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Tokmanni Group Oyj: Tokmanni Group announces its intention to launch an initial public offering and listing on Nasdaq Helsinki

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by April 5, 2016 General

Tokmanni Group announces its intention to launch an initial public offering and listing on Nasdaq Helsinki

Not for publication, distribution or release, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or Singapore.

5 April 2016

Tokmanni Group Oy (“Tokmanni” or the “Company”) today announces its intention to launch an initial public offering (the “IPO”) and a listing of its shares on the official list of Nasdaq Helsinki Ltd (“Nasdaq Helsinki”).

Tokmanni is the largest general discount retailer in Finland and in the Nordic countries, measured by revenue[1]. In 2015 Tokmanni’s revenue was EUR 755 million and on average it had approximately 3,200 employees.

The objective of the IPO is to position Tokmanni for its next stage of development by further raising its profile and further enhancing Tokmanni’s visibility in Finland and abroad. The IPO will enable the Company to obtain access to capital markets, expand its ownership base and increase the liquidity of its shares. Additional visibility is also expected to further increase Tokmanni’s recognition among the public and as an employer, and thus enhance Tokmanni’s competitiveness.

Harri Sivula, Chairman of the Board comments:

“Tokmanni’s management has developed the Company’s business in a determined way which has strengthened the Company’s position as a leading discount retailer in Finland. As a result of this work, the Company has been able to grow and maintain good profitability despite challenging economic conditions in Finland. The foundation that has been created is expected to have upside potential also in the future,  which is why we believe it is now a good time to introduce the Company on the stock exchange and provide new shareholders the opportunity to take part in the Company’s development.”

Heikki Väänänen, CEO comments:

“Tokmanni has a strong market position in Finland and a long history of profitable growth. In recent years we have significantly developed our business. Among other things we have developed our sourcing model, harmonised our brand under the Tokmanni brand, renewed our store concept and trained our store personnel in an effort to provide good in-store customer experience. We believe that the measures we have taken can increase our competitiveness, support our growth and improve our profitability in the future.”

About Tokmanni

Tokmanni is the largest general discount retailer in Finland measured by number of stores and revenue.  In 2015, Tokmanni’s revenue was EUR 755 million and on average it had approximately 3,200 employees. Tokmanni is the only nationwide general discount retailer in Finland, with 156 stores across Finland as at 31 December 2015. Tokmanni conducted an extensive brand harmonisation project between 2013 and 2015, unifying all of its stores under the Tokmanni brand. The brand harmonisation project was completed in October 2015. Based on a survey commissioned by Tokmanni from TNS Gallup in autumn 2015, approximately 42 percent of adult Finns visit a Tokmanni store at least once a month.

Tokmanni’s value proposition combines an attractive and wide product assortment at low prices supported by a good in-store customer experience. Tokmanni offers its customers a broad assortment of products across six product categories: home cleaning and personal care; groceries; clothing; tools and electrical equipment; home, decoration and garden; as well as leisure and home electronics. Tokmanni’s product assortment includes A-brand products from leading manufacturers, Tokmanni’s private label products, licensed brand products and non-branded products.

Tokmanni believes that the following are among its key strengths:

  • Tokmanni is the market leader (measured by number of stores and revenue) in the Finnish general discount retail market, which is reported to have grown by approximately 2.5 percent per annum between  2012 and 2014, driven by the “smart shopping” trend
  • Tokmanni appeals to a large and diversified customer base with over 43 million baskets in 2015 and 100 percent brand awareness among surveyed adult Finnish consumers according to a recent survey
  • Tokmanni is perceived as a price image leader as compared to its key competitors[2], and in a recent online survey 73 percent of the respondents categorised Tokmanni as “extremely cheap” or “cheap”
  • The Company has an attractive and wide assortment, with approximately 25,000 SKUs across six product categories, providing Finnish consumers with a one-stop-shopping option
  • Fully integrated low-cost sourcing model and large volumes enable direct sourcing from manufacturers
  • Tokmanni is Finland’s only nationwide general discount retailer, with 156 stores scalable to different market environments across Finland
  • The Company has a focused marketing strategy and the completion of the brand harmonisation in 2015 is expected to enable Tokmanni to scale up marketing efforts and further strengthen its brand image by communicating one unified marketing message
  • Well-invested supply chain, IT and logistics which is expected to enable efficient distribution of products and support store network expansion to approximately 200 stores
  • Financial track record of market outperformance, improved gross margin and strong cash generation

Tokmanni’s goal is to continue strengthening its position as the leading general discount retailer in Finland by leveraging its key competitive advantages: the strong perceived price image, an attractive and wide assortment and a good in-store customer experience. Tokmanni aims to deliver stable and profitable growth over the long term by (i) leveraging its unified brand image, enhanced store concept and category management to drive like-for-like revenue growth, (ii) continuing to increase the amount of net new selling area by approximately 12,000 square metres annually, translating into approximately five  new  or relocated stores, and (iii) increasing profitability and working capital management through improved processes and tools in sourcing, supply chain management and category management.

Management

Tokmanni has a highly experienced management team with substantial retail experience. The team includes a mix of new hires and executives with long Tokmanni history who are fully committed to deliver the Company’s growth ambitions.

The management team is led by Heikki Väänänen, CEO, who has been with the Company since 2009 and has over 26 years of working experience in retail companies. Sixten Hjort, CFO, has been with Tokmanni since 2005 and has 36 years of relevant experience. They are supported by a strong and deep management team with significant retail experience.

Tokmanni’s financial highlights

  2015 2014 2013
EURm, unless otherwise indicated (unaudited, unless otherwise indicated)
Revenue 755.3[3] 734.3[3] 712.8[3]
Revenue growth, percent 2.9[3] 3.0[3] 3.3
Like-for-like revenue growth[4], percent (0.6) (0.3) 0.0
Gross profit[5] 257.5 248.6 238.2
Gross margin, percent 34.1 33.9 33.4
Adjusted EBITDA[6] 58.5 57.1 56.6
Adjusted EBITDA margin, percent 7.7 7.8 7.9
Adjusted EBIT[7] 43.7 43.6 44.0
Adjusted EBIT margin, percent 5.8 5.9 6.2

Dividend policy and financial targets

The Board of Directors has adopted the following financial targets for Tokmanni:

  • Tokmanni’s target in 2016 is to increase the amount of net new selling area by approximately 10,000 square meters, and from 2017 onwards by approximately 12,000 square meters annually, translating into approximately five new or relocated stores;
  • Tokmanni’s long-term target is to achieve low single digit like-for-like revenue growth, assuming current market conditions;
  • Tokmanni’s long-term target is to progressively expand to an adjusted EBITDA margin of approximately 10 percent driven by improving gross margin levels and maintaining stable operating expenses in relative terms;
  • Tokmanni intends to maintain an efficient long-term capital structure, defined as net debt[8] in relation to adjusted EBITDA of below 2.0x; and
  • The Company targets a dividend payout ratio of approximately 70 percent of Tokmanni’s net result subject to capital structure, financial condition, general economic and business conditions and future prospects. The Company targets a dividend payout ratio of 70 percent of Tokmanni’s adjusted net result for 2016. Tokmanni’s adjusted net result for 2016 is defined as the reported net result for 2016, as adjusted for the post-tax impact of the costs related to the IPO and the refinancing of the current term loans, as well as assuming that the new senior facilities agreement would have been entered into on 1 January 2016.

Information on the IPO

The contemplated IPO is expected to consist of both a primary offering by the Company and a secondary offering by certain of the shareholders in the Company, including the main shareholders Cidron Disco S.à r.l. (a company ultimately owned by Nordic Capital Fund VII[9], together with associated co-investment vehicles) and Rockers Tukku Oy. The Company and its current shareholders would be subject to customary lock-up arrangements. Nordic Capital will remain a significant shareholder after the IPO. Depending on market conditions, the contemplated IPO is expected to be completed during the second quarter of 2016.

Goldman Sachs International (“GSI”) and Nordea Bank Finland Plc are acting as Joint Global Coordinators and Joint Bookrunners (the “Joint Global Coordinators”) in the contemplated IPO. BofA Merrill Lynch and Carnegie Investment Bank AB, Finland branch, are acting as Joint Bookrunners (and together with the Joint Global Coordinators, the “Banks”). Sundling Wärn Partners is acting as financial advisor to Tokmanni and its principal shareholders.

Further announcements relating to the process will be made in due course.

Enquiries

Heikki Väänänen, CEO, tel: +358 20 728 6044

Sixten Hjort, CFO, tel: +358 20 728 6043

Joséphine Mickwitz, Investor Relations, tel: +358 20 728 6535

Important Notice

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. The information in this announcement may be subject to change.

Neither this announcement nor the information contained herein is for publication, distribution or release, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, the Hong Kong special administrative region of the People’s Republic of China, Japan, New Zealand, South Africa or Singapore or any other jurisdiction where to do would constitute violation of the relevant laws of such jurisdiction.

This announcement is not a prospectus for the purposes of Directive 2003/71/EC (such directive, as amended, together with any applicable implementing measures in the relevant member state of the European Economic Area under such Directive, the “Prospectus Directive”). A prospectus prepared pursuant to the Prospectus Directive and approved by the Finnish Financial Supervisory Authority will be published and, when published, can be obtained from the Company and other places indicated in the prospectus. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information contained in the prospectus.

This announcement does not contain or constitute an offer to sell, or a solicitation of an offer to purchase, any securities in the United States. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Tokmanni does not intend to register any of the securities in the United States or to conduct a public offering of the securities in the United States.

This announcement is directed only at: (A) persons in member states of the European Economic Area (the “EEA”) who are “qualified investors” within the meaning of Article 2(1)(e) of the EU Prospectus Directive (Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU, to the extent implemented in the relevant member state of the EEA) and includes any relevant implementing measure in each relevant member state of the EEA) (the “Qualified Investors”); (B) in the United Kingdom, Qualified Investors who are persons who (i) have professional experience in matters relating to investments and who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Order”); or (ii) are high net worth entities falling within Article 49 of the Order; or (iii) are persons to whom it may otherwise be lawfully communicated; and (C) other persons to whom it may otherwise lawfully be communicated, (all such persons together being referred to as “Relevant Persons”). Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

None of the Banks or any of their respective affiliates, directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

The Banks are each acting exclusively for the Company and for no-one else in connection with any transaction mentioned in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to any such transaction and will not be responsible to any other person for providing the protections afforded to their respective clients, or for advising any such person on the contents of this announcement or in connection with any transaction referred to in this announcement. The contents of this announcement have not been verified by the Banks.

FCA/ICMA Stabilisation

This announcement does not constitute a recommendation concerning the IPO. The price and value of securities and any income from them can go down as well as up. Past performance is not a guide to future performance. Information in this announcement or any of the documents relating to the IPO cannot be relied upon as a guide to future performance. There is no guarantee that the listing on Nasdaq Helsinki will occur and you should not base your financial decisions on the Company’s intentions in relation to the listing at this stage. Potential investors should consult a professional advisor as to the suitability of the IPO for the entity concerned.

In connection with the IPO, each of the Banks and any of their respective affiliates, acting as investors for their own accounts, may purchase shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such shares and other securities of the Company or related investments in connection with the IPO or otherwise. Accordingly, references in the final prospectus, once published, to the shares being offered, acquired, sold, placed or otherwise dealt in should be read as including any offer, sale, acquisition, placing or dealing in the shares by any of the Banks and any of their affiliates acting as investors for their own accounts. In addition, certain of the Banks or their affiliates may enter into financing arrangements and swaps in connection with which they or their affiliates may from time to time acquire, hold or dispose of shares. None of the Banks intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

No representation or warranty, express or implied, is given by or on behalf of the Banks or any of their respective subsidiary undertakings, affiliates, agents or advisers or any of such persons’ affiliates, directors, officers or employees or any other person as to the fairness, accuracy, completeness or verification of the information or the opinions contained in this announcement, and no liability is accepted for any such information or opinions. Each of the Banks or any such persons’ directors, officers, employees or affiliates or any other person disclaim all and any responsibility and liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement.

Forward-looking statements

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” “continue,” “should” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Tokmanni believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors, which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.

The financial targets included herein constitute forward-looking statements and Tokmanni’s actual results of operations or financial condition could differ materially from those expressed or implied by these forward-looking statements as a result of many factors. These financial targets are based upon a number of assumptions, which are inherently subject to significant business, operational, economic and other risks, many of which are outside of Tokmanni’s control. The key assumptions the Board of Directors has made when setting its targets include, among others, that the market conditions and the purchasing power of consumers will remain at the current level and these assumptions may not continue to reflect the commercial, regulatory and economic environment in which Tokmanni operates. Accordingly, the assumptions may change or may not materialise at all. In addition, unanticipated events may adversely affect Tokmanni’s actual results of operations and financial condition in future periods whether or not Tokmanni’s assumptions relating to the financial year 2016 or future periods otherwise prove to be correct. As a result, Tokmanni’s actual results of operations or financial condition may vary materially from these targets and investors should not place undue reliance on them. No statement in this announcement is intended to be nor may be construed as a profit forecast.

Each of the Company and the Banks and their respective affiliates expressly disclaim any obligation or undertaking to update, review or revise any of the forward-looking statements contained in this announcement whether as a result of new information, future developments or otherwise.

The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice.

[1] Compared to discount retailers in Nordic countries excluding their revenue generated from sales outside Nordic countries

[2] Key competitors comprise other general discount retailers, hypermarkets and department stores (including Anttila, Clas Ohlson, Citymarket, Halpa-Halli, Hong Kong, J. Kärkkäinen, Minimani, Prisma and Puuilo)

[3] Derived from the audited consolidated financial statements

[4] The like-for-like revenue growth is calculated by taking into account the revenue growth of stores that are not considered to be net new and relocated stores. As defined by Tokmanni new and relocated stores include: (i) new stores opened; (ii) store relocations where the store size changes by 30 percent or more; and (iii) store expansions where the store size changes by 30 percent or more. If the store falls in one of these categories, it is regarded as a new or relocated store in its opening year and in the following calendar year. When calculating the net new and relocated stores, Tokmanni subtracts from new and relocated stores the stores that have been closed during the year.

[5] Gross profit = Revenue – Materials and services

[6] Adjusted EBITDA = EBITDA – (Changes in fair value of currency derivatives + Changes in fair value of electricity derivatives + Brand harmonisation costs + Costs related to the IPO)

[7] Adjusted EBIT = EBIT – (Changes in fair value of currency derivatives + Changes in fair value of electricity derivatives + Brand harmonisation costs + Costs related to the IPO)

[8] Net debt = Loans from financial institutions + Finance lease liabilities – Cash and cash equivalents

[9] Nordic Capital VII Limited, acting in its capacity as General Partner of Nordic Capital VII Alpha, L.P. and Nordic Capital VII Beta, L.P.


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Tokmanni Group Oyj via Globenewswire
HUG#2000364
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