Corporate Presentation 2015/16 Interim Results 24 February 2016 0
Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning Bossini International Holdings Limited (the Company ). The Company makes no representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. In addition, the information contains projections and forward-looking statements that may 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 which 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. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or financial instruments or to provide any investment service or investment advice, and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto. 1
Agenda Financial Review Review of Operations Future Plans and Strategies 2
Financial Review 3
1H 2015/16 Highlights The Group saw a decrease of 13% in revenue while recorded 12% decline in same-store sales Gross profit was HK$543 million, with a gross margin down by 3% points to 47% Launched licensing programmes with STAR WARS Collection and Frozen Collection, and collaborated with Ocean Park Halloween Bash, which received enthusiastic responses Expanded footprint of export franchising business by adding 15 stores, with presence in 29 countries Maintained a healthy financial position with a net cash balance of HK$340 million 4
Results Highlights For the six months ended 31 Dec (HK$ mn) 2015 2014 Change Revenue 1,146 1,319-13% Gross profit 543 665-18% Gross margin (%) 47% 50% -3% pts EBITDA 50 128-61% Operating profit 25 104-76% Profit for the period attributable to owners 14 87-84% Basic EPS (in HK cents) 0.86 5.37-84% Dividend per share (in HK cents) - Interim Nil 2.70-100% - Special interim 1.22 Nil n/a 5
Profitability (HK$ mn) EBITDA Margin (%) 150 15% 128 122 117 12% 100 85 9% 9.2% 9.7% 8.4% 50 6.4% 50 6% 4.4% 3% 0 0% 2011 2012 2013 2014 2015 (HK$ mn) Operating Margin (%) (HK$ mn) Net Margin (%) 150 15% 100 87 15% 104 12% 75 12% 100 90 81 59 9% 9% 50 51 7.1% 7.9% 6% 34 6% 50 6.6% 5.6% 25 5.9% 3% 14 3% 3.8% 4.0% 1.2% 2.2% 2.6% 0 0% 0 0% 2011 2012 2013 2014 2015 EBITDA Operating Profit Profit Attributable to Owners 2011 2012 2013 2014 2015 For the six months ended 31 Dec 6
Operating Expenses Breakdown Total operating expenses accounted for 46% (2014: 44%) of total revenue Selling and Distribution Expenses as a % of revenue Administrative Expenses as a % of revenue Other Operating Expenses as a % of revenue 38% 12% 3% 36% 34% 33% 33% 33% 36% 10% 8% 9% 10% 10% 10% 10% 2% 2% 2% 2% 32% 31% 6% 30% 28% 4% 1% 1% 26% 2% 24% 2011 2012 2013 2014 2015 0% 2011 2012 2013 2014 2015 0% 0 % 2011 2012 2013 2014 2015 For the six months ended 31 Dec 7
Solid Financial Position Cash and Bank Balances Net Cash* (HK$ mn) (HK$ mn) 500 500 446 446 400 370 344 352 340 400 344 352 340 300 300 200 200 202 100 100 0 2011 2012 2013 2014 2015 0 2011 2012 2013 2014 2015 * Time deposits, cash and bank balances less bank borrowings At 31 Dec 8
Solid Financial Position Total Liabilities to Equity Ratio Return on Equity 90% 80% 83% 25% 20% 19% 21% 70% 60% 50% 54% 51% 45% 49% 15% 10% 5% 14% 9% 4% 40% 2011 2012 2013 2014 2015 0% 2011 2012 2013 2014 2015 (Times) 3 2 1 1.84 Current Ratio Inventory Turnover # 2.69 2.35 2.43 2.44 (Days) 150 125 100 75 50 25 126 100 99 92 113 0 2011 2012 2013 2014 2015 0 2011 2012 2013 2014 2015 At 31 Dec # Inventory held at period end divided by annualised cost of sales times 365 days 9
Review of Operations 10
Operating Environment in 1H 2015/16 The world economy remained subdued in the second half of 2015, punctuated by market volatility across the globe Hong Kong s economy continued to be affected by the reduced number of visitors, which has led to a decrease in the number of transactions being made in the retail industry Weak local consumer sentiment for the apparel retail sector in several core markets due to the unseasonably warm winter weather which triggered fiercer competition 11
Revenue Analysis Hong Kong and Macau 71% (70%) Singapore 8% (9%) Taiwan 7% (8%) Mainland China 14% (13%) Revenue by Geographical Market For the six months ended 31 Dec 2015 (Comparative figures for the six months ended 31 Dec 2014 in brackets) 12
Performance by Segment Operating Margins Operating Operating Profit Profit Same-store Sales Growth* Operating (HK$ mn) (HK$ mn) For the six months ended 31 Dec For the six months ended 31 Dec For the six months ended 31 Dec 2015 2014 2015 2014 Change 2015 2014 Change Hong Kong and Macau -14% 5% 7% 12% -5% pts 56 111-50% Mainland China -8% 2% -8% 1% -9% pts (12) 2-700% Taiwan -14% 8% -18% -7% -11% pts (15) (7) -114% Singapore -1% 0% Total -12% 4% * For directly managed stores only -4% -2% -2% pts 2% 8% -6% pts (4) (2) -100% 25 104-76% 13
No. of Stores by Region At 31 Dec 2015 At 30 Jun 2015 Change No. of Directly Managed Stores Hong Kong and Macau 41 40 +1 Mainland China 131 120 +11 Taiwan 72 69 +3 Singapore 23 28-5 Sub-total 267 257 +10 No. of Franchised Stores Mainland China 63 81-18 Other countries 615 600 +15 Sub-total 678 681-3 Total 945 938 +7 14
International Footprint Romania 8 (8) Mongolia 1(1) Mainland China Directly managed 131 (120) Franchised 63 (81) Libya 0 (3) Middle East* 303 (297) Kenya 3 (2) Mozambique 1 (1) Reunion Island 1 (1) Bangladesh 1 (1) Taiwan 72 (69) Nepal 2 (2) Hong Kong and Macau 41 (40) India 142 (139) Myanmar 17 (18) Thailand 88 (78) Vietnam 8 (7) Cambodia 2 (2) Brunei 2 (2) Singapore 23 (28) Malaysia 14 (16) Indonesia 12 (12) Dominican Republic 4 (4) Venezuela 5 (5) Uganda 1 (1) A total of 945 stores (30 June 2015: 938) with presence in 33 countries and regions 194 (201) Directly managed and franchised stores in mainland China 136 (137) Directly managed stores in Hong Kong, Macau, Taiwan and Singapore 615 (600) Export franchised stores 945 (938) Stores in about 33 countries and regions At 31 Dec 2015 (comparative figures at 30 Jun 2015 are shown in brackets) * The Middle East includes Armenia, Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, UAE and Yemen 15
Marketing and Branding Partnered with Ocean Park, Frozen and STAR WARS, as part of a key strategy for the Group on marketing and branding 16
Co-branded and Licensed Products 17
Collaborated with Ocean Park Halloween Bash 18
bossini x Frozen Collection 19
bossini x STAR WARS Collection 20
Multi-Brand Strategy 21
Capex (HK$ mn) For the six months ended 31 Dec 2015 Shop and office renovation 28 I.T. investment 3 Others 1 Total 32 22
Future Plans and Strategies 23
Business Strategies in 2015/16 Offer more items which are easy for mix-and-matching, as well as products with better functions under a more competitive pricing strategy Continue to implement further cost control measure Expand operations further afield of Hong Kong and Macau Continue to expand apparel lines for kids, which has consistently been our competitive edge Launch bossini eyewear in mainland China through franchise arrangements 24
Our Commitments Vision To be the most preferred everyday wear brand Corporate Culture Continue to live the 7 Habits and cultivate be happy brand value Dividend Payment Strive to maintain dividend payout ratio above 50% Human Capital The Company and employees are bonded to serve each other s interests in the best way possible 25