BILLABONG INTERNATIONAL LIMITED Good morning.
On behalf of my fellow Directors I welcome you all to the 2015 Billabong International Annual General Meeting.
For the first time our AGM is also being audio webcast and can be accessed globally via www.billabongbiz.com.
In the Chairman's Report in our 2015 Annual Report I provided in some detail a review of the last 12 months, during which our turnaround agenda was progressed significantly.
Today I'd like to provide a slightly wider perspective.
In the last few years the action sports sector has undergone a great deal of change, bringing both challenge and opportunity.
Two years into our turnaround, we are confident in our key brands' resilience. They have the robustness to transition and prosper through these changes, including the changes that we are initiating, and challenges outside our control like currency movements and consumer spending patterns. Nevertheless these factors are having and will continue to have an impact on the Company in the shorter term.
There will be competing demands for young consumers' share of wallet but we do not foresee any long-term decline in either participation or interest in the lifestyle our brands represent. Looking at surfing alone, every measure we have shows a steady increase in global participation rates.
As we position Billabong for a new era and environment, one of our competitive advantages is our heritage and the authenticity that goes with it.
Growing great global surfing brands requires investment: investment in world-class athletes and their potential successors; investment in events and competitions that develop local talent and then showcase them globally.
We are one of a handful of brands in our sector that has supported and continues to back grassroots grom competitions through to some of the world's most iconic sporting events, like Pipe Masters and Tahiti's Teahupoo.
It also requires investment in attracting the best people, from the designers who live, breathe and set the course for future trends, through to retail teams whose enthusiasm for this lifestyle shines through with our customers.
We have those people globally and Neil and his management team have reignited amongst them a passion for what we do.
And today great global brands must be underpinned by investment in structures, platforms and expertise that sit behind them. As you will shortly hear from Neil this process is underway.
I would simply add that, for all our necessary focus on reforming our systems and structures in recent years, we have never forgotten that in the longer term it is the brands that have to be the stars of this show.
Today shareholders will hear from Billabong Global Brand President Shannan North. This is a very deliberate statement on our part as to where we are at in the turnaround. Our engagement and focus with our shareholders will steadily return to our brands and their performance rather than the platforms behind them.
Turnarounds are hard and seldom linear. The changes we are making require an intense focus if we are to successfully execute on our turnaround. Again as you will shortly hear from Neil, we have made very substantial progress in the last two years but we are in a critical implementation phase for many of our key projects. Your Board's key priority right now is to ensure that the global, complex and challenging changes and projects being rolled out are on track.
We believe we have in place a Board with the appropriate composition, size and diversity of expertise to ensure that we provide a rigor around implementation of these projects.
This year Matthew Wilson stood down from the Board. Matthew joined our Board at the outset of the turnaround late in 2013 and I'd like to thank and acknowledge him for his contribution to it.
I also want to thank our people globally for their ongoing work on this turnaround and their conviction in it.
In 2015, Billabong International returned to full-year EBITDA growth for the first time since 2008. We also reported our first full-year profit since 2011. As stated in the Annual Report, given we are still in the early stages of financial recovery, your Board does not anticipate there being a dividend in respect of the 2015 - 16 financial year.
We are committed to continuing to build on the positive momentum behind Billabong International. We are committed to the strategy Neil set out to you at the AGM two years ago. And we are confident in our brands and our people to deliver on that strategy.
Thank you Ian. Good morning to everyone here and good day to those of you listening in from around the world on our webcast.
Before jumping in, let me provide a few facts to set the stage. Revenues for the last Fiscal Year totaled about $1.1 billion, with a geographic balance of 43% Americas, 40% Asia Pacific, and 17% Europe. Our big three brands of Billabong, RVCA, and Element comprise 84% of our wholesale revenue. Composition of our direct to consumer business is shifting toward mono-brand retail and ecommerce, a trend we see continuing going forward. The business grew EBITDA for the first time since 2008 at a 6% EBITDA margin and posted an after tax full year profit for the first time since 2011, albeit relatively small.
The themes of our presentation today are not new. We said a couple years ago that this was a complex difficult turnaround. That it is going to take time to build the foundation necessary to sustain growth and margin expansion. That we are guided by a holistic strategy and will see it through to full implementation over the next several years.
These are the seven pillars of our strategy. They have been detailed at prior AGMs and our earnings calls. Today we remain steadfast on that course - focused, determined, and confident in our ultimate success. We are not distracted by disruptions in the market nor dissuaded by the onset of some challenging headwinds. Reflecting on our progress to date, five themes stand out.
Number one…. two years into the turnaround, this is a very different company… stronger financially and organisationally, more globally oriented, and brand led.
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