Investments will primarily be carried out for the purpose of realizing the growth strategies of each of the three Premium brands, especially including expansion and strengthening of own distribution channels (physical stores and e-commerce).

Investments in the Group’s infrastructure functions may also be necessary in order to retain the optimum support of the Group’s Premium brands.

The Group’s future investment level will depend on the speed of which the strategic plans of each brand are executed. The investment level may thus vary year on year.

Generally, we expect the Group’s investments to attain a level of approx. 3-5% of the annual revenue. For the financial year 2016/17, investments accounted for 3% of the annual revenue.

Working capital

The Group’s working capital is expected to constitute approx. 10-12% of the annual revenue. At 30 June 2017, the working capital constituted 12% of the annual revenue.

However, the expected revenue growth will naturally lead to working capital investments, and therefore, during periods of high growth, the working capital may exceed this level. Through efficiency improvements and strict control of the elements constituting the net working capital, we are working on continuously minimizing the tied-up working capital.

Capital structure

The Group aims to maintain a low level of financial gearing since, among other things, we operate in a market sensitive to economic trends. Furthermore, the Group’s operating leases represent an element of operational gearing which is not insignificant. At the end of the financial year 2016/17, operating leases amounted to DKK 368 million.

To maintain the highest possible degree of flexibility in the future, we have specifically decided to retain the level of net interestbearing debt at zero for the financial year as a whole. The Group’s credit facilities will then primarily be employed to fund seasonal fluctuations in the working capital during the year. At 30 June 2017, the net interest-bearing debt amounted to DKK 17 million.

To maintain a certain degree of strategic flexibility, the net interestbearing debt, including the Group’s operating leases, may, calculated at 30 June, constitute a level 3 times higher than EBITDA should this be required. At 30 June 2017, this key ratio amounted to 1.8.

Capital allocation and dividend policy

The Group’s priorities for employing its free cash flows are clearly defined and depicted in the below table.

To the extent that the free cash flows exceed the need for valueadding investments, this cash flow will then be distributed to the shareholders – either through dividend distribution or share buy-backs.

When distributing dividends to the shareholders, it is the Group’s policy that the total distribution reflects the Group’s earnings performance.