Earnings slides 30 April 2014
Matahari Department Store
Q1 2014 Results Update
Earnings call: April 30, 2014
Indonesia’s Most Preferred Department Store
1
1
Key Highlights Q1 2014
Financial Update
Summary
2
Key Highlights Q1 2014
Indonesia’s Most Preferred Department Store
3
3
Key Highlights Q1 2014
• Net income increased by 49.7% to Rp123.1 bn
• Adjusted net income* was Rp151.3 bn, up 84.0%
• Total gross sales were Rp2,677 bn, 12.9% over Q113
• Achieved comp store sales growth of 9.3%
• Merchandise gross margin grew 15.8% to Rp919.4 bn, improving 80 bps
• Adjusted EBITDA was 12.8% over LY, at 12.5% of gross sales
*Net income before non-recurring expense related to prior years of Rp 28.1 bn
4
Financial Snapshot Q1 2014
Gross Sales
Adjusted EBITDA
Net Income*
IDR Bn
IDR Bn
IDR Bn
123
2,677
2,372
82
335
297
13.2%
9.3%
3.5%
Q113
Q114
SSSG
12.5%
12.5%
Q113
Q114
Adjusted EBITDA Margin
Q113
4.6%
Q114
Net Income Margin
*Adjusted net income increased by 84.0%
5
MDS’s exclusive brands continue to deliver strong performance
DP accounted for 34.4% of gross sales in Q1 2014, as compared to 32.0% in FY 2013
% of Gross Sales
FY13
Q113
Q114
DP
31.6%
DP
32.0%
CV
68.0%
DP
34.4%
CV
68.4%
CV
65.6%
6
No new stores scheduled in Q1 2014
Up to Mar 2014
MDS Store Overview
No. of Stores
Kalimantan, Bali and East
Indonesia
26 stores (15 cities)
Sumatra
20 stores (11 cities)
As of 31 Dec 2013
Added up to March 2014
Total at March 2014
125
0
125
Greater Jakarta
35 stores (11 cities)
West Java
11 stores (7 cities)
Central Java
17 stores (8 cities)
East Java
16 stores (9 cities)
7
10-12 new stores in 2014, plus up to 18,000 m2 in store expansions
o Forecasting 69,000 sqm to 83,000 sqm of additional space from 10 – 12 new stores, along with 10,000m218000m2 in existing store expansions
o Q2 confirmed:
St. Moritz Jakarta (9,867 sqm) and Borneo city mall, Sampit Kalimantan (5,000 sqm)
10,300 sqm in space expansions
o Balance of the year:
Forecasting 8 – 10 additional stores for Q3 and Q4, with average size of 6,800 sqm
Forecasting up to an additional 8,000 sqm in existing store expansions
No
Geographic area
As at 31 Dec 2013
As at 31 Mar 2014
Future Pipeline 2014 onwards
# of stores
% mix
# of stores
% mix
# of stores
% mix
1
Jabodetabek (Greater Jakarta)
35
28.0%
35
28.0%
19
23.5%
2
Java (Exc Greater Jakarta)
44
35.2%
44
35.2%
18
22.2%
3
Outside Java
46
36.8%
46
36.8%
44
54.3%
125
100.0%
125
100.0%
81
100.0%
Total
8
Financial Update
Indonesia’s Most Preferred Department Store
9
9
Q1 2014 delivered a 12.9% sales growth
Strong sales growth
IDR Bn
7,000
12,735
6,000
10,867
5,000
10,000
4,000
3,000
5,000
2,372
2,677
2,000
1,000
2012
2013
Q113
Q114
10
SSSG for Q1 2014 remained strong, building on the 13.2% SSSG LY
Strong same store sales growth in Q1 2014
SSSG %
12.1%
13.2%
Average 11.6%
11.1%
9.3%
FY12
FY13
Q113
Q114
11
Expenses came in lower than planned, with stores offsetting
labor cost increases with operational efficiencies
Adjusted Opex(1) as a % of Gross Sales
17.1
%
17.1%
17.1
%
17.1%
Comp store
17.2%
17.7%
Q113
21.0
%
21.0%
Q114
21.8
%
21.8%
Total Company
FY12
FY13
Q113
Q114
Note
1. Opex calculated as Adjusted Gross Profit less Adjusted EBITDA
12
EBITDA grew by 12.8% in Q1 2014, equivalent to 12.5% sales
Adjusted EBITDA and Margins
IDR Bn
2,096
550
1,819
480
410
16.7%
16.5%
335
340
297
270
12.5%
12.5%
FY12
FY13
200
Q113
Q114
Adjusted EBITDA as a % of Gross Sales
13
Q1 2014 net profit increased 49.7% over Q1 2013
Net Profit and Margins
IDR Bn
1,150
123
771
9.0%
82
7.1%
4.6%
3.5%
FY12
FY13
Q113
Q114
Net Profit as a % of Gross Sales
Note
Effective Q3 2013 the company is using a base tax rate of 20% per regulation no. 238/PMK.03/2008 dated 30 December 2008. (See FS note 2 (q))
14
Outstanding debt will be refinanced at a lower interest margin
Total Debt and Interest Expense
Commentary
Interest rate
Total Debt
Existing debt will be refinanced with a new loan
facility, with more favorable terms
15.0%
The new facility is planned to be drawn down in
JIBOR+4.75%
12.8%
2,959
JIBOR+3.00%
11.0%
10.0%
June
The term is for 2 years, with no prepayment
penalties
1,596
Interest margin on the new facility is JIBOR
1,503 5.0%
+3%, an improvement of 175bps over the
existing facility
0.0%
2012
2013
Q114
Existing loan
New Facility
EGM to approve the grant of security to lenders
under the new facility will be held on June 2,
2014
Notes
1. Effective interest rate is computed by dividing interest expense (excluding amortization of upfront fees) during the relevant period by beginning gross debt of the relevant period
2. Total debt comprises of the bank loan, revolving facility, less unamortized upfront fee
15
Strong comp performance across geographic regions
Sales Growth and SSSG by region – Q1 2014
Geographic Area
Stores as at
Mar 2014
Store Mix
% to Total
Sales
(IDR Bn)
Total Sales
% growth
SSSG%
Greater Jakarta
35
28.0
802.3
10.3
6.6
Java exclude Greater Jakarta
44
35.2
847.7
14.8
13.2
Outside Java
46
36.8
1,027.4
13.4
8.3
Total
125
100.0
2,677.4
12.9
9.3
16
Financial Summary
Key Profit & Loss Items
IDR Bn
Q1 2013
Q1. 2014
2,372.4
2,677.4
SSSG
13.2%
9.3%
Growth
18.3%
12.9%
1,257.2
1,479.7
21.6%
17.7%
794.0
919.4
33.5%
34.3%
486.1
550.5
20.5%
20.6%
296.8
334.8
Margin
12.5%
12.5%
Profit before tax
138.1
181.5
Margin
5.8%
6.8%
82.2
123.1
Margin
3.5%
4.6%
growth
82.9%
49.7%
Gross Sales
Net Revenue
Growth
Adjusted Gross Profit
Margin
Adjusted EBITDAR
Margin
Adjusted EBITDA
Net Profit
17
Summary
Indonesia’s Most Preferred Department Store
18
18
Summary
Q1 continues to show strong consumer demand, driving both sales and
earnings growth
Gross margin improvements achieved in both Direct Purchase and
Consignment goods
Store expenses higher than last year, but trending below management
forecasts due to internal operating efficiencies
Refinancing of debt to lower interest margins will not effect plans to
continue accelerate prepayments where appropriate
19
End of Presentation
Indonesia’s Most Preferred Department Store
20
20
Appendix : Refinancing
Indonesia’s Most Preferred Department Store
21
21
Executive Summary
We are pleased to announce the signing of a new Facilities Agreement between PT Matahari
Department Store Tbk ("MDS") and the banking group comprising of PT Bank BNP Paribas
Indonesia and PT Bank CIMB Niaga Tbk.
The facilities comprise a Rp1,650 bn of term loan and a Rp230 bn of revolving credit facility
The new facilities will be primarily used to repay existing indebtedness, with flexibility for MDS to
use the remaining amounts to fund working capital and capex.
The new facilities allow MDS to lower its interest expense and commitment fees, while improving
the Company's flexibility through the removal of excess cash sweep and other mandatory
prepayments.
The improved interest margin (4.75% margin over JIBOR to 3.00%) and commitment fee (1.00%
to 0.75%) reflects the strength of MDS's credit and its access to local and international banking
and capital markets.
MDS continues to focus on optimising earnings growth through operational growth and
deleveraging.
Summary of Key Terms of the New Debt Facilities
Facilities:
Rp1,650 bn Term Facility + Rp230 bn Revolving Credit Facility
Interest Margin:
JIBOR + 300 bps (vs. JIBOR + 475 bps under existing facilities)
Commitment Fees:
0.75% (vs. 1.00% under existing facilities)
Upfront Fees:
1.00% of the aggregate amount of term and revolving credit facilities
Repayment Schedule:
2 Year Maturity - Term Facility to be repaid in instalments of 25% of drawn amounts on
the dates falling 6, 12, 18 and 24 months after the date of the initial drawdown
Mandatory Prepayment:
Cash sweep of 30% of Excess Cashflow under existing facilities as well as mandatory
prepayment under asset disposal and receipt of insurance proceeds have been
removed.
Financial Covenants:
• Net debt to consolidated EBITDA less than 1.5x for December 2014 testing and 1.0x
thereafter
• Debt service coverage ratio including beginning cash covenant higher than 1.30x, an
improvement from 1.40x under existing facilities.
Shareholder Approval
MDS will grant security to the new banking group, which includes security over MDS's intellectual
property rights, bank accounts, receivables and tangible assets, similar to the security package
provided by MDS to lenders under the existing facilities agreement.
The provision is subject to shareholder approval, which will be obtained through an extraordinary
general meeting of shareholders (“EGM”).
The EGM is scheduled to take place on June 2, 2014 at 2:00pm at the Aryaduta Hotel Jakarta.
Shareholders can contact IR@matahari.co.id to make arrangements to vote via proxy.
End
25
25
Q1 2014 Results Update
Earnings call: April 30, 2014
Indonesia’s Most Preferred Department Store
1
1
Key Highlights Q1 2014
Financial Update
Summary
2
Key Highlights Q1 2014
Indonesia’s Most Preferred Department Store
3
3
Key Highlights Q1 2014
• Net income increased by 49.7% to Rp123.1 bn
• Adjusted net income* was Rp151.3 bn, up 84.0%
• Total gross sales were Rp2,677 bn, 12.9% over Q113
• Achieved comp store sales growth of 9.3%
• Merchandise gross margin grew 15.8% to Rp919.4 bn, improving 80 bps
• Adjusted EBITDA was 12.8% over LY, at 12.5% of gross sales
*Net income before non-recurring expense related to prior years of Rp 28.1 bn
4
Financial Snapshot Q1 2014
Gross Sales
Adjusted EBITDA
Net Income*
IDR Bn
IDR Bn
IDR Bn
123
2,677
2,372
82
335
297
13.2%
9.3%
3.5%
Q113
Q114
SSSG
12.5%
12.5%
Q113
Q114
Adjusted EBITDA Margin
Q113
4.6%
Q114
Net Income Margin
*Adjusted net income increased by 84.0%
5
MDS’s exclusive brands continue to deliver strong performance
DP accounted for 34.4% of gross sales in Q1 2014, as compared to 32.0% in FY 2013
% of Gross Sales
FY13
Q113
Q114
DP
31.6%
DP
32.0%
CV
68.0%
DP
34.4%
CV
68.4%
CV
65.6%
6
No new stores scheduled in Q1 2014
Up to Mar 2014
MDS Store Overview
No. of Stores
Kalimantan, Bali and East
Indonesia
26 stores (15 cities)
Sumatra
20 stores (11 cities)
As of 31 Dec 2013
Added up to March 2014
Total at March 2014
125
0
125
Greater Jakarta
35 stores (11 cities)
West Java
11 stores (7 cities)
Central Java
17 stores (8 cities)
East Java
16 stores (9 cities)
7
10-12 new stores in 2014, plus up to 18,000 m2 in store expansions
o Forecasting 69,000 sqm to 83,000 sqm of additional space from 10 – 12 new stores, along with 10,000m218000m2 in existing store expansions
o Q2 confirmed:
St. Moritz Jakarta (9,867 sqm) and Borneo city mall, Sampit Kalimantan (5,000 sqm)
10,300 sqm in space expansions
o Balance of the year:
Forecasting 8 – 10 additional stores for Q3 and Q4, with average size of 6,800 sqm
Forecasting up to an additional 8,000 sqm in existing store expansions
No
Geographic area
As at 31 Dec 2013
As at 31 Mar 2014
Future Pipeline 2014 onwards
# of stores
% mix
# of stores
% mix
# of stores
% mix
1
Jabodetabek (Greater Jakarta)
35
28.0%
35
28.0%
19
23.5%
2
Java (Exc Greater Jakarta)
44
35.2%
44
35.2%
18
22.2%
3
Outside Java
46
36.8%
46
36.8%
44
54.3%
125
100.0%
125
100.0%
81
100.0%
Total
8
Financial Update
Indonesia’s Most Preferred Department Store
9
9
Q1 2014 delivered a 12.9% sales growth
Strong sales growth
IDR Bn
7,000
12,735
6,000
10,867
5,000
10,000
4,000
3,000
5,000
2,372
2,677
2,000
1,000
2012
2013
Q113
Q114
10
SSSG for Q1 2014 remained strong, building on the 13.2% SSSG LY
Strong same store sales growth in Q1 2014
SSSG %
12.1%
13.2%
Average 11.6%
11.1%
9.3%
FY12
FY13
Q113
Q114
11
Expenses came in lower than planned, with stores offsetting
labor cost increases with operational efficiencies
Adjusted Opex(1) as a % of Gross Sales
17.1
%
17.1%
17.1
%
17.1%
Comp store
17.2%
17.7%
Q113
21.0
%
21.0%
Q114
21.8
%
21.8%
Total Company
FY12
FY13
Q113
Q114
Note
1. Opex calculated as Adjusted Gross Profit less Adjusted EBITDA
12
EBITDA grew by 12.8% in Q1 2014, equivalent to 12.5% sales
Adjusted EBITDA and Margins
IDR Bn
2,096
550
1,819
480
410
16.7%
16.5%
335
340
297
270
12.5%
12.5%
FY12
FY13
200
Q113
Q114
Adjusted EBITDA as a % of Gross Sales
13
Q1 2014 net profit increased 49.7% over Q1 2013
Net Profit and Margins
IDR Bn
1,150
123
771
9.0%
82
7.1%
4.6%
3.5%
FY12
FY13
Q113
Q114
Net Profit as a % of Gross Sales
Note
Effective Q3 2013 the company is using a base tax rate of 20% per regulation no. 238/PMK.03/2008 dated 30 December 2008. (See FS note 2 (q))
14
Outstanding debt will be refinanced at a lower interest margin
Total Debt and Interest Expense
Commentary
Interest rate
Total Debt
Existing debt will be refinanced with a new loan
facility, with more favorable terms
15.0%
The new facility is planned to be drawn down in
JIBOR+4.75%
12.8%
2,959
JIBOR+3.00%
11.0%
10.0%
June
The term is for 2 years, with no prepayment
penalties
1,596
Interest margin on the new facility is JIBOR
1,503 5.0%
+3%, an improvement of 175bps over the
existing facility
0.0%
2012
2013
Q114
Existing loan
New Facility
EGM to approve the grant of security to lenders
under the new facility will be held on June 2,
2014
Notes
1. Effective interest rate is computed by dividing interest expense (excluding amortization of upfront fees) during the relevant period by beginning gross debt of the relevant period
2. Total debt comprises of the bank loan, revolving facility, less unamortized upfront fee
15
Strong comp performance across geographic regions
Sales Growth and SSSG by region – Q1 2014
Geographic Area
Stores as at
Mar 2014
Store Mix
% to Total
Sales
(IDR Bn)
Total Sales
% growth
SSSG%
Greater Jakarta
35
28.0
802.3
10.3
6.6
Java exclude Greater Jakarta
44
35.2
847.7
14.8
13.2
Outside Java
46
36.8
1,027.4
13.4
8.3
Total
125
100.0
2,677.4
12.9
9.3
16
Financial Summary
Key Profit & Loss Items
IDR Bn
Q1 2013
Q1. 2014
2,372.4
2,677.4
SSSG
13.2%
9.3%
Growth
18.3%
12.9%
1,257.2
1,479.7
21.6%
17.7%
794.0
919.4
33.5%
34.3%
486.1
550.5
20.5%
20.6%
296.8
334.8
Margin
12.5%
12.5%
Profit before tax
138.1
181.5
Margin
5.8%
6.8%
82.2
123.1
Margin
3.5%
4.6%
growth
82.9%
49.7%
Gross Sales
Net Revenue
Growth
Adjusted Gross Profit
Margin
Adjusted EBITDAR
Margin
Adjusted EBITDA
Net Profit
17
Summary
Indonesia’s Most Preferred Department Store
18
18
Summary
Q1 continues to show strong consumer demand, driving both sales and
earnings growth
Gross margin improvements achieved in both Direct Purchase and
Consignment goods
Store expenses higher than last year, but trending below management
forecasts due to internal operating efficiencies
Refinancing of debt to lower interest margins will not effect plans to
continue accelerate prepayments where appropriate
19
End of Presentation
Indonesia’s Most Preferred Department Store
20
20
Appendix : Refinancing
Indonesia’s Most Preferred Department Store
21
21
Executive Summary
We are pleased to announce the signing of a new Facilities Agreement between PT Matahari
Department Store Tbk ("MDS") and the banking group comprising of PT Bank BNP Paribas
Indonesia and PT Bank CIMB Niaga Tbk.
The facilities comprise a Rp1,650 bn of term loan and a Rp230 bn of revolving credit facility
The new facilities will be primarily used to repay existing indebtedness, with flexibility for MDS to
use the remaining amounts to fund working capital and capex.
The new facilities allow MDS to lower its interest expense and commitment fees, while improving
the Company's flexibility through the removal of excess cash sweep and other mandatory
prepayments.
The improved interest margin (4.75% margin over JIBOR to 3.00%) and commitment fee (1.00%
to 0.75%) reflects the strength of MDS's credit and its access to local and international banking
and capital markets.
MDS continues to focus on optimising earnings growth through operational growth and
deleveraging.
Summary of Key Terms of the New Debt Facilities
Facilities:
Rp1,650 bn Term Facility + Rp230 bn Revolving Credit Facility
Interest Margin:
JIBOR + 300 bps (vs. JIBOR + 475 bps under existing facilities)
Commitment Fees:
0.75% (vs. 1.00% under existing facilities)
Upfront Fees:
1.00% of the aggregate amount of term and revolving credit facilities
Repayment Schedule:
2 Year Maturity - Term Facility to be repaid in instalments of 25% of drawn amounts on
the dates falling 6, 12, 18 and 24 months after the date of the initial drawdown
Mandatory Prepayment:
Cash sweep of 30% of Excess Cashflow under existing facilities as well as mandatory
prepayment under asset disposal and receipt of insurance proceeds have been
removed.
Financial Covenants:
• Net debt to consolidated EBITDA less than 1.5x for December 2014 testing and 1.0x
thereafter
• Debt service coverage ratio including beginning cash covenant higher than 1.30x, an
improvement from 1.40x under existing facilities.
Shareholder Approval
MDS will grant security to the new banking group, which includes security over MDS's intellectual
property rights, bank accounts, receivables and tangible assets, similar to the security package
provided by MDS to lenders under the existing facilities agreement.
The provision is subject to shareholder approval, which will be obtained through an extraordinary
general meeting of shareholders (“EGM”).
The EGM is scheduled to take place on June 2, 2014 at 2:00pm at the Aryaduta Hotel Jakarta.
Shareholders can contact IR@matahari.co.id to make arrangements to vote via proxy.
End
25
25