GBG 2015 Interim Analyst Meeting - 20150811file.irasia.com/listco/hk/gbg/cpresent/pre150811.pdf ·...
Transcript of GBG 2015 Interim Analyst Meeting - 20150811file.irasia.com/listco/hk/gbg/cpresent/pre150811.pdf ·...
2015Interim ResultsAnnouncement
Analyst MeetingAugust 11, 2015
(1) EBITDA is defined as net profit before net interest expenses, tax, depreciation and amortization. This also excludes share of results of joint ventures, material gains or losses which are of capital nature or non-operational related, acquisition related costs and non-cash gain on remeasurement of contingent consideration payable
(2) Adjusted Net Profit / (Loss): Excluding merger & acquisition costs, non-cash items and non-operational expenses, such as gain on remeasurement of contingent consideration payable, amortization of other intangible assets, non-cash interest expenses and non-operational expenses
• Turnover impacted by the tail end of exiting underperforming brands and weakness in the European markets which was largely driven by FX. Excluding these factors, turnover grew by approximately 6%
• Total margin percentage increased by 200 basis points
• Operating costs reduced due to continuous integration of our businesses and operations
• All profit lines recorded significant improvement
(US$m) 1H 2014 1H 2015 Change
Turnover 1,349 1,282 -5.0%
Total Margin 400 406 1.4%% of Turnover 29.7% 31.7%
Operating Costs 463 449 -3.2%
Core Operating Profit / (Loss) (63) (43) 32.5%% of Turnover -4.7% -3.3%
EBITDA (1) 34 47 39.6%
Net Profit / (Loss) Attributable to Shareholders (98) (35) 64.5%% of Turnover -7.3% -2.7%
Adjusted Net Profit / (Loss) (2) Attributable to Shareholders
(53) (40) 24.3%
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Key Financial Highlights
(1) Adjusted Net Profit / (Loss): Excluding merger & acquisition costs, non-cash items and non-operational expenses, such as gain on remeasurement of contingent consideration payable, amortization of other intangible assets, non-cash interest expenses and non-operational expenses
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Net Profit Analysis
(US$m) 1H 2014 1H 2015 Change
Core Operating Profit / (Loss) (63) (43) 32.5%
Gain on Remeasurement of Contingent Consideration Payable 20 44
Amortization of Other Intangible Assets (25) (29)
One-off Reorganization and Listing Costs related to Spin-off (29) —
Other Non-core Operating Expenses (2) (3)
Non-cash Interest Expenses (9) (7)
Cash Interest Expenses (7) (21)
Share of Profits of Joint Ventures — 2
Tax 17 24
Non-controlling Interest – (2)
Net Profit / (Loss) Attributable to Shareholders (98) (35) 64.5%
Adjusted Net Profit / (Loss) (1) Attributable to Shareholders (53) (40) 24.3%
• Operating cash flow remained positive despite a loss in the period
• Net debt increased for payment of prior acquisitions and investment in new licenses
- These investment will generate
positive operating cash flow in the second half of the year
(1) Total debt includes bank loan
(2) Sum of net debt and total equity
(3) Net debt divided by total capital
(US$m) Dec 2014 Jun 2015
Bank Loan 667 837
Total Debt (1) 667 837
Cash 126 102
Net Debt 541 735
Total Equity 2,475 2,443
Total Capital (2) 3,016 3,178
Gearing Ratio (3) 17.9% 23.1%
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Balance Sheet Highlight
Skewing Effect
5
0
1,000
2,000
(US$m)
39%61%1,349m
2,105m
1H 2014 2H 2014
0
1,000
2,000
(US$m)
40%60%1,330m
1,958m
1H 2013 2H 2013
Turnover 1H vs 2H in 2013
Turnover 1H vs 2H in 2014
Licensed Brands
Fashion
EntertainmentCharacters
Accessories & Home
Footwear
* Partial List7
A Portfolio of Power Brands*
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• Turnover affected by discontinuation of underperforming brands and weakness in the European markets which was largely driven by FX.
• Total margin percentage improved resulting from better mix of businesses, in addition to the impact of exiting underperforming brands
• Operating costs decreased as a result of rationalizing our businesses
(US$m) 1H 2014 1H 2015 Change
Turnover 1,152 1,062 -7.9%
Total Margin 347 329 -5.1%% of Turnover 30.1% 31.0%
Operating Costs 379 358 -5.6%
Core OperatingProfit /(Loss)
(32) (29) 11.0%
% of Turnover -2.8% -2.7%
Segment Highlights - Licensed Brands
Controlled Brands
Fashion
Accessories
Footwear
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Seven GlobalA Portfolio ofControlled Brands*
* Partial List
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• Key Controlled Brands continued to perform well, including contribution from Juicy Couture for the full period
• Total margin percentage increased by 800 basis points due to improvement on existing margins and larger contribution from better brands
• Operating costs increased due to investment in Frye, Juicy Couture and Spyder
(US$m) 1H 2014 1H 2015 Change
Turnover 196 220 12.0%
Total Margin 53 77 44.0%% of Turnover 27.3% 35.1%
Operating Costs 84 91 7.8%
Core OperatingProfit /(Loss)
(31) (14) 55.2%
% of Turnover -15.7% -6.3%
Segment Highlights - Controlled Brands
- Focus on not only skiwear but also off mountain sportswear
• Appointed a new president
• Strong online sales momentum continued
• Re-launched e-commerce site to further strengthen brand storytelling and customer engagement
• Appointed a new CEO
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Continuous Development of Key Controlled Brands• New stores opening – an additional store just opened in
August in Atlanta. Another 3 new stores are set to open this year in Dallas, New York and Washington DC
• Expanding presence to South Korea in the run up to the 2018 Winter Olympics and gearing up for China, the host country of the 2022 Winter Olympics
- Shop-in-shops and stand-alone stores opening in South Korea beginning in August
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Strengthening Women’s Fashion/Apparel Platform• An iconic American brand covering multiple categories
including womenswear, menswear, kidswear, accessories, and footwear.
• Leveraging our expertise in apparel and accessories as well as global relationships with retailers
• The brand drives close to US$1 billion in retail sales across department stores in the US as well as key international markets
• Strong sales momentum continued since launching in the first half of 2014.
• Expanding girls category with shop-in-shop opening at Harrods in the Fall, plus others scheduled to open in Asia and Middle East by the end of 2015
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• Strong focus on iconic American brands in the affordable luxury space;we are unique - we grow and globalize brands through licensing, ownership, and brand management
• We have a strong brand portfolio, leveraging our core competencies in key product categories
• Capturing new business opportunities in an evolving industry landscape (e.g. expanding portfolio of long-term licensing partnership with various brand groups)
• Capitalizing on the digital opportunities with omni-channel initiatives around the world, e.g. strategic partnership in China
• Strengthening the organization with investment in our global talent
• Improved cost efficiency across our global platform
One Year after Listing
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The Outlook
• US economy is relatively stable; Europe continues to be under pressure. Despite China growing at a slower rate than previous years, Asia continues to be relatively stronger than the rest of the world
• Margins continue to trend up
• Continue to drive operational synergies to maximize cost efficiency
• Pipeline full of exciting licensing deals
• We are focusing on a few strategic acquisition opportunities
• In line with previous years, both turnover and profits will accelerate significantly in the second half due to impact of skewing effect
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Disclaimer
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2015Interim ResultsAnnouncement
Analyst MeetingAugust 11, 2015