FY2018 Annual Results Announcement

Transcription

1 FY2018 Annual Results Announcement Analyst Meeting 27 June, 2018

2 Highlights of Strategic Divestment After a review of operations to enhance shareholder value, we decided to improve our balance sheet, simplify our organization, and focus on less established lines of business with high growth potential Disposal of substantial part of North American licensing businesses to Differential Brands Group Inc. - Includes Kids, Accessories, and certain fashion businesses in Men s & Women s fashion businesses - These command a high value - Represents approx. US$2.2 billion of revenue against total revenue of US$4 billion in FY2018 Cash consideration of US$1.38 billion Employees and management team associated with these businesses will transition with the sale Target closing date is 31 August 2018 Allows the company to reduce financial debt, working capital needs and pay a special cash dividend up to HK$0.325 per share (Based on market close on 26 June 2018) The deal is a very substantial disposal and requires shareholders approval 2

3 Overview of Divestment Scope of Business Divestment North American licensing business - All North American Kids Business - All North American Accessories Business - Certain Men s and Women s Fashion Brands: Brands include Joe s Jeans, Bebe, BCBG and Buffalo Jeans GBG Post Divestment North American licensing business - All Footwear Business: Licensing business for footwear brands - Men s and Women s Fashion Brands: Brands include Spyder, Jones New York, Kenneth Cole, Frye, ASL Tahari and Juicy Couture etc. All European Businesses All Asian Businesses Global Brand Management Business (CAA-GBG) Location of Offices Size of Business Number of Employees North America: NYC, LA, North Carolina, Montreal FY2017 Revenue: approx. US$2.0 billion FY2018 Revenue: approx. US$2.2 billion 4,000 employees U.S. Europe Asia FY2017 Revenue: approx. US$1.9 billion FY2018 Revenue: approx. US$1.8 billion 3,000 employees 3

4 Post Divestment Focus on businesses that have strong growth potential A very focused operation Working capital for brick and mortar locations dramatically reduced Stronger balance sheet and credit profile Continue to grow and operate businesses on a global basis 4

5 Key Financial Highlights - FY2018 (US$m) Pre-transaction FY2017 FY2018 Change Annual Results FY2017 FY2018 Change Revenue Total Margin % of Revenue Operating Costs % of Revenue Other Gains/(Losses) (1) Impairment of Goodwill (2) Operating Profit / (Loss) % of Revenue EBITDA (3) % of Revenue Net Profit / (Loss) Attributable to Shareholders % of Revenue (1) FY2017: Gain on remeasurement of contingent consideration payable of US$20m 3,891 4, % 1,111 1, % 28.5% 31.2% 1,030 1, % 26.5% 31.4% 20 (56) 197 (1) % 5.1% 0.0% % 9.8% 9.4% 90 (74) % 2.3% -1.8% 3,891 4, % 1,111 1, % 28.5% 31.2% 1,030 1, % 26.5% 31.4% 20 (56) 1, (1,050) % 5.1% -26.1% % 9.8% 9.4% 90 (903) -1,106.2% 2.3% -22.4% FY2018: Gain on remeasurement of contingent consideration payable of US$15m, gain on disposal of business of US$12m, gain on disposal of trademarks of US$11m, net off with write off of loan receivable of US$34m and write off of intangible assets of US$59m (2) Impairment of Goodwill: a non-cash impairment of goodwill taking into account the strategic divestment, the external market condition and business performance (3) EBITDA is defined as net profit before net interest expenses, tax, depreciation and amortization. This also excludes share of results of associate and 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 5

6 Net Profit Analysis - FY2018 (US$m) FY2017 FY2018 Total Margin 1,111 1,254 Operating Costs (1,030) (1,265) Other Gains / (Losses)* 20 (56) Gain on Disposal of Interest in a Subsidiary / an Associate Impairment of Goodwill (1,050) Operating Profit / (Loss) 197 (1,050) Interest Income 2 3 Non-cash Interest Expenses (14) (26) Cash Interest Expenses (65) (75) Share of Profits of Associate and Joint Ventures 4 8 Change in Redemption Value on Put Option written on Non-Controlling Interests - 24 Profit / (Loss) Before Taxation 124 (1,116) Taxation (29) 230 Net Profit / (Loss) for the Year 95 (887) Non-Controlling Interests (5) (16) Net Profit / (Loss) Attributable to Shareholders 90 (903) * FY2017: Gain on remeasurement of contingent consideration payable of US$20m FY2018: Gain on remeasurement of contingent consideration payable of US$15m, gain on disposal of business of US$12m, gain on disposal of trademarks of US$11m, net off with write off of loan receivable of US$34m and write off of intangible assets of US$59m 6

7 Balance Sheet Highlights - FY2018 (US$m) Mar 2017 Sep 2017 Mar 2018 Total Debt (1) 1, ,201 Cash Net Debt ,103 Total Equity 2,456 2,549 1,615 Total Capital (2) 3,400 3,465 2,718 Gearing Ratio (3) 27.8% 26.4% 40.6% Net increase in debt due to investment in infrastructure, settlement of consideration payable for prior years acquisitions, and purchasing certain assets for the operation of new brands Operating cash flow decreased due to lower operating profit, increase in working capital due to higher revenue With the strategic divestment, CAPEX, acquisition payments and working capital expected to significantly decrease in FY2019 (1) Total debt represents bank loan and bank overdraft ; (2) Sum of net debt and total equity; (3) Net debt divided by total capital 7

8 Looking Ahead

9 Looking Ahead Strategic Divestment: Consideration Special Cash Dividend up to US$ 1,380 m HK$ per share A simpler and more nimble organization, with a tighter and deeper focus Continue to attract new licenses and brands to our portfolio U.S. to focus on footwear and men s and women s fashion businesses; all European and Asian businesses, and brand management business have no change Continue to improve our cash flow via tighter working capital management and stronger cost discipline, with emphasis on businesses that require lower working capital Further improve efficiency of our verticals and enhance synergies across our platforms 9

10 Disclaimer This document has been prepared by Global Brands Group Holding Limited (the Company ) solely for selected recipients for information purposes only. These materials are given to you solely for your own use and information and no part of this document may be copied, reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organization/firm) or published, or otherwise disclosed, in whole or in part, in any manner and for any purpose without the prior consent of the Company. Any forwarding, distribution or reproduction of this document in whole or in part is unauthorized. The information contained in this document has not been independently verified. No representation, warranty or undertaking, express or implied, is made by the Company or any of its affiliates, advisers or representatives as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions presented or contained herein. The information contained in this document should be considered in the context of the circumstances prevailing at the time, is subject to change without notice and the Company makes no undertaking to update the information in this document to reflect any developments that occur after the date of the presentation. It is not the Company s intention to provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the Company, or its financial or trading position or prospects. Neither the Company nor any of its affiliates, advisers or representatives accept any responsibility or have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. This document may contain statements that reflect the Company s current intent, beliefs and expectations about the future as of the respective dates indicated herein. These forwardlooking statements are not guarantees of future performance and are based on a number of assumptions about the Company s operations and factors beyond the Company s control and are subject to significant risks and uncertainties, and accordingly, actual results may differ materially from those described in these forward-looking statements. Neither the Company nor any of its affiliates, advisers or representatives has any obligation, nor do they undertake, to update these forward-looking statements for any events or developments including the occurrence of unanticipated events that occur subsequent to such dates. This document does not constitute, in whole or in part, an offer for subscription or for sale or invitation to purchase or subscribe for any securities for sale in the United States, Hong Kong or anywhere else. No part of this document shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Specifically, and without limiting the foregoing, these materials do not constitute, nor are they intended to constitute (i) a prospectus within the meaning of the U.S. Securities Act of 1933, as amended, and the regulations enacted thereunder, or (ii) a prospectus in connection with the offering for sale or subscription of shares pursuant to the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) or the Companies Ordinance (Chapter 622 of the Laws of Hong Kong). No securities may be sold in the United States without registration with the United States Securities and Exchange Commission except pursuant to an exemption from, or in a transaction not subject to, such registration. Save for those shares, issued or to be issued, of the Company in respect of which application for listing in Hong Kong had already made, the Company has not registered and does not intend to register any shares or conduct a public offering of securities in the United States, Hong Kong or anywhere else. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves of, and observe, any such restrictions. 1

11 FY2018 Annual Results Announcement Analyst Meeting 27 June, 2018