BoConcept Holding AS Annual Report 200607

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• BoConcept Holding A/SAnnual Report 2006/07

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Agenda

• Introduction to BoConcept
• Financial developments in 2006/07
• Markets, concept and strategy
• Long term targets and 2007/08 Guidance
• QA

ContactsViggo Mølholm, CEO Hans Barslund, EVP
CFOE-mail vm_at_boconcept.com E-mail
hb_at_boconcept.com
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Historical development

• Phase I (1952-1992)
• From carpenter to furniture manufacturer
• Phase II (1993-2003)
• Furniture production and own franchise based
  retail chain
• Phase III (2004-)
• Retail oriented concept holder / international
  marketing and logistics business with furniture
  production
• BPR and implementation of focused business plan
• Optimising distribution setup, upgrading and
  trimming Store-portfolio as well as divesting
  subsidiaries and non-core areas
• One company One brand One distribution
  channel
• Vision To make BoConcept no. 1 brand within
  urban interiors

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Today's BoConcept at a glance

• International retail-oriented concept holder
  within furniture and lifestyle products for
  private homes
• Following a turn-around and restructuring process
  focus is now purely on development, support and
  supply to the global individually run
  franchise-based retail chain, BoConcept
• 193 BoConcept Brand Stores
• Most important sales channel
• 400-800 m2 individual operated franchise stores
• High-traffic locations
• Only BoConcept products are sold
• 148 BoConcept Studios
• 100-400 m2 shop-in-shops
• BoConcept's products supplement other brands and
  products
• Brand Stores and Studios in 45 countries
  throughout the world
• Core competencies
• Design and branding
• Best practice in retail and sales processes
• Supply Chain Management and sourcing
• Production of board furniture

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5 years of strong financial performance
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Shareholder information

• From July 2007 member of MidCap on OMX
  Copenhagen Stock Exchange
• Liquidity continues to increase trade volume up
  32 (1Y)
• 240,000 A-shares / 2,360,000 B-shares
• 800 registered shareholders
• Free float approx. 75
• Mcap approx. DKK 1,300m (B-shares)
• Dividend proposal for 2006/07 DKK 2 per share of
  DKK 10 nom.

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Financial developments in 2006/07

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Continued solid top-line performance

• Revenues at DKK 1,047m up 17.7 YoY
• Marginally lower than expected (approx. 20) due
  to very strong 4Q2005/06, postponements in
  openings and below-expectations growth in the US
• Growth in same store sale at 9
• Net addition of 30 Brand Stores and 4 Studios
  during the year
• Strategic focus on Brand Stores as primary growth
  driver
• Sales up 45 in the channel (76 of total
  revenues)
• Product customers continues to diminish as
  planned (down 42 YoY)

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Further execution of the strategic gameplan

• Taking measures to secure delivery and service
• In 1H2006/07 problems occurred due to large
  product replacement, heavy order intake and low
  inventories
• To solve, production capacity and inventories
  were increased
• Strong managerial focus on cost-efficiency and
  building on core-competencies
• Further outsourcing of upholstery products to
  China
• Danish upholstery production plant closed
  future production to European market will be
  sourced from strategic partnership with
  Lithuanian manufacturer
• BoConcept's wood component production unit in
  Lithuania sold

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Profit improvements carry on

• Gross margin reduced from 41.4 to 40.6
• Gross margin declines as hikes on raw material,
  energy and labour can not be transferred to
  product prices in short term (new prices fixed
  from Sept. 2007)
• EBIT-margin up from 4.1 to 6.6 (6.0 expected)
• Economy of scale
• Continued upturning trend as effects of cost
  control and focus on SCM pays off
• PTP at DKK 61.7m (expected DKK 55-60m) - up DKK
  34m YoY and slightly better than expected

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Investments in expansion and inventories

• Balance sheet increased by DKK 47.6m to DKK
  546.9m during the year
• Investments made in inventories due to strong
  demand
• Acq. of 3 Brand Stores in the US
• Opening of own Brand Store in Tokyo
• Increased receivables caused by high activity
• NIBD reduced to DKK 183m
• Shareholder equity at DKK 148m corresponding to
  an equity ratio of 27

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also impact cash flow

• Cash flow before instalments on non-current debt
  items comes in at DKK 25.7m (min. DKK 10m
  expected)
• Impacted by
• Acq./opening of own Brand Stores
• Hike in inventories

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Markets, concept and strategy

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CUSTOMISEDURBAN DESIGN
OUR BRAND SOULthe most singular way to describe
our brand

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Global mega-trend is driving demand

• The urban city is today's ultimate mega-trend
• Metropolises are growing as people across the
  world are settling down in big cities or
  duplicating the life and lifestyles in these
• With metropolises increasing in numbers and size,
  the market for customised designed furniture is
  expanding rapidly
• The market is moving from traditional to modern
• BoConcept is exceptionally positioned to take
  advantage of the marked drivers
• Global concept and presence
• One global style

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Updated identity as platform for future growth
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Moving up in the competitive landscape

• BoConcept's concept is truly global
• BoConcept's products are the most commercial and
  coordinated on the market in terms of design
• BoConcept's primary target group consists of
  brand-oriented trendsetters who want reasonable
  priced designer furniture

HIGH PRICE
HIGH PRICE
Rochebobois
Rochebobois
Lignet
Roset
Lignet
Roset
Natuzzi
Natuzzi
Heals
Heals
Crate Barrel
Crate Barrel
Habitat
Habitat
Bolia
Bolia
Ilva
Ilva
LOW IMAGE
HIGH IMAGE
LOW IMAGE
HIGH IMAGE
IDEm
ø
bler
IDEm
ø
bler
DFS
DFS
Better quality
Better quality
Argos
IKEA
Argos
IKEA
at same price
at same price
Jysk
Jysk
More m2 used on
More m2 used on
high
-
end products
high
-
end products
Hyper Markets
Hyper Markets
LOW PRICE
LOW PRICE
Source BoConcept
Source BoConcept
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Attractive franchise concept

• Very attractive franchise model built on
  centralised marketing, distribution, support and
  conceptual development
• BoConcept is the sole supplier and delivers a
  complete range of products, accessories and shop
  fixtures to BoConcept Brand Stores and Studios
• Store strategy aims at
• Considerable expansion of Brand Stores in
  excellent locations
• Increasing same store sale, hit rate and basket
  size
• Offering customers an exceptional shopping
  experience

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Scaling up in channels and markets

• Net-addition of 30 Brand Stores (42 opened, 12
  closed) and 4 Studios (32 opened, 28 closed) in
  2006/07
• In total 17 Brand Stores are currently owned by
  BoConcept
• Are to be divested as it is not the companys
  long term strategy to have a Brand Store
  portfolio
• Focus on 10 main markets
• Market dispersal helps to minimise cyclical
  sensitivity

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Production and Supply Chain optimisation
continues at undiminished strength

• Strong focus on SCM and production optimisation
  as value driving vehicles
• Own production of board furniture in DK all
  other production is sourced (primarily from
  Eastern Europe and China)
• Distribution centres in Ølgod (DK), Bayonne (US)
  and Tokyo (JPN)
• Own production continuously measured on same
  metrics as external suppliers so secure
  competitive position and profitability
• Future capacity expansion by increasing
  outsourcing of inventories and distribution
  planned
• 60 of the total production is sourced thus
  number is expected to increase

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Growth strategy with focus on further improving
profitability to be continued

• Focus in all parts of the company is on
  maximising positive customer experience
• Organic growth to be realised via
• Optimising same store sale by further investments
  in education of sales staff and focused
  development of shop and product concepts
  (BoConcept University and BiC)
• Considerably grow number of Brand Stores on main
  markets(35-50 net additions p.a.)
• Product customers to be phased out by 2008/09
• Increased sourcing and improved productivity in
  own production to maintain gross margin
• Introduction of best practise tools to make
  supply chain costs flexible and dependable on
  demand
• Economy of scale in additional sales to further
  grow EBIT-margin
• Limited investments in non-current assets as
  growth is not capital intensive

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Long term targets and2007/08 Guidance

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Long term targets upgraded

• Old targets (2008/09)
• EBIT-margin min. 10
• ROCE min. 20
• Cash flow min. 4 of revenues
• 500 sales units of which min. 300 Brand Stores by
  2010/11

• New targets (2010/11)
• Revenues of DKK 2bn
• EBIT-margin min. 12
• ROCE min. 30
• Cash flow min. 6 of revenues
• 500 sales units of which min. 350 Brand Stores

• Current status
• RevenuesDKK 1,047m
• EBIT-margin 6.6
• ROCE 14
• Cash flow2.5 of revenues
• 341 sales units of which 193 Brand Stores

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2007/08 Guidance

• Operations
• 15-20 growth in revenues (continued businesses)
• Same store sale to increase due to focus and
  support
• Revenues from product customers will drop
  considerably
• Increased productivity and effects of plant
  closings and divestments will improve EBIT-margin
  to 8
• Pre-tax profit between expected in the range DKK
  85-95m
• of Brand Stores
• Net addition of 30-40 Brand Stores
• CAPEX and cash flow
• Investments in non-current assets of DKK 40-45m
  (well above previous years' level)
• Cash flow before instalments on non-current debt
  items expected to reach a minimum of DKK 35m

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In summary

• 2006/07 a successful and reassuring year for
  BoConcept proving the feasibility of our vision
• BoConcept's concept and design perfectly aligned
  with global mega-trend
• Business model, strategy and organisation updated
  and fully in place to take advantage of core
  competencies and previous refocusing efforts
• Ambitious plan launched road to steep and
  profitable non- capital-intensive growth paved

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QA

• For further information visit us at
• www.boconcept.com