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13 May 2008

2007: Imerco converted into capital chain with M. Goldschmidt Capital A/S as co-investor and largest shareholder

  • Imerco was converted into a capital chain effective 3 September 2007.
  • The Imerco chain retained its market-leading position in Denmark, generating retail revenue of approximately DKK 1.3 billion, including VAT.
  • Management expects retail revenue of DKK 1.5 billion, including VAT in 2008.
  • The Imerco chain is growing and will have 150 stores in Denmark by 30 June 2008.
  • Imerco retains its goal of having 170-180 stores in Denmark.
  • Expansion progressing ahead of schedule.

The year 2007 was marked by the conversion of the Imerco chain from a voluntary chain into a capital chain. The conversion became effective on 3 September 2007. The transaction originally comprised 125 Imerco stores, and franchise agreements were signed with an additional seven stores.

Including the addition of new stores in the autumn of 2007 and in the spring of 2008, the Imerco chain will have a total of 150 stores in Denmark by 30 June 2008.

The capital chain transition has required a tremendous amount of resources, but the process has generally been satisfactory. Since the conversion, Imerco has had fully integrated IT operations and bookkeeping functions.

The head office function has been supplemented by an operations department, an accounting support department and an HR department. After these organisational changes, the head office is now fully staffed with a total of 46 employees.

CEO Ib Berntsen said: “The transition from a voluntary chain to a capital chain went well, thanks to the great commitment of our former cooperative members, employees, the chain office and our suppliers. We will be kicking off the next big move in the autumn of 2008 when we plan to launch a very comprehensive investment programme to modernise all Imerco stores. We will also strengthen our marketing efforts and continue to have the strongest media exposure in the housewares industry. These efforts are intended to secure the platform for an even stronger profile and to increase Danish consumers’ awareness of Imerco.”

Financial performance in 2007

The 2007 annual report has been presented in accordance with the International Financial Reporting Standards (IFRS).

The 2007 annual report is to a large extent characterised by the conversion into a capital chain, comprising 132 acquisitions and a large number of non-recurring costs related to the conversion and to the very large number of acquisitions. Moreover, the consolidated financial statements comprise a chain office for a voluntary chain for a period of eight months and for a capital chain for a period of four months.

The annual report is therefore not representative of the Group’s future activities, revenues or operations. Accordingly, the first full capital chain financial statements for the Imerco Holding Group will be the financial statements for the year ending 31 December 2008.

The Imerco Holding Group generated a profit of DKK 30 million after tax, which is considered satisfactory.

Equity stood at DKK 523 million at 31 December 2007.

Outlook for 2008

Recent years’ growth in consumer spending in Denmark weakened in 2007. We do not expect the economic situation to improve in 2008.

The Imerco Holding Group expects to generate net revenue of approximately DKK 1.2 billion in 2008 (equivalent to retail revenue of DKK 1.5 billion, including VAT). The Group’s EBITDA performance is expected to total at least DKK 130 million.

After the first four months of the year, the Imerco Holding Group has generated net revenue in line with expectations, with total growth at chain level of 13%.

Chairman Søren Bjørn Hansen said: “The annual report marks the end of a long and very extensive process of converting a voluntary chain into a capital chain. This major task has been skilfully solved by the Executive Board and by the Group’s employees. Today, Imerco holds a stronger position than ever before and, with the Group’s organisational and financial resources, which by far exceed previous levels, Imerco stands well prepared for the future. The next major step is the refurbishment of Imerco’s stores scheduled to begin in the autumn months and, of course, our continued expansion through the opening of new stores and acquisitions. We are therefore pleased to note that our expansion plans are progressing ahead of schedule and that we will be achieving our goal of having 150 stores already in mid-2008.”

About Imerco Holding A/S

The Imerco Holding Group is Denmark’s largest nation-wide housewares chain, with 150 stores across the country. The chain generates retail revenue of DKK 1.5 billion, including VAT. Imerco aims to further expand its position as Denmark’s leading housewares chain and to grow to 170-180 stores within a few years. The Imerco Holding Group is extremely well-consolidated with equity of more than DKK 500 million. The Group has close to 1,000 employees.

Read more about M. Goldschmidt Capital’s involvement in Imerco Holding

See a list of all Imerco stores in Denmark

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