Indonesia’s Most Preferred Department Store 1
Matahari Department Store
Earnings call: April 30, 2014
Q1 2014 Results Update
Key Highlights Q1 2014
Financial Update
Summary
Indonesia’s Most Preferred Department Store 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
Key Highlights Q1 2014
4
2,372 2,677 Q113 Q114 IDR Bn Gross Sales SSSG 9.3% 297 335 Q113 Q114 IDR Bn Adjusted EBITDA
Adjusted EBITDA Margin
12.5% 82 123 Q113 Q114 IDR Bn Net Income* 3.5%
Net Income Margin
4.6% 13.2%
Financial Snapshot Q1 2014
12.5%
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
CV 68.0% DP
32.0%
CV 65.6% DP
34.4%
CV 68.4% DP
31.6%
Q114
No new stores scheduled in Q1 2014
Up to Mar 2014
East Java
16 stores (9 cities)
Sumatra
20 stores (11 cities)
Kalimantan, Bali and East Indonesia
West Java
11 stores (7 cities)
Greater Jakarta
35 stores (11 cities)
Central Java
17 stores (8 cities)
26 stores (15 cities)
MDS Store Overview
No. of Stores
As of 31 Dec 2013 125
Added up to March 2014 0
Total at March 2014 125
o Forecasting 69,000 sqm to 83,000 sqm of additional space from 10 – 12 new stores, along with 10,000m2-18000m2 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
10-12 new stores in 2014, plus up to 18,000 m
2in store expansions
8
# 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%
Total 125 100.0% 125 100.0% 81 100.0%
Indonesia’s Most Preferred Department Store 9
Financial Update
Strong sales growth
IDR Bn
Q1 2014 delivered a 12.9% sales growth
Strong same store sales growth in Q1 2014
SSSG %
SSSG for Q1 2014 remained strong, building on the 13.2% SSSG LY
13.2%
9.3%
Q113 Q114
11.1%
12.1%
FY12 FY13
Average 11.6%
17.2% 17.7%
FY12 FY13
Adjusted Opex(1) as a % of Gross Sales
Expenses came in lower than planned, with stores offsetting
labor cost increases with operational efficiencies
Note
1. Opex calculated as Adjusted Gross Profit less Adjusted EBITDA
21.0% 21.8%
Q113 Q114
12
17.1% 17.1%
Q113 Q114
Comp store
Total Company
17.1 % 17.1 %
1,819 2,096 FY12 FY13 297 335 200 270 340 410 480 550 Q113 Q114
Adjusted EBITDA and Margins
IDR Bn
EBITDA grew by 12.8% in Q1 2014, equivalent to 12.5% sales
Adjusted EBITDA as a % of Gross Sales
12.5%
12.5% 16.7% 16.5%
771
1,150
FY12 FY13
82
123
Q113 Q114
Net Profit and Margins
Q1 2014 net profit increased 49.7% over Q1 2013
IDR Bn
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))
4.6%
3.5% 7.1%
9.0%
12.8% 11.0% 0.0% 5.0% 10.0% 15.0%
Existing loan New Facility
2,959
1,596 1,503
2012 2013 Q114
Total Debt and Interest Expense
Existing debt will be refinanced with a new loan facility, with more favorable terms
The new facility is planned to be drawn down in June
The term is for 2 years, with no prepayment penalties
Interest margin on the new facility is JIBOR +3%, an improvement of 175bps over the
existing facility
EGM to approve the grant of security to lenders under the new facility will be held on June 2,
2014
Commentary
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
Total Debt Interest rate
Outstanding debt will be refinanced at a lower interest margin
JIBOR+4.75%
JIBOR+3.00%
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
Strong comp performance across geographic regions
Q1 2013 Q1. 2014
Gross Sales 2,372.4 2,677.4
SSSG 13.2% 9.3%
Growth 18.3% 12.9%
Net Revenue 1,257.2 1,479.7
Growth 21.6% 17.7%
Adjusted Gross Profit 794.0 919.4
Margin 33.5% 34.3%
Adjusted EBITDAR 486.1 550.5
Margin 20.5% 20.6%
Adjusted EBITDA 296.8 334.8
Margin 12.5% 12.5%
Profit before tax 138.1 181.5
Margin 5.8% 6.8%
Net Profit 82.2 123.1
Margin 3.5% 4.6%
growth 82.9% 49.7%
IDR Bn
Key Profit & Loss Items
Financial Summary
Indonesia’s Most Preferred Department Store 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
Summary
Indonesia’s Most Preferred Department Store 20
End of Presentation
Indonesia’s Most Preferred Department Store 21
Appendix : Refinancing
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.
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”).
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