ORCHESTRA : Financial information at 30 June 2017

Financial information at 30 June 2017

Results for the financial year

from 1 March 2016 to 28 February 2017

• Revenue: €608.3 million (up 8.7%)

• Further increase in Childcare market share: 50% of revenue

• Gross operating income: €37.4 million (6.2% of revenue)

• Decline in profits reflects transformation in the store network in a highly competitive market

* Level of review of auditors: the audit procedures on the consolidated annual financial statements for fiscal year 2016/2017 have been completed and the auditors report is in preparation.

1. Period from March 1, 2015 to February 29, 2016

2. Period from March 1, 2016 to February 28, 2017

3. Revenue minus purchase cost of goods sold

4. Restated as part of the PCAOB audit to take into account -3.1 million euros attribuatable to "Other income and expenses" (Fimitobel dividends of -1.9 million euros and the ceeding of Karina shares of -1.2 million euros) as set forth in the Financial Communiqué of March 16, 2017.

GROUP REVENUES

The final amount of consolidated revenue for the 2016/2017 financial year reported above differs from the projected consolidated revenue announced on 13 April 2017 (€609.4 million).

During the 2016/2017 financial year, i.e. between 1 March 2016 and 28 February 2017, Orchestra- Prémaman Group posted consolidated revenue of €608.3m, up 8.7% year-on-year, thanks to:

• the increase in the number of m² operated under the Orchestra brand run as branches or under commission-affiliation schemes (293,000 m² at 28 February 2017 versus 260,000 m² at 29 February

  2016);

• strong growth in the Childcare business: +50.0% over the 2016/2017 financial year; revenue from the Childcare business totalled €109.7m and now accounts for 18.0% of total business (versus 13.1% in 2015/2016).

Branch network revenues increased 10.9%, while revenues from stores under commission-affiliation schemes, which were impacted by the transfer of business to the Trading arm, were up by only 3.9%. These two main distribution channels account for 94.7% of consolidated revenue for the period.

Internet business progressed well over the period, with revenue climbing 10.7%.

The strong increase in Trading and Miscellaneous revenues was due to the development of international contracts and the transfer of stores in Mauritius (2) and the United Arab Emirates (4), which were previously affiliates, to this network.

Business was up 5.4% in France (where the Group recorded 62.6% of its revenue for the period), where the Group continues to grow its market share in Childcare products, with an increase of 49.5%.

On the international market, the Group's revenue rose by 15.3%. In BeLux, growth stood at 13.6% due to an entirely restructured and refurbished network. This momentum was also seen in Greece, which became the Group's number three market thanks to a 12.8% increase in revenue. Following the acquisition of the Autour de Bébé network, revenue in Switzerland grew by almost 80%.

At 28 February 2017, nearly 1.8 million customers owned a Club card, up 6.7% compared to 29 February 2016. The Group continues to generate almost 90% of its revenue with customers who are members of the Club.

STORE NETWORK

The Large Format store network ("mixed stores and megastores"with a surface area of more than 800 m²), which sell children's clothes, maternity and childcare products under the same roof, located in peri-urban areas, posted revenue of €239.7m, up 33.9% year-on-year.

Revenues from the Textile store network (300m² to 500m²) declined 5.3% to €334.5m (including the Internet business), due to the transformation in our network towards larger formats.

In total over the 2016-2017 financial year, the store network (run as branches or under commission- affiliation schemes) grew by 19 units and around 33,000 m². Large format stores (mixed stores and megastores) now represent 49.0% of the network's store space and a total of 122 stores.

CONSOLIDATED RESULTS

Gross margin amounted to 49.9% of consolidated revenue, compared with 52.7% the previous year, due to:

• changes in the product mix (development of Childcare products, which generate lower margins than textile products),

• delays in the realisation of margin growth via the Childcare products purchasing centre,

• an adverse euro/dollar exchange rate effect on the purchasing price of textile products not reflected in sales prices in a highly competitive market.

  Current gross operating income amounted to €37.4m. Operating costs rose sharply due to the increase in the size of the network (total surface area +12.7%).

  Net provisions increased from €31.9m in the previous year to €48.4m, impacted by:

• a 10.8% increase in depreciation and amortisation over the year (€35.7m versus €32.2m) following major recent investments,

• provisions in the amount of €12.8m recorded for the restructuring of the Prémaman headquarters in Belgium, the closure of stores in China and Turkey and the reorganisation in Saudi Arabia (inventories), disputes with suppliers and impairment of receivables from affiliates and partners.

Current operating income amounted to -€11.0m in 2016/2017, compared with +€18.8m the previous year.

Non-recurrent expenses totalling €10.9m were booked to the "Other operating income and expenses" line, primarily stemmed from the costs of the Destination Maternity transaction (€3.5m), costs of reorganising the Childcare business (€2.4m), and the cost of transforming the Textile stores into larger formats (€2.1m).

At 29 February 2016, this line had recorded a profit of €11.3m (primarily due to capital gains on asset disposals for a net amount of €15.9m).

In view of the significant provisions and the non-recurrent expenses described above, operating income showed a loss of €21.9m.

Financial income posted a net expense of €14.2m (vs. €3.2m the previous year), including:

• an increase in the cost of debt from €6.9m to €7.3m,

• accounting expenses not giving rise to cash flows, in the amount of €7.5m (decline in the fair value of derivatives and hedging instruments).

Net income from discontinued operations showed a loss of €3.6m (compared with a loss of €5.6m last year). Most of this loss was incurred as a result of the store closure plan in Belgium and China.

Consolidated net income Group share showed a loss of €33.6m in 2016-2017 (against a profit of

€17.7m last year).

BALANCE SHEET ITEMS

Growth was particularly robust in 2016/2017, with the net creation of some 33.000m² in additional retail space in France and abroad.

Investments for the year totalled €42.7m, and break down as follows:

• €17.8m in intangible assets (development costs €8.4m, leasehold rights and franchises €0.9m, licences and software €3.6m and structure-building IT projects €3.7m),

• €21.4m in property, plant and equipment (mainly new stores and renovations),

• €2.3m for the acquisition of Autour de Bébé Suisse, renamed as Babycare,

• €1.2m in long-term investments, mostly in the form of guarantee deposits.

  Inventory growth amounted to €43.2m as a result of changes in the network (number of stores and surface area) and the development of the Childcare products activity, with an increase in the relative number of mixed stores and megastores. Inventories (net of provisions) amounted to €257.4m at 28 February 2017, compared with €217.5m at 29 February 2016.

  Group consolidated capital totalled €135.8m at 31 August 2017, i.e. 21.5% of the balance sheet total.

  At 28 February 2017, consolidated net financial debt amounted to €125.5m (versus €144.8m at 29 February 2016). This mainly comprises:

• bond issuances for a total of €100m (€20m maturing in 2020, €41.5m maturing in 2021 and

€38.5m maturing in 2022),