Presentation Results Q3 2019 Disclaimer Information contained in - - PowerPoint PPT Presentation

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Presentation Results Q3 2019 Disclaimer Information contained in - - PowerPoint PPT Presentation

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Presentation Results Q3 2019 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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SLIDE 1

Presentation Results Q3 2019

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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 may contain 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

  • 4. Results

13-20

  • 3. Group Key Initiatives

8-12 Pages

  • 1. Executive Summary

4 Agenda

3

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SLIDE 4

Executive Summary

  • Q3 Operating Revenues were 11% higher than same quarter of LY. In KSA, Retail channel

revenues increased by 78% mainly due to the recently acquired TOUS franchisee. Wholesale KSA revenues decreased by 44% compared to the same quarter last year due to high volatility in the gold price during this period which led to a temporary delay in buying decisions by our retailers and a very long summer break.

  • Egypt’s revenues continued to perform strongly, for the eighth quarter in a row, with a

growth of 19% in the wholesale channel due to successful advertising campaigns and strong customer uptake of new collections. The retail channel revenues grew by 24.5% compared to the same quarter of last year due to the sales increase in existing shops and the successful opening of four new outlets.

  • This is the sixth quarter in a row with operating revenues exceeding the same quarter of

last year.

  • Net income for Q3 2019 came at SAR 0.2 Million, 93% lower than same quarter LY due to

due to lower revenues in KSA wholesale. YTD net income is at SAR24.4 Million, up +38.6% versus same period last year.

  • The Company has a major growth initiative with the new Miss L’ line offering affordable

Gold fashion jewelry at high Gross Margin and low Working Capital sold through 3rd party retailers in Malls.

  • We undertake a significant repositioning in Q4 where we will restructure the core Gold

wholesale business at much lower costs and Working Capital while securing the right resources on growing more efficient businesses like TOUS, Miss L’ and E-commerce.

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SLIDE 5

L’azurde Business Model Evolution

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L’azurde Jewelry

Gold Wholesale Business

L’azurde Jewelry

Gold Wholesale Business L’azurde Mono Brand diamond jewelry retail

L’azurde House of Key Brands

Gold Wholesale Business TOUS L’azurde retail Miss L’ Kenaz Value Diamonds jewelry (Kiosks)

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SLIDE 6

L’azurde Business Model Evolution

6

L’AZURDE GROUP Wholesale

  • 18K
  • 21K

Retail

L’AZURDE 20 Locations 7 Duty Free TOUS 26 Locations KENAZ 12 Locations

Miss L’

Malls Wholesale and Direct Retail

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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 1,500 Retailers

7

Quarterly Gold Audit with Auditors rotation

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SLIDE 8

New Miss L’ High Potential Line

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High GM and Low Working Capital

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SLIDE 9

New Miss L’ High Potential Line

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Wholesale Business at Malls

E-Commerce Advertising Banners Standing Displays 3rd Party Retailers in Malls

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SLIDE 10

L’azurde Wholesale Business Model Evolution

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Traditional Gold Souks Wholesale Business

Gold Souks Sold by weight High WC AR at 90-120 days Limited E-Commerce

New Miss L’ Fashion Jewelry Wholesale Business

Malls Sold by piece Very low WC AR at 60 days Major E-Commerce

  • pportunity

If we shift 10% of the current wholesale volume sales to Miss L’, GM and NI can increase by SAR 50m and SAR 40m respectively

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SLIDE 11

Group Initiatives

Reinforce Core Gold Wholesale Business

  • Improve design capabilities and leverage

technology and 3D printing to produce differentiated products at lower weight

  • Leverage product tracking technologies

for better measurement of sales, faster replenishment to our retailers and lower working capital

  • Restructure the business model to run at

lower operating costs and improve manufacturing productivity

  • Reduce working capital through shorter

payment terms and lower inventories levels

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Grow Miss L’

  • Drive the promising Miss L’ affordable

gold jewelry fashion line distribution through 3rd party retailers, own stores and e-commerce

  • Develop a regional and global

distribution channel for Miss L’ products

  • Launch top designs: essentials, classic

and fashion jewelry at affordable prices

  • Leverage latest consumer and fashion

jewelry trends: gifting and lighter jewelry

  • Enhance Gross Margins through mix and

premium pricing for products endorsed by celebrities

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SLIDE 12

Group Initiatives

Enhance L’azurde Retail Profitability

  • Develop our profitable L’azurde retail

business in Egypt

  • Improve the profitability of the L’azurde

retail business in KSA by rationalizing our footprint and re-invigorating our flagship shops

  • Expand our exclusive airports retail
  • perations
  • Enhance products mix to raise Life Like

sales through cross selling

  • Invest in staff training to raise

productivity

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Perfect Integration Tous Franchisee Acquisition

  • Optimize the newly acquired TOUS

franchisee business in KSA

  • Strong marketing to build awareness

and brand image

  • Enhance products assortment
  • Train and develop engaged female

Saudi team in the shops

  • Expand network with top locations
  • Establish global E-Commerce platform

and CRM

  • Leverage global TOUS best practices
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SLIDE 13

Revenues Variance – Q3 2019 (Million SAR)

98.5 (9.5) 7.1 (4.2) 14.6 2.9 109.4 50 60 70 80 90 100 110 120 Retail

13

Wholesale

Net Volume and Price Impact

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SLIDE 14

Revenues Variance – YTD Sep 2019 (Million SAR)

306.3 (3.5) 19.8 2.8 56.9 12.8 395.2 50 100 150 200 250 300 350 400 450

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Retail Wholesale

Net Volume and Price Impact

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SLIDE 15

Group Quarterly Revenues (Million SAR)

121.9 82.2 76.2 75.1 115.0 92.8 98.5 115.0 92.8 98.5 100.1 153.0 132.8 109.4

  • 20.0

40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Previous Year Current Year

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SLIDE 16

Group Quarterly Operating Income (Million SAR)

34.8 15.7 10.7 14.0 23.0 17.4 15.8 23.0 17.4 15.8 13.8 30.4 28.0 13.2

  • 5.0

10.0 15.0 20.0 25.0 30.0 35.0 40.0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019

Previous Year Current Year

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SLIDE 17

% of Total 54% 42% 2% 2%

  • Vs. 2018

33%▲ 25% ▲ 27%▼ >100% ▲

Operating Revenues by Country – YTD Sep 2019

Million SAR

KSA Revenues increased by 33%

215.0 164.6 8.1 7.4

  • 10

40 90 140 190 240 KSA Egypt Other GCC Other Export

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SLIDE 18

Retail Revenues at +57% in Q3 2019 vs. LY

68 61 31 48 99 109

  • 20

40 60 80 100 Q3-2018 Q3-2019 Wholesale Retail 210 229 96 166 306 395

  • 50

100 150 200 250 300 350 400 YTD Sep-2018 YTD Sep-2019 Wholesale Retail

+57%

  • 10%

+9% +72%

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SLIDE 19

Retail Gross Margin +93% in Q3 - 2019 vs. LY (Million SAR)

147 168 36 75 183 242

  • 50

100 150 200 250 YTD Sep-2018 YTD Sep-2019 Wholesale Retail 48 45 11 21 59 66

  • 10

20 30 40 50 60 70 Q3-2018 Q3-2019 Wholesale Retail

+93%

  • 7%

+14% +108%

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SLIDE 20

Group Consolidated Income Statements (Million SAR)

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Q3 YTD Sep 2018A 2019A Delta 2018A 2019A Delta Revenue 98.5

100.0%

109.4

100.0% 11.0%

306.3

100.0%

395.2

100.0% 29.0%

Cost of revenue (39.8)

  • 40.4%

(43.8)

  • 40.0% 10.2%

(123.1)

  • 40.2%

(152.9)

  • 38.7% 24.1%

Gross Profit 58.8

59.6%

65.6

60.0%

11.6% 183.2

59.8%

242.3

61.3% 32.3%

Selling and marketing (32.6)

  • 33.1%

(43.7)

  • 39.9% 33.9%

(96.6)

  • 31.5%

(138.1)

  • 34.9% 42.9%

General and admin (10.4)

  • 10.5%

(8.7)

  • 8.0%
  • 15.9%

(30.4)

  • 9.9%

(32.6)

  • 8.3%

7.2% Operating Income 15.8

16.0%

13.2

12.1% -16.4%

56.2

18.3%

71.6

18.1% 27.5%

Other income – net (0.4)

  • 0.4%

3.1

2.8%

>100% (3.5)

  • 1.1%

3.1

0.8%

>100% Finance Charges – net (9.0)

  • 9.1%

(12.8)

  • 11.7% 42.9%

(26.2)

  • 8.6%

(38.4)

  • 9.7%

46.5% Net Profit before Zakat 6.4

6.5%

3.5

3.2%

  • 45.9%

26.5

8.7%

36.3

9.2%

37.0% Zakat (2.6)

  • 2.6%

(2.5)

  • 2.3%
  • 5.3%

(8.2)

  • 2.7%

(8.5)

  • 2.2%

3.6% Income Tax (0.1)

  • 0.1%

(0.8)

  • 0.7%

>100% (0.7)

  • 0.2%

(3.4)

  • 0.9% >100%

Net Income 3.7

3.8%

0.2

0.2%

  • 93.7%

17.6

5.7%

24.4

6.2%

38.6% Earning per Share 0.1 0.0

  • 93.7%

0.4 0.6 38.6%