Presentation Results Q3 2018 Disclaimer Information contained in - - PowerPoint PPT Presentation

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Presentation Results Q3 2018 Disclaimer Information contained in - - PowerPoint PPT Presentation

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Presentation Results Q3 2018 Disclaimer Information contained in this presentation is subject to change without further notice. Its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor

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Presentation Results Q3 2018

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Disclaimer

Information contained in this presentation is subject to change without further notice. Its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness

  • f, or any errors or omissions in, to any information contained herein.

In addition, the information contains projections and forward-looking statements that reflect the company’s current views with respect to future events and financial

  • performance. These views are based on current assumptions which are subject to

various risks and may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the company’s assumptions are

  • correct. Actual results may differ materially from those projected.

This presentation is strictly not to be distributed without the explicit consent of L’azurde for Jewelry Company management under any circumstances.

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SLIDE 3
  • 2. Business Model

5-7

  • 3. Results

8-15

  • 4. Group Key Initiatives

16-17 Pages

  • 1. Executive Summary

4

  • 5. Conclusion

18

3

Agenda

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SLIDE 4

Executive Summary

Q3 Revenues were 29.3% higher than same quarter of LY: Egypt’s revenues continued to increase strongly with a growth in the wholesale by 30.7% due to a successful advertising campaign and a positive recovery in the economy and purchasing power, and in the Retail by 170.0% due to the same reasons in addition to opening new shops. In KSA, wholesale and retail revenues have increased by 16.8% and 10.0% respectively compared to same quarter of last year due to successful promotional activities. Net income for Q3 2018 came at SAR 3.7 Million, 637.6% higher same quarter LY. The increase vs. same quarter of LY was due to higher operating revenues. The solid Q3 performance improves the total net income year to date performance versus last year. We are very focused on growing the business through organic initiatives and inorganic potential acquisitions.

  • Wholesale Business:
  • Launch new premium differentiated collections across all markets
  • Raise prices in Egypt to cover the impact of devaluation
  • Leverage technology and 3D printing to reduce operating expenses
  • Retail Business:
  • Perfectly Integrate the acquisition of the Tous franchisee in KSA
  • Expand our L’azurde retail business in Egypt
  • Train and develop our Saudi retail staff to enhance customer service, in-store experience and raise

consumers’ loyalty and purchases 4

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SLIDE 5

L’azurde Business Model Evolution

L’azurde Jewelry

Gold Wholesale Business

L’azurde Jewelry

Gold Wholesale Business L’azurde Mono Brand diamond jewelry retail stores

L’azurde House of Brands

Gold Wholesale Business L’azurde retail Tous Affordable Jewelry Kenaz Value diamonds jewelry Amazing Silver fashion jewelry

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SLIDE 6

L’azurde Group: House of Brands L’azurde Business Model Evolution

L’azurde Group L’azurde Group Wholesale Wholesale

  • 21K
  • 18K
  • 14K
  • 21K
  • 18K
  • 14K

Retail Retail

L’AZURDE

24 Shops 7 Duty Free

L’AZURDE

24 Shops 7 Duty Free

KENAZ

(Value Diamonds) 12 Kiosks

KENAZ

(Value Diamonds) 12 Kiosks

AMAZING

(Silver Fashion) 3 Shops

AMAZING

(Silver Fashion) 3 Shops

TOUS

(Affordable Jewelry) 25 Shops

TOUS

(Affordable Jewelry) 25 Shops

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SLIDE 7

Gold Jewelry Wholesale Business Model Wholesale Business Model

Value Creation at L’azurde:

  • Creating great Gold jewelry products

(Design, technology, value offering, innovation,….)

  • Brand marketing
  • Revenues = LSC (Labor Service Charge ) +

Stones Profits

Bank Facilities + Margin Bank Facilities (Murabaha)

Banks L’azurde

Physical Gold + Labor Service Charge (SAR/USD) Gold Jewelry

2,000 Retailers L’azurde takes no position on Gold Retailers pay L’azurde:

  • Physical Gold + Labor Service Charge

L’azurde 2,000 Retailers

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SLIDE 8

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Retail Wholesale

Net Volume and Price Impact

76.2 3.9 (0.1) 8.8 0.6 9.8 (0.5) (0.1) 98.5 20 40 60 80 100 120

Revenues Variance – Q3 2018 (Million SAR)

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SLIDE 9

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Retail Wholesale

Net Volume and Price Impact

280.3 (15.0) (7.3) 35.1 (4.0) 14.4 1.9 0.9 306.3 50 100 150 200 250 300 350

Revenues Variance – YTD 2018 (Million SAR)

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SLIDE 10

10

82.2 76.2 75.1 115.0 92.8 98.5

  • 20.0

40.0 60.0 80.0 100.0 120.0 140.0 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018

Group Quarterly Revenues (Million SAR)

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SLIDE 11

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6.4 0.5 2.6 9.0 4.8 3.7 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018

Group Quarterly Net Income (Million SAR)

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SLIDE 12

55 68 21 31 76 99

  • 20

40 60 80 100 Q3-2017 Q3-2018 Wholesale Retail

Retail Revenues at +22% YTD Sep-2018 vs. LY

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201 210 79 96 280 306

  • 50

100 150 200 250 300 YTD Sep-2017 YTD Sep-2018 Wholesale Retail

+43% +24% +4% +22%

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SLIDE 13

% of Total 52% 43% 4% 1%

  • Vs. 2017

9%▼ 66% ▲ 40% ▼ 69% ▼

Operating Revenues by Country – YTD Sep 2018

Million SAR

Egypt Revenues increased by 66%

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161.6 132.0 10.9 1.8

  • 10

10 30 50 70 90 110 130 150 170 190 KSA Egypt Other GCC Other Export

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14

141 147 30 36 171 183

  • 20

40 60 80 100 120 140 160 180 200 YTD Sep-2017 YTD Sep-2018 Wholesale Retail

Group Gross Margin +31% in Q3 -2018 vs. LY (Million SAR)

37 48 8 11 45 59

  • 10

20 30 40 50 60 Q3-2017 Q3-2018 Wholesale Retail

+35% +30% +5% +20%

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SLIDE 15

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Q3 YTD September 2017A 2018A Delta 2017A 2018A Delta Revenue 76.2 100.0% 98.5 100.0%

29.3%

280.3 100.0% 306.3 100.0%

9.3%

Cost of revenue (31.2) -41.0% (39.8) -40.4%

27.2%

(109.6) -39.1% (123.1)

  • 40.2%

12.4%

Gross Profit 44.9 59.0% 58.8 59.6%

30.8%

170.7 60.9% 183.2 59.8%

7.3%

Selling and marketing (24.8) -32.5% (32.6) -33.1%

31.6%

(82.4) -29.4% (96.6)

  • 31.5%

17.2%

General and admin (9.4) -12.4% (10.4) -10.5%

10.1%

(27.0)

  • 9.6%

(30.4)

  • 9.9%

12.7%

Operating Income 10.7 14.1% 15.8 16.0%

47.0%

61.3 21.9% 56.2 18.3%

  • 8.3%

Other income – net (0.3)

  • 0.4%

(0.4)

  • 0.4%

21.5%

(0.2)

  • 0.1%

(3.5)

  • 1.1% 1303.3%

Finance Charges – net (7.4)

  • 9.7%

(9.0)

  • 9.1%

22.0%

(23.4)

  • 8.3%

(26.2)

  • 8.6%

12.1%

Net Profit before Zakat 3.1

4.0%

6.4

6.5% 110.0%

37.7 13.4% 26.5

8.7%

  • 29.6%

Zakat (2.5)

  • 3.3%

(2.6)

  • 2.6%

4.2%

(8.1)

  • 2.9%

(8.2)

  • 2.7%

1.0%

Income Tax (0.1)

  • 0.1%

(0.1)

  • 0.1%

97.5%

(0.6)

  • 0.2%

(0.7)

  • 0.2%

18.6%

Net Income 0.5

0.7%

3.7

3.8% 637.6%

28.9 10.3% 17.6

5.7%

  • 39.2%

Earning per Share 0.01 0.09

637.6%

0.67 0.41

  • 39.2%

Group Consolidated Income Statements (Million SAR)

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Group Initiatives

Celebrities Collaboration

  • New Collections

Campaign

  • Nelly Karim, top celebrity

in Egypt on board

  • New opinion leaders

Expand 3D Printing Technology Grow 18K Market Share

  • Launch more lines using

the 3D printing technology

  • Reduce costs through

production automation

  • Raise number of SKUs for

most profitable line

  • Partnership with

designers linked to royalty

Develop Exports Outside The Region

  • Solid response from

International Exhibitions

  • Orders for new countries

in Europe and the USA

  • New subsidiary Oman

Perfect Integration Tous Franchisee Acquisition Enhance Retail Performance

  • Train and develop team
  • Stepchange marketing
  • Enhance products

assortment and VM

  • Launch CRM
  • Review performance of

all locations and brands assortment

  • Launch new 2019

collections

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TOUS Overview

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Acquisition Rationale

  • Delivers our strategy to grow from a mono brand wholesaler to a retailer house of brands
  • Fastest growing segment in jewelry, complementing our current assortment
  • Very profitable business with low investments and high ROI
  • Strong track record in KSA with solid potential to grow
  • We expect synergies and cost savings from integrating TOUS with L’azurde

Acquisition Key facts

  • Acquisition value: SAR 188m
  • Acquisition payment: Split in a payment in 2018 and other payments in 2021 and 2022
  • Acquisition Financing: 80% by acquisition finance and 20% from L’azurde operating

cashflow

  • No. of shops: 22 Shops in KSA end 2018
  • Net Sales 2017: SAR 69.8m
  • Net income 2017: SAR 18.8m
  • ROI: 33.6% in 2017
  • Franchise agreement: 10 years renewable
  • Consolidation date: Q4 2018
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SLIDE 18

Thank You

For investors relations matters please contact: investors@lazurde.com

L’azurde, a great history, a greater future

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