Investors presentation H1 Report June 30, 2014 August 28, 2014 - - PowerPoint PPT Presentation

H1 Report June 30, 2014

Investors presentation

August 28, 2014

Confidentiality

This presentation has been prepared by Marcolin S.p.A. and its affiliates. The information contained herein is confidential and has been prepared solely for the needs of the adressee and is not to be relied upon by any other person or entity. Hence, if you wish to disclose copies of this report to any other person or entity, you must inform they that they may not use these reports for any purpose without Marcolin written consent. No representation, warranty or undertaking, express or implied, is made as to, and no reliance shoud be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. 2

3

At a glance Key consolidated financials: H1 2014 Viva Integration Project

Agenda

Appendix Key consolidated financials: LTM

At a glance

* EBITDA is affected by a number of extraordinary items. For this reason it has been adjusted to restate the one-off effects deriving from the re-organization as represented in “Consolidated Adjusted EBITDA” page.

Sales

Consolidated Net sales increased +2,0%, thanks to a significant upside from TF and a good performance of TB and DL. In terms of Markets 2014 H1 has confirmed the expectations of sales improvement in Europe namely Germany, Spain and Italy. At constant FX sales increased +4,9% vs. PY.

194.3

Million EUR

EBITDA

2014 H1 EBITDA Reported is € 21.2m (€ 19.9m previous year). 2014 H1 Adjusted EBITDA* (excluding one-offs) is € 24.1m in line with previous year. LTM Adjusted Run-Rate EBITDA for 2014 is € 46.9m, compared to LTM Dec 2013 of €47.8m. The difference is mostly due to a negative fluctuation of the exchange rate

• f the group currencies.

H1 24.1 12.4%

On Net sales

Net Debt

199.9

2014 Constant FX

4 Consolidated Net Debt as of June 2014 is € 175.5m (€ 166,2m end of December 2013) with a cash absorption of € 8.3m mostly due to seasonality

• f the business as well as non recurring payments.

The ratio Net financial position to LTM Adjusted run-rate EBITDA is 3.74

Million EUR in 2013

190.6

3.74

NFP / Adj LTM RR Ebitda

LTM 46,9 13.4%

On Net sales

175.5

Million EUR

5

At a glance Key consolidated financials: H1 2014 Viva Integration Project

Agenda

Appendix Key consolidated financials: LTM

H1 Consolidated Sales

194.3

million EUR

2014 H1

@ const FOREX

+2% vs PY Global sales

By market destination

199.9 mill EUR +4,9% vs PY

6

North America Europe

Asia

RoW

73.8

• Mill. EUR

74.5

• Mill. EUR

16.7

• Mill. EUR

29.4

• Mill. EUR

38% 38% 9% 15%

+2.9% +0.1%* +17.0% * +4,4% costant forex

• 2,9%*

* + 1 % costant forex

Summary P&L

7

7

Key Financials: H1

Q2 1H GROUP Actual 14 Reported Actual 13 Pro-Forma ∆ 14 vs. 13 Actual 14 Reported Actual 13 Pro-Forma ∆ 14 vs. 13 Net sales 95,6 93,3 2,5% 194,3 190,6 2,0%

• - EBITDA

11,4 11,5

• 0,5%

21,2 19,9 6,6% % of NS 12,0% 12,3% 10,9% 10,5%

• - EBITDA Adj.

12,7 12,7 0,0% 24,1 24,1 0,3% % of NS 13,3% 13,6% 12,4% 12,6% Q2 1H MARCOLIN Actual 14 Reported Actual 13 Pro-Forma ∆ 14 vs. 13 Actual 14 Reported Actual 13 Pro-Forma ∆ 14 vs. 13 Net sales 58,4 55,7 4,8% 117,8 112,2 4,9%

• - EBITDA

8,2 6,1 34,1% 13,9 12,5 11,0% % of NS 14,0% 11,0% 11,8% 11,2%

• - EBITDA Adj.

8,8 7,3 20,6% 15,4 16,7

• 7,7%

% of NS 15,1% 13,2% 13,1% 14,8% Q2 1H VIVA Actual 14 Reported Actual 13 Pro-Forma ∆ 14 vs. 13 Actual 14 Reported Actual 13 Pro-Forma ∆ 14 vs. 13 Net sales 37,3 37,7

• 1,0%

76,6 78,4

• 2,3%
• - EBITDA

3,3 5,4

• 39,6%

7,3 7,4

• 0,8%

% of NS 8,7% 14,3% 9,6% 9,4%

• - EBITDA Adj.

3,9 5,4

• 28,0%

8,8 7,4 18,2% % of NS 10,4% 14,3% 11,4% 9,4%

Forex Impact

8

8

Key Financials: H1

• Negative impact on 1st Half sales performance for -€5.5m of which -€3.2m on 2nd Quarter

CURRENCY HEADWINDS PERSIST

SALES PERFORMANCE +2.5% +2.0%

At constant Forex At constant Forex

+5.9% +4.9%

2Q 2014 1H 2014

• Net Sales were positive: above last year +€3.7m (+2.0%) mainly driven by TF, TB and DL.
• Net Sales @ constant FX +€9.3 m or +4.9%.
• GM% in June 2014YTD was 120bps below PY, mainly due to VIVA for worse channel mix and higher close-out sales.

Negative impact for € 3.3 m due to fluctuation on exchange rate vs. same period of last year.

• Ebitda Reported in June 2014YTD is €21.2m vs. €19.9m last year (respectively 10.9% vs. 10.5% of Net sales).
• EBITDA Adjusted, excluding one off items, would be 12.4% (or €24.1 m).
• Financial of €9.6 m is including €8.5 m for Bond interests.

9

H1 P&L Executive Summary

Consolidated Profit & Loss

10

10

2014 Reported and 2013 pro-forma: considering Marcolin, Cristallo and Viva

Key financials: H1

YTD Jun

(EURm) Actual 14 Reported Actual 14 Reported %NS Actual 13 Pro-Forma Actual 13 Pro-Forma %NS Net sales 194,3 100,0% 190,6 100,0% Cost of sales (76,7)

• 39,5%

(73,0)

• 38,3%
• - Gross Margin

117,6 60,5% 117,6 61,7% Selling and marketing costs (88,3)

• 45,4%

(86,8)

• 45,5%

General and administrative expenses (14,9)

• 7,6%

(18,0)

• 9,5%

Other operating income and expenses 1,6 0,8% 2,4 1,2% Effects of accounting for associates 0,2 0,1% 0,2 0,1%

• - OPERATING PROFIT (EBIT)

16,3 8,4% 15,4 8,1% Net finance costs (9,6)

• 5,0%

(6,8)

• 3,6%
• - Profit before taxes

6,7 3,4% 8,6 4,5% Income tax expense (4,3)

• 2,2%

(4,8)

• 2,5%
• - Net Result

2,4 1,2% 3,8 2,0%

• - EBITDA

21,2 10,9% 19,9 10,5%

• - EBITDA ADJUSTED

24,1 12,4% 24,1 12,6%

• Inventory: has increased compared with Dec 13 (+€2.0m of which Marcolin +€4.0 m and Viva -€2.0 m); compared

to June 2013 has risen for €9.7m (which is mostly due to the PPA provision release)

• Net Trade Receivables: +€18.7 m increase compared to Dec 13 due to seasonality and turnover increase;

compared to June 2013 is +€ 6.8 m in line with the sales trend increase

• Other Current Financials (Cash and Cash liquidity): are decreasing -€8 m strongly affected by the following

items

• 2014 Bond Expenses non recurring payments (€ 3,4m);
• Interests on the Bond notes paid in May for € 8.5 m;
• Payment to HVHC (price adjustment of € 3,3m)
• Intangible assets: include €6.8 m renewal fees for SK (€0.7 m) and DL (€6.1 m) (payment planned starting from

April)

• Payables: the increase of €13.7m is in primarily attributable to non-recurrent payables for the aforementioned

extension of DL and SK licensing agreements, and guaranteed minimum royalties that will be paid after June 30th since they accrue in the second half of the year.

• Net Financial Position: versus same period of previous year is affected by Bond issuance; June 2014 increased

from €166.2m in Dec. 13 to €175.5m, with a change of €9.3m as detailed in the consolidated cash flow statement

11

B/S Executive Summary

Consolidated Balance sheet

12

2014 Reported, Dec 2013 pro-forma and Dec 2013 Reported: considering Marcolin, Cristallo and Viva

Key financials: H1

Balance Sheet (EURm) June 14 Dec 13 Change Net trade receivables 80,9 62,2 18,7 Inventory 74,9 72,9 2,0 Payables to suppliers (78,4) (64,7) (13,7) TRADE WORKING CAPITAL 77,3 70,4 6,9 Other receivables 15,2 14,0 1,2 Other payables (25,7) (23,1) (2,6) NET WORKING CAPITAL 66,9 61,3 5,6 Other receivables - medium/long term 23,4 25,2 (1,8) Equity investments 2,1 2,0 0,1 Net tangible assets 22,8 23,5 (0,7) Net intangible assets 40,9 34,7 6,2 Goodwill 257,6 256,9 0,7 FIXED ASSETS 346,8 342,3 4,5 Funds and reserves (20,0) (22,4) 2,4 NET INVESTED CAPITAL 393,7 381,1 12,5 Financial debts - short term 17,9 17,7 0,2 Financial debts - medium/long term 196,2 195,9 0,4 FINANCIAL POSITION 214,2 213,6 0,6 Other current financial (32,3) (40,3) 8,0 Other non current financial (6,4) (7,1) 0,7 NET FINANCIAL POSITION 175,5 166,2 9,3 NET EQUITY 218,2 215,0 3,3 COVERAGE OF NIC 393,7 381,1 12,5

Net Financial Position

13

(EURm) June 2014 December 2013 Short Term borrowings 17,9 17,7 Medium Long Term borrowings 196,2 195,9 Gross borrowings 214,2 213,6 Cash and cash equivalents 30,6 38,5 Financial receivables current 1,6 1,8 Financial receivables non current 6,5 7,1 Reported Net indebtedness 175,5 166,2 Revolving Credit Facility €25mn 2,0 0,0 Short term borrowings from Banks 11,4 8,6 Receivable Factoring 0,0 1,1 Vendor Loan (HVHC) - Short Term 1,4 4,6 Bond accrued interests 2,2 2,3 Ministry of productive activities 0,1 0,1 Financial leasing VIVA 0,7 0,7 Other 0,1 0,3 Short Term gross borrowing 17,9 17,7 Senior Secured bonds €200mn 200,0 200,0 Bond issue amortized fees

• 8,5
• 9,3

Vendor Loan (HVHC) - Long Term 3,1 3,0 Financial leasing VIVA 1,6 2,0 Ministry of productive activities 0,1 0,2 Other 0,0 0,0 Medium Long Term gross borrowing 196,2 195,9

Key financials: H1

1 2

Consolidated Cash Flow statement

14

Dec 2013 Reported: Marcolin, Cristallo and Viva (Viva for the month from the acquisition date to the annual closing date) Dec 2013 pro-forma: only Marcolin and Cristallo (excluding Viva for the month from the acquisition date to the annual closing date) 2014 March: considering Marcolin, Cristallo and Viva (EURm) 2014 June Dec 2013 Reported Dec 2013 Pro-Forma Operating activities Profit before income tax expense 6,7

• 11,8
• 10,0

Depreciation, amortization and impairments 4,5 5,4 5,2 Accruals to provisions other accruals 9,4 17,1 17,2 Adjustments to other non-cash items

• 6,6

1,0 1,1 CF from operating activities before changes in WC, tax and int. 14,0 11,7 13,4 Movements in working capital

• 2,2
• 9,3
• 12,5

Income taxes paid

• 2,0
• 1,9
• 1,9

Interest paid

• 8,9
• 17,5
• 17,5

Net cash flows provided by operating activities 0,9

• 17,0
• 18,5

Investing activities (Purchase) of property, plant and equipment

• 1,2
• 2,6
• 2,6

Proceeds from the sale of property, plant and equipment 0,1 0,0 0,2 (Purchase) of intangible assets

• 8,6
• 1,5
• 1,6

(Acquisition) of investment - Marcolin e Viva 0,0

• 127,7
• 53,6

Net cash (used in) investing activities

• 9,8
• 131,9
• 57,7

Financing activities Net proceeds from/(repayments of) borrowings 0,5 91,6 88,0 Other cash flows from financing activities 0,0 51,3 51,2 Net cash from/(used in) financing activities 0,5 142,9 139,2 Net increase/(decrease) in cash and cash equivalents

• 8,3
• 6,0

63,1 Effect of foreign exchange rate changes 0,4

• 0,7
• 0,7

Cash and cash equivalents at beginning of period 38,5 45,2 45,2 Cash and cash equivalents at end of period 30,6 38,5 107,6

Key financials: H1

Cash Flow – excluding one-offs

15

Key financials: H1

(EURm) June 2014 Net increase/(decrease) in cash and cash equivalents (8,3) Bond interests paid in May 8,5 Bond Expenses paid in Jan/Feb 3,4 Vendor Loan - Price adjustment due to HVHC 3,3 Renewal Fees - first installment to DL/SK 1,5

• Adj. Net increase/(decrease) in cash and cash equivalents

8,3

16

At a glance Key consolidated financials: H1 2014 Viva Integration Project

Agenda

Appendix Key consolidated financials: LTM

Revenues Analisys by market destination

Europe

million eur

Row ASIA North america

million eur million eur million eur

17

1,370 1,313

Ex rate EUR/USD

As of June, 30st Full Year 2014 % 2013 % 2014 LTM % 2013 % Europe

74,5

38,3%

72,3

37,9%

126,2

36,2%

124,1

36,0% North America

73,8

38,0%

73,7

38,7%

136,6

39,2%

136,6

39,6% Asia

16,7

8,6%

14,3

7,5%

29,7

8,5%

27,2

7,9% Rest of World

29,4

15,1%

30,2

15,9%

56,1

16,1%

57,0

16,5% Total 194,3 100,0% 190,6 100,0% 348,6 100,0% 344,9 100,0%

Total @ constant FX (€ Mln)

199,9

change vs. PY

4,9%

in € Mln, except percentages in € Mln, except percentages

+2.9% +1.7% +0.1% or 4,4% constant forex 0% +17.0% +8.9%

• 1.5%

Key financials: LTM

• 2.9% or +1% constant forex

18

EBITDA REPORTED EBITDA ADJUSTED *

8.0%

ADJ RUN-RATE EBITDA **

% 2014 LTM on net sales

11.0%

% 2014 LTM on net sales 7,8% in 2013

13.4%

% 2014 LTM on net sales 11,4% in 2013 13,9% in 2013

* excluding one-offs * including synergies

LTM Ebitda performance (million eur)

2014 LTM FY 2013 2014 LTM FY 2013 2014 LTM FY 2013 2013 JUNE LTM

in € Mln, except percentages in € Mln, except percentages in € Mln, except percentages

NET SALES

209,7 204,2 138,9 140,7 348,6 344,9 348,2

% vs. PY 2,7%

• 1,3%

1,1%

EBITDA

18,0 16,6 10,1 10,2 28,1 26,8 18,0

Adjustment 7,7 10,4 1,4 0,0 9,1 10,4 16,8

25,7 26,9 11,5 10,2 37,2 37,1 34,8

Management Fees 0,8 1,8 0,8 1,8 1,8 Germany J/V 0,4 0,4 0,4 0,4 0,8 EBITDA ADJUSTED

25,7 26,9 12,7 12,4 38,4 39,3 37,4

Synergies 8,5 8,5 8,5 ADJ RUN-RATE EBITDA

46,9 47,8 45,9

EBITDA ADJ % on Net sales

12,24% 13,20% 9,14% 8,80% 11,00% 11,41% 10,75%

EBITDA ADJ RR % on Net sales

13,44% 13,87% 13,20%

CONSOLIDATED

MARCOLIN VIVA

Key financials: LTM

19

At a glance Key consolidated financials: H1 2014 Viva Integration Project

Agenda

Appendix Key consolidated financials: LTM

Work Plan

20

20

Viva Integration

Status as of Today(1)

21

21

Viva Integration

Marcolin Entity VIVA Entity

Integration Steps

% Complete

USA

Scottsdale, AZ Sommerville, NJ

Integration of Sales Force Optical Channel

100

Migration of VIVA into Marcolin SAP

75

Harmonizaton of Financial Reporting & HR policies

85

Move of stock into NJ, Distribution Center

10

Merge of the AZ business into NJ

10

UK

Newbury, Berkshire Harrogate, Yorkshire

Business Review

100

Transfer of Domestic Business to Marcolin UK

100

Transfer of International Business to Marcolin SpA

100

Redundancy Program

100

SAP Migration of Item Master, Customer Orders, A/R, A/P

100

Domestic Sales Force Integration

95

Integration of International Sales Force & Customer Service

95

Move of stock into Longarone Distribution Center

95

Closure of VIVA UK Corporate Office

50

HK

Hong Kong Hong Kong

Business Review

100

Transfer of APAC Business to Marcolin HK Branch

100

Transfer of Techinical Business to Marcolin Asia

100

Redundancy Program of VIVA DC Staff

100

SAP Migration of Item Master, Customer Orders, A/R, A/P

100

Integration of Sales Force, CS and Tech Staff

100

Closure of VIVA HK Corporate Office

70

Country

Status as of Today (2)

22

22

Viva Integration

Marcolin Entity VIVA Entity

Integration Steps

% Complete

France

Paris Pontault C. (Paris SE)

Business Review

20

Integration of two Business Closure of VIVA France Corporate Office

Brasil

Alphaville (Sao Paulo) Campinas

Business Review

10

Integration of two Business Closure of VIVA do Brasil Corporate Office

Canada

New Brunswick

Integration into VIVA, NJ

10

Germany Ludwisburg

near Stuttgart

Merge of two companies. Discussion in progress

20

Country

Appendix

23

24

CONSOLIDATED

24

Introductory note on Consolidated Financial Reports

> Year 2013 is affected by a number of non recurring events:

• Cristallo mandatory tender offer (OPA) on Marcolin shares (Feb. 2013)
• reverse merger of Marcolin Parent Company Cristallo (Oct. 2013)
• refinancing on existing indebtedness through HY Bond on Nov. 2013
• VIVA acquisition on Dec. 2013

Due to the scale of the non recurring events, comparison with the previous period in not always immediate, particularly as regards to the Group cash flows. To enhance period-on-period comparability and whereas possible, financial information has been represented as “Pro-Forma” (including Cristallo and Viva results).

25

> Financial information presentation

In a departure from the previous financial report issued, this report focuses on the consolidated result for the Group. The results of operations of the Group, which includes Marcolin, Cristallo and Viva are discussed as one entity (whereas previously the result of Marcolin and Viva were discussed separately). This is consistent with the strategy to fully integrate Viva, its

• perations and its brands into the Marcolin Group. Stand-alone income statement information for both Marcolin and Viva can

be found in appendix.

Reasons for restatements

26 Marcolin is still involved in new projects, in consolidation and in development activities, which in fact brought about a global reorganization at all levels:

• Reorganization process with changes in top and middle management
• Reposition of collections, expanding the “vision” segment and integrating new lines or new models and relaunch of domestic

brand WEB

• Rationalization of the distribution networks both internationally and at domestic level
• In-depth review of the brand portfolio with the addition of new prestigious licensing agreements that will start in January

2015, and discountinuation of non performing licences For the above reasons the EBITDA is also reported net of the impact of the one-off effects in order to provide comparability.

• Integration process of Viva Group

Consolidated Adjusted Ebitda

27

in € Mln, except percentages Q2 2014 Q2 2013 EBITDA pre-adjustment 21,2 19,9 Cost related to Cristallo impact 0,0 1,2 EBITDA Reported 21,2 21,1 Exceptional termination of licenses 0,0 1,0 Cost related to PAI Acquisition 0,0 0,3 Cost related to VIVA Acquisition 0,0 0,0 Senior management changes 0,7 1,4 Restructuring of sales force 0,0 0,0 Cost related to VIVA Integration 2,2 0,0 Other 0,0 0,3 Total adlustments 2,9 2,9 EBITDA ADJUSTED 24,1 24,1 Net Sales 194,3 190,6 %

• n Net Sales

12,42% 12,62% in € Mln, except percentages LTM 2014 FY 2013 EBITDA pre-adjustment 28,1 26,8 Cost related to Cristallo impact 0,2 1,4 EBITDA Reported 28,2 28,1 Exceptional termination of licenses 1,4 2,3 Cost related to PAI Acquisition 0,3 0,5 Cost related to VIVA Acquisition 1,0 1,0 Senior management changes 2,1 2,8 Restructuring of sales force 1,4 1,4 Cost related to VIVA Integration 2,2 0,0 Other 0,6 0,9 Total adlustments 8,9 9,0 EBITDA ADJUSTED 37,2 37,1 Net Sales 348,6 344,9 %

• n Net Sales

10,67% 10,76%

Key consolidated financials

28

Stand alone

28

Key financials

Sales

Sales driven by EUROPE, in particular as expected Italy improve thanks to the reorganization of selling distribution implemented at the end of 2013. North America still positive despite to the negative exchange rate effect

117.8

• mill. EUR

+5%

vs PY

EBITDA

EBITDA reported € 13,9m (11.8%); EBITDA Adjusted* € 15,4m, 13.0%

• n Net Sales.

13.9

11.8%

• n Net

sales

• mill. EUR

29

Stand alone

+6.9%

constant FX

> INTRODUCTORY NOTE:

* EBITDA is affected by a number of extraordinary items. For this reason it has been adjusted to restate the one-off effects deriving from the re-organization as represented in “Adjusted EBITDA” page.

Revenues 2014 H1

By market of destination, product type and segment

by product type

North America Asia Rest of W. Europe

By market destination

Europe Asia North America Rest of the World +4.8% +2.9%

Revenues in EUR/000 and % changes vs 2013

+20,7%

• 1%

Sunglasses Prescription frames

+8.7% +2.8%

by product segment

Luxury Diffusion

• 1.9%

+31.7%

30

Stand alone

31 Stand alone 31

32

Sales

SALES: at $ 104,9m (vs. 102,9m of H1 2013), increase of 1,9% vs. PY

104.9

• mill. USD

1.9% vs PY

EBITDA

EBITDA reported $ 10m (9.6% on Net Sales) ; EBITDA Adjusted* $ 11.9m, 11.4% on Net Sales.

10

9.6%

• n Net

sales

• mill. USD

Stand alone

Key financials

32

> INTRODUCTORY NOTE:

* EBITDA is affected by a number of extraordinary items. For this reason it has been adjusted to restate the one-off effects deriving from the re-organization as represented in “Adjusted EBITDA” page.

by market of destination

Europe Asia Americas Rest of the World

Revenues in USD/000 and % changes vs 2013

by product segment

Diffusion

+1.9%

by product type

Americas Asia Rest of W. Europe

Revenues 2014 Q2 - Viva

By market of destination, product type and segment

+2.5%

Sunglasses Prescription frames

• 0.5%

+5.8% +5.4%

• 2.6%

+2.4%

33

Investor relation

Marcolin Contacts:

Massimo Stefanello CFO and COO +39 0437 777111 mstefanello@marcolin.com Alessandra Sartor +39 0437 777204 asartor@marcolin.com Francesca Pellegrini +39 0437 777152 fpellegrini@marcolin.com

34