OrotonGroup : 17/03/2016 - OGL HY16 Investor Presentation

FY16 INVESTOR PRESENTATION XX March 2016

HY16 INVESTOR PRESENTATION

17 March 2016

CEO/MD - Mark Newman CFO - Vanessa De Bono

1

HY16 Reported $ M	HY15 Reported $ M	Change %
Revenue	74.5	66.8	+12%
- Group LFL Sales Growth	+10%	-6%
Gross Margin (%)	60.1%	62.7%
Total Expenses (%)	52.2%	55.2%
EBITDA	8.9	7.1	+25%
EBIT	6.2	4.5	+38%
EBIT Margin (%)	8.3%	6.7%
NPAT	3.8	2.2	+73%
EPS (cents)	9.2	5.4	+73%
Interim DPS (cents) / Fully franked	6.0	4.5	+33%
Net Cash / (Debt)	2.0	(5.6) HY15 (5.8) FY15
HY16 $ M	HY15 $M	Change %
Underlying EBIT(1)	6.2	4.8	+30%
- excluding Brooks Brothers (2)	6.2	5.8	+8%
Underlying EPS (cents) (1)	9.2	6.1	+52%
- excluding Brooks Brothers 2)	9.2	8.5	+9%

• Group Revenue up 12% to $74.5m: - Group like for like (LFL) sales were +10% in HY16 with all channels positive

  • 2nd year of the Oroton brand repositioning with LFL sales growth of +11% achieved

  • Oroton International LFL sales growth of +6%

  • Gap sales +29% (LFL +6%) as brand awareness increases with a full 6 months of the recently expanded network

  
  

• Gross margin declined to 60.1% due to downward pressure from higher USD purchasing costs in AUD not fully offset by retail price increases
• CODB decreased -300bps to 52.2% of sales (HY15: 55.2%) as the company continued to be vigilant about cost control whilst still increasing investment in marketing
• EBIT increased to $6.2m or +38%:

  • Increased revenue together with positive gross margin dollar generation, reduced CODB and reduced losses from International and GAP, offset by approximately $0.9m foreign currency impact

  • No losses following exit from Brooks Brothers joint venture in July 2015 (HY15:

    $1m)

    
    

• Underlying EBIT excluding share of BB losses improved +8% (2)
• EPS up 73% to 9.2 cents

  • EPS increase higher than EBIT increase as current effective tax rate improves from 47% (HY15) to 37% (HY16) due to less non-deductible international losses and no equity accounted losses in Brooks Brothers

• Strong Balance Sheet and no debt to support growth initiatives
• Interim DPS of 6.0 cents fully franked (+33% vs HY15)

  • The Board has declared an interim fully franked dividend of 6.0 cps (HY15: 4.5cps)

(1) + (2) No underlying adjustments in HY16

1. Underlying HY15 comparatives are reconciled to IFRS audited measurements through the add back of the onerous Hong Kong Store lease after exit ($0.3m) per HY15 presentation

2. Underlying HY15 comparatives are changed to be consistent with the FY15 year end presentation by adding back the trading losses from Brooks Brothers Australia joint venture ($1.0m) following the exit in July 2015

   
   

   Oroton - Sales growth restored as investment in a true affordable luxury positioning continues to gain traction

   
   

   • LFL sales restored to +11% in HY16 compared to -6.5% in HY15 when we cycled the aggressive discounting of FY14 and prior years

     
     

   • Womens handbags driving growth in full priced stores and online with unit volume and average selling prices up

     
     

   • Brand elevation resonating with customers:

     • Limited edition products, new categories, and clientelling together with the new store concept has positively impacted consumers perception of the Oroton brand luxury positioning and led to higher average selling prices and transaction value

       
       

     • New store concept continues to be more productive with higher LFL sales, average transaction value and conversion rates compared to non refurbished stores

       
       

     • Compelling brand campaigns across all media are resonating with our customers and we continue to work on innovative ways to engage, retain and convert

       
       

     • Increased social media engagement and celebrity endorsement

       
       

   • Investment in technology and marketing to maintain position as e-commerce leader

     with online sales growing from ~10% in HY15 to ~12% in HY16 of sales mix

     
     

   • Continue to review store network for opportunities to take more prominent positions in key centres or close marginal non performing stores

     
     

   • There were 71 stores at the end of HY16 compared to 71 at the end of FY15 and HY15, with 1 closure and 1 opening during the half year

• International losses were significantly reduced to ~$1m (HY15: ~$1.8m) with positive LFL sales and gross margin dollar contribution, and the closure of loss making stores and Singapore office

  
  

• We continue to apply strict performance measures to all International stores with a focus on eliminating losses in this channel

  
  

• Store closures since FY15 and the closure of the Singapore Office had a positive impact on earnings in HY16

  
  

  • Closed 1 Malaysia store in August 15

    
    

  • Exiting all Asia department store concessions by May16

    
    

• Total number of International stores at HY16 was 14 (FY15: 15 HY15: 16)

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