effect from Q1

§   Q2 2016/17 revenue was down by 1.5% year on year to DKK 771.6 million. The
like-for-like growth rate for Q2 was minus 1.5%. Revenue for H1 2016/17 was DKK
1,619.7 million, representing like-for-like growth of 0.8% on the year-earlier

§   Q2 2016/17 gross profit was DKK 361.9 million, equivalent to a gross margin
of 46.9%, which was on a level with Q2 2015/16. Gross profit for H1 2016/17 was
DKK 763.0 million, representing a gross margin of 47.1%, up from 46.8% in the
year-earlier period. 

§   EBITA was DKK 97.5 million in Q2 2016/17, equivalent to an EBITA margin of
12.6%, down from 15.7% in Q2 2015/16. EBITA was adversely affected by increased
payroll costs, especially at head office, in connection with the execution of
Matas’s strategic initiatives, general salary increases, a small increase in
the number of staff in the stores, partly as a consequence of the acquisition
of stores and costs of DKK 6.6 million in connection with changes to an option
programme. EBITA for H1 2016/17 was DKK 234.4 million (H1 2015/16: DKK 260.7
million). Overall, the EBITA margin for H1 2016/17 was 14.5%, which was
1.7%-point lower than in the year-earlier period. 

§   Profit after tax in Q2 2016/17 was DKK 54.6 million, and adjusted profit
after tax net of amortisation not related to software was DKK 69.4 million (Q2
2015/16: DKK 85.8 million). Adjusted profit after tax for H1 2016/17 was DKK
168.7 million (H1 2015/16: DKK 186.7 million). 

§   Cash generated from operations decreased to DKK 13.1 million in Q2 2016/17
(Q2 2015/16: DKK 44.0 million). The free cash flow in Q2 2016/17 was an outflow
of DKK 21.8 million (Q2 2015/16: an inflow of DKK 18.6 million). 

§   Gross debt stood at DKK 1,766.7 million at 30 September 2016. The target of
a gross debt of DKK 1,600 - 1,800 million remains unchanged. Net
interest-bearing debt was DKK 1,732.1 million at 30 September 2016, equivalent
to 2.8x LTM EBITDA before exceptional items as compared to 2.4x at the end of
Q2 2015/16. 

§   Club Matas continued its net membership growth in Q2 2016/17, retaining its
position as the largest customer club in Denmark. After the summer, the
relaunch of Club Matas was focused on making customers even more aware of the
individualised customer benefits inherent in the programme. 

§   Matas’s webshop continued its high growth rate in the quarter.

§   After the end of the quarter, Matas has opened the first M·A·C shop-in-shop
and the first pharmacy shop-in-shop in the new store in Sønderborg, which is
the largest Matas store in Denmark. 

Outlook for 2016/17

The financial targets for the Group for 2016/17 are as follows:

§ Like-for-like revenue is expected to grow by 0 - 2% (previously 1 - 3%).

§ The EBITA margin is expected to be around 16% (previously slightly below 17%).

§ Investment (CapEx), excluding acquisitions of stores, is expected to be at
the level of DKK 90 - 100 million (unchanged). 

Conference call

Matas will host a conference call for investors and analysts on 9 November at
10:00 a.m. (CET). 

The conference call and presentation will be available on our investor website: 

Conference call access numbers for investors and analysts:

Denmark:             +45 3271 1659

US:                       +1 646 254 3365

UK:                       +44 (0)20 3427 0503

Event code:          8303818 or “Matas”


Terje List                                                                Søren

CEO, tel +45 4816 5555                                       Head of Investor
Relations, tel +45 4816 5548 

Anders T. Skole-Sørensen                                    Henrik Engberg

CFO, tel +45 4816 5555                                       Information
Manager, tel +45 2171 2474