Beter Bed N : Half-year results 2020 (1.30Mb)

2020 H1 Results

July 17th, 2020

Agenda

2020	H1 business	John Kruijssen
2020	H1 financials	Gabrielle Reijnen
Q&A

2

Strong performance in first half with sales growth of +9.9%

Strong H1 2020 sales growth of +9.9% (€103.5M). Order Intake grown by +19.8% to €106.0M

High order intake levels have resulted in a record-level orderbook of €23.5M, creating a buffer for the period to come

Achieved +2% revenue growth in Belgium despite 9 weeks of store closures

Online sales for the group has grown +71.4%, leading to a channel-share of 14.0%, particularly due to a strong performance in Q2 of +115%

Sängjätten has made significant steps towards a better performance

• Further improved sound financial position with extension of currentfinancing-facilities with banks and conversion of shareholder loan including accrued interests into newly issued shares and agreed to decrease the interest rate of the perpetual loan for the next 12 months

The macro-economic, consumer and COVID-19 predictions indicate challenging times are ahead, to mitigate these uncertainties & challenges, we are taking precautionary measures

The shown resilience over the last 2 years, combined with a successful H1 '20, the buffer from an all-time high orderbook and a financially healthy company with access to liquidity if needed, gives us the confidence that we will be able to face the challenges ahead

3

2020 H1 business

2020 H1 financials

Order intake and sales showing strong growth

2019

# of stores	134	27	n/a
# of FTE	806	88	16

	+
	In 8 EU markets
Benelux	New Business
88% of total sales	12% of total sales

3y CAGR	FY19 Sales	FY19 EBITDA
+8.2%	€ 186M	5.1%1

1. Pre IFRS'16 adoption

Current state

# of stores	133	17*	n/a
# of FTE	808	77	17

		+	In 8 EU markets
	Benelux	New Business
89% of total sales	11% of total sales
Q1 OI growth	Q2 OI growth	'20 H1 Sales	'20 H1 EBITDA
-2.0%	49.1%	€104M
H1 OI growth		6.3%1
19.8%	+9.9%

* Own store network; in addition we have 3 franchise stores

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2020 H1 business

2020 H1 financials

Assortment & promos

We have expanded our assortment and ran successful campaigns

Mlily assortment

Box spring lease

Campaigns

Expansion of assortment with products	•New box spring lease pilot live, launch
sourced at HealthCare Co. Ltd.:	planned for July/August
•Bamboo cool - deluxe - mattress and	•Customer pays monthly fee instead of a
pillow	one-off transaction
•Flex cool - deluxe - mattress and pillow	•Lease option currently offered on four box
•Serene - mattress, topper and pillow	springs

• Successful "Sleep as a king" Kingsday campaign
• TEMPUR mattress campaign
• Summer campaignHoliday in your bedroom
• New Mline positioning on TV, radio and online: "topprestaties komen niet vanzelf", with top athletes from various sports

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2020 H1 business

2020 H1 financials

Ecommerce

Ecommerce improvements are boosting online growth

%

Increased campaign effectiveness by creating dashboard for return on advertisement spend (ROAS),ROAS-basedmarketing investments and enhancing advertisement feeds

Improved imageryon website to increase conversion and average selling price

Prioritized assortmentacross categories, bringing focus across category management, marketing and supply chain

Developed Never-Out-Of-Stock and high-speed delivery list to improve

logistics processes for high-priority products

Boosted online experienceby improving product recommendations, A/B testing and platform performance

Advanced 3PP ambitionby creating roadmap towards doubling the business, optimizing SEA/SEO keywords and introducing new products

Created dedicated online P&Lto drive towards profitability more focused

Year-on-year online traffic growth

April & May 2020

150%

100%

50%

0%
Leen Bakker	Dekbed Discounter	Beter Bed
Source: Google Analytics		April		May

Evolution from brick & mortar to omnichannel player
	Beter bed online vs. offline revenue
2016A	2017A	2018A	2019A	2020F

6

2020 H1 business

2020 H1 financials

Performance culture

Performance culture is increasing productivity & performance

Several measures have been taken to improve our performance culture

• Created clarity on job roles & career ladders through new job classification system, moving from 100+task-oriented role descriptions to 25 role families, focused on output, competencies and KPIs
• Established new Beter Bed Academy curriculum directly linked to job roles offering better opportunities for people to be trained & educated
• Improved HR processes & talent recognition

Productivity improvements

Acquired insights into productivity per store and per employee

• Using these insights to optimize the use of labor hours per store and steer on the average purchase value
  Both the order intake per hour and the average purchase value have increased significantly, leading to improved productivity

36 internal	Lowered churn and decreasing absenteeism
Lower absenteeism after March 2020,
promotions	Lower churn
start of COVID-19;

Modules followed: 5144 |Active users: 505	10%
		8%							2019
865	E-learnings	6%
3316	Essentials
187	Podcasts	4%			2020
90	Scans	2%
669	Webinars
17	WE-learnings	0%						Aug
		Jan	Feb	Mar	Apr May	Jun	Jul	Sep Oct	Nov	Dec

4%							2019
3%
2%
1%				2020
0%						Aug
Jan	Feb	Mar	Apr	May Jun	Jul	Sep Oct Nov	Dec

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2020 H1 business

2020 H1 financials

Cost leadership

Improvementinitiatives in procurement and logistics

Reducing cost of goods sold through:

More competitive sourcing:

	•	During COVID-19 many alternative suppliers engaged
	•	Moving from incumbent suppliers towards new suppliers
Sourcing	•	Direct sourcing of textiles
Should costing: defining "should cost prices" based on raw material prices and manufacturing
	costs to increase ability to renegotiate purchase prices and to refine value chain strategies
	Assortment optimization:
	•	Channel specific assortments to allow for tailored pricing while safeguarding margin
	•	Targeted assortment in entry level boxsprings, allowing for higher volume sourcing

Results

Initiatives are leading to a lower cost of goods sold across categories:

• Double-digitreduction of COGS in core textile products
• Single-digitreduction of COGS in core bedding products

		Record level throughput
			in colli per month in '000
	800
Logistics	600		DC3
	DC2
	400
	200			DC1
	0
	1	2	3	4	5	6

Increased productivity

Colli per hour

+17%

2019 Q1

2020 Q1

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2020 H1 business

2020 H1 financials

New business

Sängjätten is stepping up implementation to become profitable

Re-positioning the brand focusing on sleep expertise and customer in- store experience

Omnichannel marketing campaigns including offering a Quality-Sleep

Guarantee

Changed the assortment to include more A-brands and higher quality products, driving healthier margins

Introduced premium partnerships with strategic suppliers

Introduced a franchise store model: 3 stores end of H1 2020

Reduced overhead and logistics costs, impact expected in H2

Driving operational excellence through leaner sales & support structure

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2020 H1 business

2020 H1 financials

New business

DBC H1 performance strong, despite COVID-19 related slowdown

Contract agreed, virtual signing-session to be organized due to COVID-19. First phase of roll-out will take up to one year to be concluded

Changing agreement with Matratzen Concord for Mline Slowmotion 3-6 to a wholesale basis

Mline's first shop in shop in department store Nijhof in Baarn, to be launched in August / September. 100m2 with own personnel amid other high-value brands

Launch of Mline in Loods 5 in September 2020 with 3 bedsystems with option roll out to all 5 stores

International sales: Launch Galaxus Switzerland, Amazon Germany, Wayfair Germany and launch with 10 French dealers

Introduction new Mline Iconic collection July 2020

Strong start of online business through mline.nl and wavebymline.nl

B2B: New hotels (e.g. Amsterdam and Tui Hotels), Ministry of Defense and further roll out Europarcs

Donation Mline mattresses to hospitals in The Netherlands due to COVID-19

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2020 H1 business

2020 H1 financials

Due to the COVID-19 crisis the economic conditions are challenging

The bedding market is generally stable and growingdue to an ageing & growing population and an increasing emphasis on health and lifestyle

The outbreak ofCOVID-19 has a profound negative impact on the economy for the coming1-2years. Luxury goods and the housing market are expected to be affected accordingly

The impact of COVID-19 differs strongly per sector. The retail & wholesalesector in the Netherlands is expected to contract by 7%in 20202

CPB has defined four scenariosregarding potential impact on the Dutch market:

• Quick recovery:rapid shift in employment, catch-up spending and investments
• Base case:recovery from Q3 onwards, but incomplete. Unemployment rate doubles
• Weak recovery:bigger problems abroad and in the financial system lead to a deeper and longer recession
• Second wave:companies are hit by a second wave while their buffers have already been stretched

Impact COVID-19 crisis on Dutch GDP1

105

100

95

90

85

Q4 '19	Q1 '20	Q2 '20	Q3 '20	Q4 '20	Q1 '21	Q2 '21	Q3 '21	Q4 '21
	Quick recovery			Base scenario			Weak recovery		Second wave

Concluding H1 the company proved to be resilient by formulating adequate responses to the COVID-19 crisis, working together with dedicated employees, supported by committed suppliers and rewarded by many loyal and new customers. By focusing on the long term and investing in value creation for our customers and stakeholders, we believe we will emerge from this crisis stronger and be ready to capture more growth in the future

1.	Source: CPB, June Forecast 2020	11
2.	Source: Rabobank, June 2020

Agenda

2020	H1 business	John Kruijssen
2020	H1 financials	Gabrielle Reijnen
Q&A

12

2020 H1 business

2020 H1 financials

Order intake and sales are showing strong performance

Order intake	Sales
In € million - All entities Beter Bed Holding	In € million - All entities Beter Bed Holding

-2,0%

€50,8M €49,8M

+49,1%

€56,2M

€37,7M

+19,8%

€106,0M

€88,5M

+8,1%

€50,3M €54,3M

+12.1%

€43.9M €49.2M

+9.9%

€94.2M €103,5M

Strong H1 2020 Sales growth and order intake growth

Order intake was down slightly in Q1 due to the COVID-19 outbreak in March

2019 Q1 2020 Q1

2019 Q2 2020 Q2

2019 H1

2020 H1

2019 Q1 2020 Q1

2019 Q2 2020 Q2

2019 H1

2020 H1

EBITDA bridge

In € million - All entities Beter Bed Holding

An improving gross margin leads to a higher EBITDA despite higher marketing investment and

€5.6M €1.7M

€11.1M

€0.6M €0.2M€14.2M

logistics expenses

2019 H1	Gross	Advertising	Logistical costs	Other OPEX	2020 H1
Reported EBITDA	Margin				Reported EBITDA

Overall reported H1'2020 EBITDA has improved by +€3.1 million

13

2020 H1 business

2020 H1 financials

H1 2020 EBITDA is € 14.2 million (13.8% of sales) and € 3.1 million above H1 2019

Profit & Loss statement continuing operations

In thousand €, unless otherwise stated	H1			H1'2020
2020		IFRS16	Adjusted
Revenue	103.478		-	103.478
Cost of sales	(48.142)		-	(48.142)
Gross Profit	55.336	53,5%	-	55.336	53,5%
Personnel expenses	(23.024)		-	(23.024)
Other operating expenses	(18.081)		7.742	(25.823)
Total operating expenses	(41.105)	-39,7%	7.742	(48.847)	-47,2%
EBITDA	14.231	13,8%	7.742	6.489	6,3%
Depreciation and amortisation	(10.150)		(7.414)	(2.736)
Operating profit (loss) (EBIT)	4.081	3,9%	328	3.753	3,6%
Finance costs	(819)		(193)	(626)
Profit (loss) before tax	3.262	3,2%	135	3.127	3,0%
Income tax	(1.221)		(74)	(1.147)
Net profit (loss) from continuing operations	2.041	2,0%	61	1.980	1,9%
Profit / (loss) after tax from discontinued operations	-		-	-
Net profit (loss)	2.041	2,0%	61	1.980	1,9%

H1			H1'2019
2019		IFRS16	Adjusted
94.158		-	94.158
(44.427)		-	(44.427)
49.731	52,8%	-	49.731	52,8%
(23.304)		-	(23.304)
(15.282)		7.220	(22.502)
(38.586)	-41,0%	7.220	(45.806)	-48,6%
11.145	11,8%	7.220	3.925	4,2%
(10.766)		(7.400)	(3.366)
379	0,4%	(180)	559	0,6%
(338)		(83)	(255)
41	0,0%	(263)	304	0,3%
(746)		-	(746)
(705)	-0,7%	(263)	(442)	-0,5%
(21.945)		-	(21.945)
(22.650)	-24,1%	(263)	(22.387)	-23,8%

Record level order intake growth of +49.1% in Q2 2020 and +19.8% to date

Order Book all time high, enough for nearly next 1.5 months Sales

Operating profit € 3.7 million ahead of previous year

Operational cost as a % of revenue -1.3pp lower than last year

14

2020 H1 business

2020 H1 financials

Balance sheet structure improved with lower working capital requirements

Consolidated Balance Sheet

In thousand €, unless otherwise stated	H1	IFRS16	H1'2020
2020	Adjusted
Fixed assets	55.968	(36.981)	18.987
Intangible assets	8.278		8.278
Property, plant & equipment	9.312		9.312
Right-of-use assets	36.302	(36.302)	0
Deferred tax assets	2.012	(679)	1.333
Other non-current financial assets	64		64
Current assets	42.606	(643)	41.963
Inventories	21.284		21.284
Receivables1	11.771	(643)	11.128
Cash and cash equivalents	9.551		9.551
Total assets	98.574	(37.624)	60.950
Equity & Liabilities	98.574	(37.624)	60.951
Equity	4.985	2.547	7.532
Non-current liabilities	25.306	(24.504)	802
Current liabilities	68.283	(15.667)	52.616
Total Equity & liabilities	98.574	(37.624)	60.950

FY	IFRS16	FY'2019
2019	Adjusted
62.977	(42.459)	20.518
8.483		8.483
10.596		10.596
41.747	(41.747)	-
2.087	(712)	1.375
64		64
36.427	(192)	36.235
22.233		22.233
12.079	(192)	11.887
2.115		2.115
99.404	(42.651)	56.753
99.404	(42.651)	56.754
3.035	2.331	5.366
30.043	(29.240)	803
66.326	(15.742)	50.584
99.404	(42.651)	56.753

Improved working capital

Strengthened equity position through operational result and interest accrued on perpetual loan

Substantial improvement in cash and cash equivalents

ROIC

10,8%

57,2%

-0,9%

-1,4%

1. Trade receivables, income tax receivable & other receivables

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2020 H1 business

2020 H1 financials

Cash generation ability further improved

Cash flow statement

	H1		H1'2020		H1			H1'2019
In thousand €, unless otherwise stated	2020	IFRS16	Adjusted		2019	IFRS16	Disc. Ops.	Adjusted
Result (loss) for the period from operations	4.081	328	3.753		379	(180)		559
Depreciation & amortization	10.150	7.414	2.736		10.780	7.400		3.380
EBITDA	14.231	7.742	6.489		11.159	7.220	-	3.939
Inventories	949		949		2.508			2.508
Trade & other receivables	760		760		1.393			1.393
Trade & other liabilities	3.713		3.713		(5.728)			(5.728)
Change in Working Capital	5.422	-	5.422		(1.827)	-	-	(1.827)
Costs share-based compensation	37		37		41			41
Income tax received/(paid)	(15)		(15)		(1.005)			(1.005)
Discontinued operations	-		-		(30.615)		(30.615)	-
Cash flow from operating activities	19.675	7.742	11.933	-	(22.247)	7.220	(30.615)	1.148
Capital expenditures	(1.256)		(1.256)		(2.154)			(2.154)
Other	9		9		897			897
Discontinued operations			-		16.452		16.452	-
Cash from from / (used in) investing activities	(1.247)	-	(1.247)		15.195	-	16.452	(1.257)
Repayment of borrowings	(2.171)		(2.171)					-
Proceeds from borrowings			-		11.110			11.110
Interest paid	(575)		(575)		(540)			(540)
Payment lease liabilities	(7.987)	(7.742)	(245)		(7.200)	(7.220)		20
Discontinued operations	-		-		1.407		1.407	-
Cash from from / (used in) financing activities	(10.733)	(7.742)	(2.991)		4.777	(7.220)	1.407	10.590
Movements in cash and cash equivalents	7.695	-	7.695		(2.275)	-	(12.756)	10.481
Net foreign exchange difference	(259)		(259)		(122)			(122)
Opening balance	2.115		2.115		6.173			6.173
Closing balance	9.551	-	9.551	-	3.776	-	(12.756)	16.532

€7.7 million cash generated in H1 2020

Positive cash from operating activities driven by operational profit and working capital reduction

Selective capital investments

16

2020 H1 business

2020 H1 financials

Inventoryconversion cycle reduced

Inventory development

Inventory days - Benelux only

€22.2M	-4%
€21.3M
Other	Other
€8.8M	€8.5M
Store	Store
€13.4M	€12.8M
FY 2019	H1 2020

93 days

	81 days
FY 2019	H1 2020

Inventory reduced by € 0.9 million in first half of 2020

				Weekly total inventory in €M - Benelux only
22					Inventory conversion cycle reduced
21					improving cash conversion cycle
20					2019
19					2020
18
17
1	3	5	7	9	11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51
					17

2020 H1 business

2020 H1 financials

Order Book record high in H1 2020, covering nearly 1.5 months of Sales

Total order book development in €M

2020€23.5M

Intensified marketing efforts and targeted commercial activities resulted in substantially higher order intake

Record level order intake growth of +49.1% in Q2 2020 and +19.8% for H1

2019

Delta: €8.8M

€14.7M

2020

Order Book all time high, covering nearly 1.5 months of Sales

Jan

Feb

March

April

May

June

18

2020 H1 business

2020 H1 financials

Company turned into a net cash position and extended bank financing

Financing structure

€22.3M	€3.6M	€25.9M
Bank financing	Perpetual loan	Total financing

Net debt development

€1.7M

Bank financing

Shareholder loan

Perpetual loan

Extension of current financing facilities of € 22.3 million with incumbent banks

Conversion of € 3.5M shareholder loan plus incurred interest into newly issued shares:

• Conversion of interest based on avg market price before publication;
• Conversion of principal amount on average market price after publication with modest discount.

Maximum # of shares to be issued is 2.15 million

Agreement to decrease interest rate applicable to perpetual loan of

• 3.6 million for the next 12 months

-€7.9M

Dec-19Jun-20

19

Agenda

2020	H1 business	John Kruijssen
2020	H1 financials	Gabrielle Reijnen
Q&A

20

Q&A