MR BRICOLAGE (EPA:ALMRB) - Mr.Bricolage: 2019 first-half earnings

Transparency directive : regulatory news

02/08/2019 18:30

2019 first-half earnings
Agreement with the Group's banking partners
Progress with the divestment plan

With the realignment of its operations around its core "Network Services"
business fully underway, the Mr.Bricolage Group is reporting its earnings for
the first half of 2019. They reflect the network's good performances in a
sluggish home improvement superstore market(1). Covered by the plan to divest
directly-owned stores, which is progressing under satisfactory conditions, the
"Retail" business is still down. In this context, the Group has reached an
agreement with its banking partners to enable it to continue effectively
rolling out the REBOND strategic plan, a key part to renewed competitiveness of
the Group and its brands.

Orléans, France, 2 August 2019 - Mr.Bricolage SA, which groups together local
independent home improvement and gardening stores, is reporting its earnings
for the first half of 2019 (1 January to 30 June 2019), which were approved by
the Board of Directors during its meeting on Friday 2 August 2019.

* With consolidated turnover of EUR145.7m and a current operating profit of
  EUR1.0m, the half-year accounts are marked by the first scope effects with
  the store divestment plan launched in December 2018 and the difficulties
  facing the directly-owned stores. However, the good performances by the
  core "Network Services" business (+2.1%) and the members and affiliates
(+2.8% on a like-for-like store basis in France) in a sluggish home
  improvement superstore market(2) highlight the relevance of the strategy to
  realign operations around this business, launched in November 2016. These
  performances are being driven by the strategic actions from the REBOND plan,
  whose implementation continued over the first half of the year (renewing the
  product selection, standardizing the information systems, etc.). Backed by
  various supporting measures, the network's members are ramping up their
  commitment to modernizing their points of sale: 10 stores are now in line
  with the new concept (four new stores over the half-year period) and this
  deployment will be accelerating over the coming months. At the same time,
  the Group is continuing to attract new member and affiliate entrepreneurs:
  the total number of points of sale was 781 at end-June 2019, compared with
  764 at end-December 2018 (positive balance for new arrivals net of
  departures of 17 points of sale).

* The talks initiated with the banking partners in the second half of 2018 made
  it possible to reach an agreement on 1 August 2019 giving the Group leeway to
  continue rolling out the REBOND plan and finalize the plan to divest the
  directly-owned stores, a key element for the Group's future. It includes
  plans to consolidate the bilateral lines and defer the maturity of all the
  bank borrowings of Mr.Bricolage SA to December 2026.

* The divestment plan launched in December 2018 is continuing to progress under
  good conditions thanks to the dedication and efforts of all the Group's
  stakeholders. 23 directly-owned stores have already been taken over to date
  (3), including 21 by Mr.Bricolage network members-entrepreneurs.
  Negotiations are ongoing, including 30 stores whose sale is considered
  highly likely in the short term. Everything is being done to ensure that
  this divestment plan can be finalized under the best conditions.

(1) and (2) Banque de France home improvement superstore index at end-June
2019: +0.05% in value and +0.15% in volume
(3) Status report at 31 July 2019

I - 2019 FIRST-HALF EARNINGS

Application of IFRS 16 "Leases"(4) - With IFRS 16 coming into force on 1
January 2019, the Group has recognized assets and liabilities for all the
leases included in this standard's scope. Its application has changed the
presentation of the Group's results, canceling lease charges to replace them
with repayments of lease liabilities and interest expenses. In addition,
earnings are affected by the depreciation recorded on the rights of use
recognized as assets on the balance sheet.

Application of IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations"(5) - The Group has reclassified earnings for the 16 directly-owned
stores sold during the first half of 2019 on a separate line on the income
statement. The earnings, assets and liabilities of 37 other stores whose sale
is considered highly likely on the half-year reporting date and the related
real estate assets owned by six subsidiaries have also been reclassified on the
corresponding lines.

Condensed consolidated        30 June 2019     30 June 2018       Change
accounts (EURm)              IFRS 5 reported  IFRS 5 restated  Like-for-like

Consolidated turnover             145.7            150.3           -3.0%
- Network Services                112.5            110.2           +2.1%
- Retail                           33.2             40.1          -17.0%
EBITDA(6)                          10.4              8.6          +20.7%
Current operating profit(7)         1.0              3.7          -73.7%
- Network Services                  6.7              8.7          -23.0%
- Retail                           (5.7)            (5.0)         +14.8%
Other non-current operating
income and expenses                (3.3)               0              -
Operating profit                   (2.3)             3.7         -161.5%
Financial income and expenses      (2.0)            (1.3)         +50.4%
Contribution from associates       (0.1)             0.2         -173.4%
Corporate income tax               (0.8)            (0.6)         +29.7%
Profit after tax from
continuing operations              (5.3)             2.0         -364.4%
Profit after tax from
discontinued operations            (3.4)            (1.8)             -
Profit (loss) for the period       (8.7)             0.2              -
- Group share                      (8.7)             0.2              -
- Minority interests                 ns               ns              -

                                 30 June           30 June
Consolidated turnover              2019              2018           Change
EURm                         IFRS 5 reported   IFRS 5 restated   Like-for-like

Retail turnover                         33.2              40.1          -17.0%
Directly-owned store sales              29.8              35.1          -14.9%
Online sales                             3.4               5.0          -32.1%
Network Services turnover              112.5             110.2           +2.1%
Sales of goods                          77.7              73.7           +5.4%
Sales of services                       34.8              36.5           -4.5%
Total consolidated turnover            145.7             150.3           -3.0%

(4) and (5) The main impacts of these standards are detailed in the Half-Year
Financial Report
(6) EBITDA = Current operating profit + Depreciation and amortization
(7) Current operating profit = Operating profit excluding non-current
operations

With consolidated turnover of EUR145.7m for the first half of 2019 (-3.0%), the
Group is continuing to move forward with its realignment around its core
"Network Services" business and the plan to divest all of its directly-owned
stores.

The "Network Services" business is up 2.1% to EUR112.5m, despite the changes in
scope seen since the end of 2018 (sales of services down -4.5%). This robust
development is being driven by the increase in sales of goods (+5.4%), linked
to the range changes, the development of the Inventiv own-brand and the higher
volumes recorded by the member and affiliate network.

At the same time, the contraction in the "Retail" business (-17.0% on a
total-store basis and -7.8% on a like-for-like store basis) primarily reflects
the lower commercial performance levels recorded by the directly-owned stores
(-14.9%).

Current operating profit and operating profit

The first-half current operating profit came to EUR1.0m, reflecting the impact
of the "Retail" activity's losses (-EUR5.7m) and the temporary drop in earnings
for the "Network Services" business. This primarily reflects the changes in
scope linked to the divestment plan and the support measures provided to
support the deployment of the new store concept, with its positive effects to
be seen over the coming months, despite the strong cost reduction measures
implemented, the full impact of which has not yet been recorded. The
application of IFRS 16, in force from 1 January 2019, is reflected in an
adjustment of the current operating profit for EUR0.3m, transferring part of
the external lease charges (EUR4.8m) to depreciation (EUR4.6m).

After taking into account non-current operations (-EUR3.3m), mainly fees linked
to the ongoing divestment plan and the Group refinancing, the operating profit
comes to -EUR2.3m.

Net profit

Financial income and expenses represent -EUR2.0m for the first half of 2019,
including -EUR0.5m of interest expenses linked to the application of IFRS 16.
Factoring in a tax expense of EUR0.8m, the consolidated net profit for the
first half of 2019 represents -EUR8.7m.

II. AGREEMENT WITH THE BANKING PARTNERS

At 30 June 2019, net financial debt excluding lease liabilities totaled
EUR93.5m (including EUR18.5m of cash, excluding undrawn overdraft lines),
compared with EUR96.1m at end-2018. The Group has drawn down EUR95m from the
syndicated loan set up in December 2017. Alongside this, it has short-term
credit lines for EUR24.1m (EUR20.9m drawn down at 30 June 2019).

On 1 August 2019, the Group reached an agreement with its banking partners to
reschedule the syndicated credit agreement set up in December 2017.

All the bank borrowings for the company Mr.Bricolage SA, including EUR16m of
bilateral lines grouped together within a consolidation loan, have seen their
maturity deferred to December 2026 (instead of December 2023 for the majority
of the borrowings). With the exception of the EUR40m revolving credit, the
repayment schedule for debt will be very gradual from December 2022. The
financial ratios have been reduced and adjusted to enable the Group to finalize
the plan to sell the directly-owned stores and continue rolling out the REBOND
strategic plan, in line with the transformation and modernization objectives
since November 2016.

III - VOLUMES OF BUSINESS FOR THE NETWORKS

                                              Change on     Change on
Volume of business        Number             total store  like-for-like
inc. taxes (EURm)       of stores   H1 2019     basis      store basis

In-store sales             781      1,003.1     +0.3%         +2.1%
- France                   712        872.7     -0.9%         +1.3%
- International             69        130.4     +9.0%         +6.9%
In-store sales excl.
directly-owned stores      733        899.8     +5.3%         +3.5%
Online sales                 -          5.2    -23.6%            NA
Total                      781      1,008.3     +0.1%         +2.2%

France (87% of volume of business)
The network in France has 712 stores at 30 June 2019, compared with 695 at
end-2018. On a French home improvement superstore market with +0.05% growth at
end-June 2019 in value terms(8), the volume of business for the networks on a
like-for-like store basis is up 1.3% and 2.8% excluding directly- owned stores,
significantly outperforming the market's trend.

International (13% of volume of business)
The international network has 69 stores at 30 June 2019, as at end-2018. The
volume of business is up 6.9% to EUR130.4m on a like-for-like store basis, with
robust development in the main countries where the Group is present. Belgium
(45 stores) represents 57% of the international volume of business, with 5.4%
growth on a like-for-like store basis. Bulgaria (11 stores) represents 23% of
the volume of business, up 6.7% on a like-for-like store basis. Morocco (six
stores) represents 10% of the volume of business, with 16.4% growth on a
like-for-like store basis. During the first half of 2019, Mr.Bricolage SA also
signed a new international partnership deal, with the LOE group, to develop the
Mr.Bricolage brand in Mauritania.

IV - OUTLOOK FOR 2019

For the second half of 2019, Mr.Bricolage is moving forward with the
implementation of its roadmap with four objectives:
* Finalizing the plan to divest the directly-owned stores;
* Continuing to optimize the "Network Services" business and accelerating all
  the value-creating actions rolled out since November 2016: renewing the
  product selection and pricing management tools, standardizing the
  information systems, maintaining marketing investments in the Inventiv brand
  and in-store footfall, and deploying the new customer services platform;
* Developing the growth of the brand and affiliate store network;
* Continuing to roll out the new store concept.

In this environment, the Group confirms that its results for 2019 will be
affected by a contraction in consolidated turnover and a significant reduction
in operating losses due to the stores removed from the scope.

(8) - Banque de France home improvement superstore index at end-June 2019:
+0.05% in value and +0.15% in volume

ABOUT MR.BRICOLAGE GROUP

The Mr.Bricolage Group, which develops the well-known brands Mr.Bricolage and
Les Briconautes, is the French specialist for local independent DIY retail,
with 712 outlets operating under the brands or through affiliates at 30 June
2019. Internationally, the Group is present in nine other countries with 69
stores. Mr.Bricolage SA (MRB - FR0004034320) is listed on Euronext Paris
Compartment C and is notably part of the Enternext PEA-PME 150 and CAC All
Shares indices. Mr.Bricolage SA is eligible for SME share- based savings
schemes (PEA-PME).

CONTACTS

Financial press
* Eve Jondeau, Mr.Bricolage - eve.jondeau@mrbricolage.fr - 02 38 43 50 00
* Marie Calleux, Calyptus - mrbricolage@calyptus.net - 01 53 65 68 68

Corporate press
* Anne-Claire Moyer, Mr.Bricolage - anne-claire.moyer@mrbricolage.fr
* Louise Chaulin - louise.chaulin@gmail.com - 07 83 35 96 93

For more information about the Mr.Bricolage Group, visit www.mr-bricolage.com

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MR BRICOLAGE (EPA:ALMRB) - Mr.Bricolage: 2019 first-half earnings

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