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75 million Senior Notes 1 st December 2015 Fiscal year 2015 annual - - PowerPoint PPT Presentation
75 million Senior Notes 1 st December 2015 Fiscal year 2015 annual - - PowerPoint PPT Presentation
365 million Senior Secured Notes 75 million Senior Notes 1 st December 2015 Fiscal year 2015 annual results Forward Looking Statements This presentation may include forward looking statements. These forward looking statements can be
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Frédéric Poux Chief Executive Officer Didier Pascual Chief Financial Officer André Verneyre Investor Relations investors@afflelou.net / +33 1 4937 7337
Today’s presenters
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1. Commercial update 2. Financial review 3. Strategic perspectives Q&A
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718 300 77 63 88 25
Alain Afflelou Spain AA Portugal
1,271
Alain Afflelou France AA / Other countries Claro by Afflelou Optical Discount
Executive summary
Network sales stable at €643 million (-0.1%)
– French LFL sales outperformed sector by +0.7% since Q2 (after weak Q1) – Second year of strong growth in Spain: +4.0% LFL FY15 (+3.6% in FY14) – Net openings of 9 stores; achieved threshold of 300 stores in Spain – 1,271 stores as at 31 July 2015, including OPTICAL DISCOUNT (88 stores)
Despite stable network sales, FY15 EBITDA at €64.8m (14.9% below
FY14) – €3.9m lower supplier gross profit (quality issue, mix) – €2.3m lower D.O.S. profitability – €3.2m higher investment in communication
Improvement in net debt to €423.0 million (vs. €428.4 million a year ago)
– €18.4 million investment in capex and acquisitions (€11.6 million in FY14) – Improvement in working capital management
Commercial update
– Benefits from strategic shift towards closed networks in France – Launched new commercial concept “Win-Win” – Further expansion in Spain – Reduction in D.O.S. perimeter going forward – Acquisitions: OPTIVISAO and OPTICAL DISCOUNT
Storecount as at July 31st, 2015
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Outlook and dynamics in our main geographical areas
France: still a challenging market
– Consumer sentiment had been improving over the last several months - until the terrorist attacks in Paris – Increased penetration of closed networks – A changing regulatory environment (Loi de Financement de la sécurité sociale, Loi de sécurisation de l’Emploi, current discussions on Loi de Santé) – However, sector remains resilient despite current market challenges – Stable market in value (but LFL declines due to increased number of opticians) – Structural attractiveness of sector supported by ageing population, social habits and technological improvements – Expect market to consolidate over the medium term and Afflelou to benefit from consolidation
Spain: Afflelou winner in a growing market
– 2 years of strong market growth (following several years of decline due to the economic crisis) – AA Spain continuing to gain market share
Other countries
– Further expansion opportunities in other countries in which we already have a presence
80 85 90 95 100
01-2010 07-2010 01-2011 07-2011 01-2012 07-2012 01-2013 07-2013 01-2014 07-2014 01-2015 07-2015
Confidence consumer survey
Source / INSEE – Nov2015 2014
1,585 114.3
LTM-7/15
119.2 1,663 99.0
2010
98.5
+21% +16%
- 5%
1,555 1,661 103.7
2013 2011
99.7
2012
1,593
Spanish market AA Spain
Spanish market and AA Spain sales (incl.VAT)
Source / SWV and company figures
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Commercial achievements
France
– Benefits from strategic shift towards closed networks in France – Three out of six closed networks ran tenders during fiscal year: AA achieved share at or above its market share
- utside preferred networks, thereby gaining fair representation in this previously untapped pool of customers
– Clear evidence of positive sales impact for stores participating in closed networks – Two more upcoming tenders: Kalivia (13m+ people) and Sévéane (6m+ people) – Targeted support for underperforming franchisee stores (Programme ‘Elite’) – AA has outperformed the market since Q2 (+0.7% versus market LFL)
Marketing push in H2: launch of the Sharon Stone partnership and innovative WIN WIN offer
– Maintain reputation as the most innovative optical banner – Increase brand visibility with Sharon Stone partnership – Communication expenses and advertising space increased to maintain leading position
Active management of our lenses manufacturers partnerships
– Changes in the distribution of our exclusive suppliers – Growing influence of closed networks also impacts the distribution of suppliers
D.O.S.
– Strategic initiative to significantly reduce D.O.S. network in France: 5 stores already closed or sold back since April with several transactions in advanced stages of completion – Improvement of financial performance at our D.O.S. structure in Spain
External growth steps with OPTIVISAO and OPTICAL DISCOUNT
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1. Commercial update 2. Financial review 3. Strategic perspectives Q&A
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8 € in millions (except percentages) 2015 2014
∆
2015 2014
∆
INCOME STATEMENT Total network sales 169.0 166.9
1.2%
642.6 643.1
(0.1%)
Franchisor revenue 56.5 66.5
(15.1%)
225.8 243.4
(7.3%)
Directly-owned stores revenue 31.8 30.2
5.3%
113.6 107.4
5.7%
Elimination (8.4) (7.7) (28.7) (27.0) Total Group revenue 79.9 89.0
(10.2%)
310.7 323.9
(4.1%)
Franchisor gross profit 24.9 30.5
(18.1%)
102.5 109.9
(6.8%)
Directly-owned stores gross profit 18.3 17.2
6.3%
67.7 66.0
2.5%
Intercompany eliminations (3.6) (3.3) (12.5) (10.9) Total Group gross profit 39.6 44.4
(10.7%)
157.6 165.0
(4.5%)
Franchisor EBITDA 17.2 22.5
(23.5%)
70.8 79.8
(11.3%)
Directly-owned stores EBITDA (1.1) (0.8) (6.0) (3.7) Total Group EBITDA 16.1 21.6
(25.6%)
64.8 76.1
(14.9%)
as a % of Group revenue 20.2% 24.3% 20.9% 23.5% For the year ended July 31, ended July 31, For the three months
Group financials
Network
Network sales up since Q2 and stable for the full
fiscal year
LFL at -0.9% in FY15 (France -1.8%, Spain
+4.0%), despite -7.1% in Q1 Revenues
Franchisor revenues down by 7.3% mainly due to
changes in purchasing activities
D.O.S. revenues up with the network expansion
Gross profit
Franchisor performance impacted by
– Purchasing activities (- €3.9m) – Communication effort (- €3.2m)
D.O.S. decline at the gross margin level (-1.8%)
EBITDA
Q1 (- €3.9m) weighs on FY underperformance - €7.4m of underperformance from Q2 to Q4, but
including the stronger communication expenses
EBITDA at almost €66 million, including + €0.9m
EBITDA contribution of Optical Discount
1.0 Evolution of network sales by quarter vs FY14
1.2% 2.2% 2.5%
- 6.6%
Q1 Q2 Q3 Q4
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1 174 July 15
- 1
AA France
- 7
Other countries +3 Portugal Optical Discount +88 Spain +14 Claro 1 271
Network
Network sales at -0.1% in FY15
LFL sales at -0.9% Network expansion of 9 stores, and 97 stores
including Optical Discount France
LFL outperforming sector since Q2
– Positive impact of our recent penetration in closed networks – Impactful communication campaigns (Sharon Stone and WIN WIN commercial offer)
Higher number of closures affects net number of
stores
Claro ‘on hold’, in light of Optical Discount
acquisition Spain
Positive performance in LFL sales at +4.0% Target of 300 stores reached at the end of FY15
International & Portugal
Broadly flat on LFL + 3.6% overall sales
Network sales evolution (€m) Store count evolution
669.9
July 15 LTM Other countries
+1.3
AA Portugal
+0.2
AA Spain Optical Discount
+7.4
Claro
+27.3 +0.7
AA France
- 10.1
July 14 LTM
643.1 LFL growth -1.8% -3.6% +4.0% -3.0% -0.1% Total -0.9% LFL growth -1.1% -5.5% +3.1% -11.4% +5.2% Total -0.3% Q4 FY15 642.6
1 183
July 14
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Franchisor segment
Revenues
Royalties in line with network sales Suppliers’ revenues and gross profit (- €3.9m)
impacted by changes in products and suppliers’ mix – Listing fees strong growth linked to the reclassification of suppliers’ revenue streams – Licensing revenues progressively shifting into purchasing gross profit and listing fees – Lower Purchasing revenues due to a mix effect in exclusive suppliers
Trading revenues close to FY14, despite negative
base effect (launch of Afflelou collections in March 2014); gross margin stable
Communication revenues in line with FY14, but gross
profit down by €3.2m after strong expenses in H2 FY15 Gross Profit down 6.8% (- €7.4m)
Specific expenses in new projects (online strategy,
network management team) now completed EBITDA in FY15 down - €9.0m
€ in millions (except %) 2015 2014
∆
2015 2014
∆ 2015 2014
INCOME STATEMENT Total network sales 169.0 166.9
1.2%
642.6 643.1
(0.1%)
Entry fees and royalties 6.3 6.2
1.7%
24.0 24.1
(0.3%) 3.7% 3.7%
Listing 7.7 6.8
14.0%
27.2 23.9
13.8% 4.2% 3.7%
Licensing 0.9 4.7
(81.4%)
9.0 21.2
(57.8%) 1.4% 3.3%
Purchasing 19.0 19.9
(4.7%)
77.2 83.4
(7.5%) 12.0% 13.0%
Trading 9.9 12.0
(17.1%)
35.3 36.2
(2.4%) 5.5% 5.6%
Communication 16.0 23.3
(31.2%)
64.4 65.5
(1.6%) 10.0% 10.2%
Others 1.9 1.3
45.0%
5.7 5.3
7.0% 0.9% 0.8%
Interactivity eliminations (5.2) (7.7)
(31.9%)
(17.0) (16.2)
5.2% (2.7%) (2.5%)
Franchisor revenue 56.5 66.5
(15.1%)
225.8 243.4
(7.3%) 35.1% 37.9%
Franchisor gross profit 24.9 30.5
(18.1%)
102.5 109.9
(6.8%) 15.9% 17.1%
Franchisor EBITDA 17.2 22.5
(23.5%)
70.8 79.8
(11.3%) 11.0% 12.4% For the three months
For the year ended July 31, ended July 31,
% of network sales
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Directly-owned stores
Sales increased by +5.7% in FY15
+10 net stores, of which 9 in Spain
– France had a peak at 91 stores in April 2015; 5 stores reduction achieved as at July 2015 – Completion of our restructuring programme in Spain
Performance of our networks
– Changes in the French perimeter affected LFL sales; D.O.S. progressively converged with franchisees’ performance – Spanish stores at positive LFL sales Profitability
Gross margin at 59.6% compared to 61.4% last year
– GM in Spain stabilized versus FY14 – France impacted by closed networks margin dilution but incremental customer traffic; progressive recovery
Other charges (personnel store costs, rents) weigh on
profitability given LFL sales decline in France; good control on headquarter costs EBITDA in FY15 declined by €2.3m versus prior year
Core and ramp up categories still positive (+4.0%) before
headquarter costs
Strong underperformance of Claro stores Spanish perimeter is progressively recovering
€ in millions (except %) 2015 2014
∆
2015 2014
∆
D.O.S. 187 177 187 177 D.O.S. revenue 31.8 30.2
5.3%
113.6 107.4
5.7%
D.O.S. gross profit 18.3 17.2
6.3%
67.7 66.0
2.5% as a % of D.O.S. revenue 57.5% 56.9% 59.6% 61.4%
D.O.S. EBITDA (1.1) (0.8) (6.0) (3.7)
as a % of D.O.S. revenue (3.4%) (2.7%) (5.3%) (3.4%)
For the year ended July 31, ended July 31,
For the three months
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Consolidated EBITDA
Gross profit down 4.5%
Q4 gross profit impacted by communication
costs
Franchisees purchases represent a negative
impact of €3.9m
D.O.S. gross profit impacted by lower LFL
sales in France and a 1.8 % decline in gross margin Overheads
Personnel costs grew in proportion to sales
– Slight deterioration at D.O.S. in % of sales – Headquarter costs controlled (+ € 0.7m), despite new projects and reinforcement of
- ur network management teams
Restructuring of headquarter organisation
(D.O.S., wholesale, web) and optimization (premises left unoccupied) expected to generate positive impact from FY16 EBITDA down €11.3m
One-off issues weigh on FY performance
€ in millions (except percentages) 2015 2014
∆
2015 2014
∆
INCOME STATEMENT Total network sales 169.0 166.9
1.2%
642.6 643.1
(0.1%)
Directly-owned stores 187 177 187 177 Franchisor revenue 56.5 66.5
(15.1%)
225.8 243.4
(7.3%)
Directly-owned stores revenue 31.8 30.2
5.3%
113.6 107.4
5.7%
Elimination (8.4) (7.7) (28.7) (27.0) Total Group revenue 79.9 89.0
(10.2%)
310.7 323.9
(4.1%)
Franchisor gross profit 24.9 30.5
(18.1%)
102.5 109.9
(6.8%)
Directly-owned stores gross profit 18.3 17.2
6.3%
67.7 66.0
2.5%
Intercompany eliminations (3.6) (3.3) (12.5) (10.9) Total Group gross profit 39.6 44.4
(10.7%)
157.6 165.0
(4.5%)
Overheads (23.5) (22.7)
3.4%
(92.8) (88.9)
4.5%
as a % of Revenue (29.4%) (25.6%) (29.9%) (27.4%)
- /w wages and salaries
(13.3) (12.3)
8.3%
(52.1) (49.3)
5.7%
Franchisor EBITDA 17.2 22.5
(23.5%)
70.8 79.8
(11.3%)
Directly-owned stores EBITDA (1.1) (0.8) (6.0) (3.7) Total Group EBITDA 16.1 21.6
(25.6%)
64.8 76.1
(14.9%)
as a % of Group revenue 20.2% 24.3% 20.9% 23.5% For the year ended July 31, ended July 31, For the three months
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Cash flow and net debt
Net cash from operating activities
Profit decline corresponds approximately to the
difference in cash before borrowing costs
Change in working capital well monitored, despite
increase in receivables from franchisees (c.-€5m, slightly reduced at FY end) Investing activities amounted to €18.4m
External growth (Optivisao and Optical Discount)
represents c.€6 m
Stores’ expansion at our D.O.S. accounts for €7.5m Refurbishment and franchisor capex account for
€4.9m Financing activities
Correspond mainly to payments of interest charges on
€365m senior secured and €75m senior notes (€26.4m)
Reimbursement of €2.8m bilateral loans (inherited
from store buybacks) and financial leases to optimize
- ur cash
Consolidated statement of cash flows 2015 2014 € in millions I – Cash flows before borrowing costs 64.2 74.3 II – Change in working capital requirements (9.2) (22.0) Net cash from operating activities (I + II) 55.0 52.3 III – Net cash used in investing activities (18.4) (11.6) IV – Net cash from / (used in) financing activities (30.2) (23.8) Change in cash (I + II + III + IV) 6.3 16.9 Cash and cash equivalents at beginning of period 19.7 2.8 Cash and cash equivalents at end of period 26.0 19.7 For the year ended July 31,
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1. Commercial update 2. Financial review 3. Strategic perspectives Q&A
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Update on our commercial strategy
Commercial strategy
Focus on Win-Win offer will continue in next months Product offers on contact lenses and lenses will
support our innovative image
Communication spend will be focused on advertising
space, to reach a maximum share of voice
Support for franchisees for closed networks tenders
(especially Kalivia) International expansion
Growing brand awareness
– Sales of our exclusive frames abroad – Visibility with our international communication and Sharon Stone’s face
Expansion
– In existing geographies: Belgium (Flanders) – Exploring China, Chile
OPTIVISAO
Suppliers
Recover profitability through strong partnerships with
suppliers
Progressive re-engineering of our supply chain
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Reducing the Directly Owned Stores portfolio
French D.O.S.
Strategic plan started since April 2015 to reduce existing store portfolio in France (from 91 stores, as at
04/2015)
Target to reduce the French perimeter to approximately 50 core stores
– Positive cash impact – Closures and sale back programme will reduce D.O.S. losses
Closure or sale back of 15 stores already in process Reduced headquarter costs Integration of Claro by Afflelou stores into Optical Discount Sales improvement since beginning of the fiscal year
Spanish D.O.S.
Support of store buy backs by franchisees Openings managed carefully, and balanced by sales of existing stores
150 187 192 181 180 177 162 132
- 5 stores
± 37 stores
July 2015 July 2014 July 2013 July 2012
- Oct. 2014
Apr.2015
- Jan. 2015
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Focus on value segment through OPTICAL DISCOUNT
Transaction summary
– 100% acquisition of Optical Finance, franchisor of OPTICAL DISCOUNT banner – Pure franchisor (3 directly owned stores to be sold before end
- f 2015)
– 88 stores generating €27.3m network sales – €0.9 million EBITDA and positive cash flow in LTM July 15 – Founders will manage the expansion of OD (with earn-outs)
Commercial positioning
– Target price sensitive customers with strong discount on branded frames (original comparative approach) – Low start-up cost for franchisees (store concept, location of store) will allow rapid development
Strategy
– Generate rapid synergies on network purchases – Build up a single banner focused on the value segment from a solid base – Merger of two banners under OD – Network: 63 CLARO + 88 OPTICAL DISCOUNT stores as at July 2015 – Combined network sales of c. €55m as at end July – International expansion will start rapidly (especially in Spain)
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