TCM A/S : Interim Report Q4 2020

TCM Group Management's review

Interim report Q4 2020 (October 1 - December 31)

(All figures in brackets refer to the corresponding period in 2019)

Continued strong financial performance. Proposal of an extraordinary dividend and a share buy back program.

CEO Torben Paulin: "2020 was an unprecedented year for TCM Group. In a year dominated by the Covid-19 pandemic, TCM Group managed to continue to grow with turnover reaching DKK 1,025 million, up 1.8%, and with an adjusted EBIT of DKK 140 million. Overall, revenue and EBIT was in line with our expectations.

In 2020 TCM Group continued to generate a considerable positive cash flow, building on an already strong finan-cial position from previous years. As a consequence of this and in light of the capital structure goal set out by the Board of Directors earlier, the Board of Directors will be recommending the following measures to the upcoming Annual General Meeting:

• 1. Ordinary dividend for 2020 of DKK 5.50 per share corresponding to 54% of net profit

• 2. Extraordinary dividend of DKK 7.50 per share

• 3. The implementation of a share buy back program of in total up to DKK 150 million

The extraordinary dividend should also be seen in light of the fact that due to the emerging Covid-19 pandemic, no dividend was distributed during 2020.

If the Annual General Meeting follows the recommendation of the Board of Directors, these measures will move TCM Group towards a capital structure in line with the long term guidelines set out by the Board of Directors.

The results that TCM Group has achieved in 2020 would not have been possible without the dedication and deter-mination of our employees and the employees in the franchisee and dealer operated stores. We thank you for your determination, flexibility and strong contribution to bringing TCM Group and our brands through a challenging year.

We will maintain our focus on growth a.o. through gaining a stronger foothold in Norway and expanding our online sales channel, while continuing to gain market share in mature markets and brands.

For 2021 we predict a revenue in the range of DKK 1,040-1,100 million, corresponding to an expected organic growth of 4-10% on the continuing business excluding the divestment of the Svane store in Copenhagen, and EBIT in the range of DKK 145-160 million."

Financial highlights Q4

• • Revenue DKK 262.8 million (DKK 261.6 million) corresponding to a revenue growth of 0.5%.

• • Adjusted EBITDA DKK 41.6 million (DKK 48.5 million). Adjusted EBITDA margin was 15.8% (18.5%).

  The decrease in adjusted EBITDA margin was primarily driven by a lower gross margin impacted from a change in sales mix, costs related to new product launches and additional costs related to the replacement of the main automised board cutting and stacking solution.

• • Adjusted EBIT down DKK 7.0 million to DKK 36.4 million (DKK 43.4 million). Adjusted EBIT margin was 12.7% (15.0%)

• • Non-recurring items had a negative impact of DKK 3.0 million due to Covid-19 precautions.

• • EBIT down DKK 6.0 million to DKK 33.4 million (DKK 39.4 million), corresponding to an EBIT margin of 12.7% (15.0%).

• • Net profit down DKK 4.7 million to DKK 25.1 million (DKK 29.8 million).

• • Free cash flow was DKK 29.9 million (DKK 44.7 million).

• • Cash conversion ratio was 85.8% (99.9%).

Financial highlights 2020

• • Revenue DKK 1,024.6 million (DKK 1,006.9 million) corresponding to an organic growth of 1.8%.

• • Adjusted EBITDA DKK 161.1 million (DKK 174.4 million). EBITDA margin was 15.7% (17.3%).

• • Adjusted EBIT down DKK 13.9 million to DKK 139.7 million (DKK 153.6 million). Adjusted EBIT margin was 13.6% (15.3%).

• • Non-recurring items had a negative impact of DKK 5.0 million due to Covid-19 precautions.

• • EBIT down DKK 11.9 to DKK 134.7 million (DKK 146,6 million), corresponding to an EBIT margin of 13.1% (14.6%).

• • Net profit down DKK 9.1 million to DKK 102.2 million (DKK 111.3 million).

• • Free cash flow was DKK 101.0 million (DKK 132.3 million).

• • Full-year guidance for the financial year 2021 is revenue in the range DKK 1,040-1,100 million, and EBIT in the range DKK 145-160 million.

Contact

For further information, please contact: CEO Torben Paulin [phone]

CFO Mogens Elbrønd Pedersen [phone] IR Contact [e-mail]

Key figures and ratios

DKK million	Q4 2020	Q4 2019	FY 2020	FY 2019
Income statement Revenue Gross profit Earnings before interest, tax, depreciation and amorti-sation (EBITDA) Adjusted EBITDA Earnings before interest, tax and amortisation (EBITA) Adjusted EBIT Operating profit (EBIT) Profit before tax Net profit for the period	262.8 70.4 38.6 41.6 35.3 36.4 33.4 32.2 25.1	261.6 75.7 44.5 48.5 41.3 43.4 39.4 38.3 29.8	1,024.6 272.8 156.1 161.1 142.3 139.7 134.7 130.7 102.2	1,006.9 279.6 167.4 174.4 154.1 153.6 146.6 142.4 111.3
Balance sheet Total assets Net working capital (NWC) Net interest-bearing debt (NIBD) Equity	929.5 (117.0) (42.9) 574.4	911.1 (108.9) 51.7 472.7	929.5 (117.0) (42.9) 574.4	911.1 (108.9) 51.7 472.7
Cash Flow Free cash flow excl. acquisitions of operations Cash conversion, %	29.9 85.8%	44.7 99.9%	101.0 85.8%	132.3 99.9%
Growth ratios Revenue growth, % Gross profit growth, % Adjusted EBIT growth, % EBIT growth, % Net profit growth, %	0.5% (7.1%) (16.1%) (15.2%) (15.8%)	3.9% (2.9%) (2.0%) (11.1%) (10.9%)	1.8% (2.4%) (9.0%) (8.1%) (8.2%)	11.9% 6.4% 9.6% 6.1% 7.3%
Margins Gross margin, % Adjusted EBITDA margin, % Adjusted EBIT margin, % EBIT margin, %	26.8% 15.8% 13.8% 12.7%	28.9% 18.5% 16.6% 15.0%	26.6% 15.7% 13.6% 13.1%	27.8% 17.3% 15.3% 14.6%
Other ratios Solvency ratio, % Leverage ratio NWC ratio, % Capex ratio excl. acquisitions, %	61.8% (0.23) (11.4%) 6.4%	51.9% 0.31 (10.8%) 2.0%	61.8% (0.23) (11.4%) 3.0%	51.9% 0.31 (10.8%) 1.5%
Share information Earnings per share before dilution, DKK Earnings per share after dilution, DKK	2.51 2.51	2.98 2.98	10.22 10.22	11.13 11.13

Reference is made to the consolidated financial statements for 2020 prepared in accordance with IFRS for definitions of key figures and ratios.

Business review

In Q4 2020 revenue increased by 0.5% to DKK 262.8 million (DKK 261.6 million).

TCM Group's primary market is Denmark which contributed with 92% of Group revenue in Q4 2020. The kitchen market in Denmark has up to this point shown robust resilience, and demand has kept up despite the increased macro economic uncertainty following the virus outbreak. Revenue in Denmark was up 0.9% driven by growth within Nettoline and our e-commerce platform kitchn.dk offset by a decline in B2C revenue through the branded stores.

Our Norwegian business has been softer in the quarter resulting in a decline of 4.0% compared to Q4 2019. During Q4 2020 we signed an agreement with a dealer to open a new store in Oslo, which is an important milestone to leverage on the significant potential we see for Svane Køkkenet in Norway.

In Q4 2020 the gross margin was negatively impacted by a change in sales mix (B2B vs. B2C) and additional discounts supporting the launch of the new kitchen lines S12 RAW Limited edition for Svane Køkkenet and Mo-mento for Tvis Køkkener. Furthermore, additional costs in our supply chain related to the replacement of our main automised board cutting and stacking solution had a significant impact on the cost of goods sold in the quarter.

The new solution is excepted to be in full operation at the end of Q1 2021.

At the end of Q4 2020, the total number of Svane and Tvis branded stores was 69 (68). We continue our focus to add new branded stores to our business primarily new Svane Køkkenet stores in Norway and new Tvis Køkkener and Nettoline stores in Denmark. Nettoline has converted most of its Danish dealers into the Nettoline store con-cept, and therefore we now consider these stores to be branded in line with the Svane and Tvis branded stores.

During Q4 2020 Nettoline opened a new store in Skive, Denmark. At the end of Q4 2020, Nettoline had 21 branded stores in Denmark, bringing the total number of branded stores in TCM Group to 90.

During 2021 a new Svane Køkkenet store will open in Oslo, Norway. Tvis Køkkener will open a new store in Roskilde, Denmark during 2021. Furthermore, during Q1 2021 Nettoline will open two new branded stores in

Køge and Fjerritslev, Denmark.

During Q4 2020 Tvis Køkkener launched the new kitchen line Momento including the launch of the new Pocket-grip, while the focus within Svane Køkkenet was the new S12 RAW Limited edition kitchen line. S12 RAW

Limited edition is based on uncompromising design with fully veneered frame and wooden fronts with a raw and dark look.

Total number of employees at the end of Q4 2020 was 496 (493).