FY2017 Annual Results &Three-Year PlanAnnouncement
Analyst Meeting June 14, 2017
2
Key Financial Highlights - FY2017• Strong revenue growth of 11.6%
despite tough market environment
• Total margin continued to trend up as a result of improving business mix in favour of higher-margin businesses and sourcing
optimization
• Operating costs increased mainly due to investment in key brands and the additon of new licenses
• Core operating profit up 64.5%
• Net profit attributable to shareholders increased by 89.4%
(US$m)FY2016 FY2017 Change
Revenue 3,486 3,891 11.6%
Total Margin 1,181 1,416 19.8%% of Revenue 33.9% 36.4%
Operating Costs 1,076 1,242 15.5%
Core Operating Profit 105 173 64.5%% of Revenue 3.0% 4.4%
EBITDA (1) 301 380 26.3%% of Revenue 8.6% 9.8%
Net Profit for the Year 55 95 71.6%
Net Profit Attributable to Shareholders 47 90 89.4%% of Revenue 1.4% 2.3%
Adjusted Net Profit (2) Attributable to Shareholders 48 72 49.4%
(1) EBITDA is defined as net profit before net interest expenses, tax, depreciation and amortization. This also excludes share of results of joint ventures, material gains or losses which are of capital nature or non-operational related, acquisition related costs and non-cash gain on remeasurement of contingent consideration payable
(2) Adjusted Net Profit: Excluding merger & acquisition costs, non-cash items and non-operational expenses, such as gain on remeasurement of contingent consideration payable, amortization of other intangible assets, non-cash interest expenses and non-operational expenses
3
(US$m) FY2016 FY2017 Change
Core Operating Profit 105 173 64.5%Gain on Remeasurement of Contingent Consideration Payable 96 20Amortization of Other Intangible Assets (64) (81)
Gain on Disposal of Interest in a Subsidiary - 96Other Non-core Operating Expenses (19) (11)
Operating Profit 118 197 67.0%Interest Income 1 2Non-cash Interest Expenses (14) (14)Cash Interest Expenses (51) (65)
Share of Profits of Joint Ventures 5 4
Profit Before Taxation 59 124 108.8%Taxation (4) (29)
Net Profit for the Year 55 95 71.6%Non-Controlling Interest (8) (5)
Net Profit Attributable to Shareholders 47 90 89.4%
Adjusted Net Profit(1) Attributable to Shareholders 48 72 49.4%(1) Adjusted Net Profit: Excluding merger & acquisition costs, non-cash items and non-operational expenses, such as gain on remeasurement of contingent consideration payable, amortization
of other intangible assets, non-cash interest expenses and non-operational expenses
Net Profit Analysis - FY2017
Vertical Highlights - FY2017Kids
(US$m)FY2016 FY2017 Change
Revenue 1,542 1,603 3.9%
Total Margin 531 584 9.9%% of Revenue 34.5% 36.4%Operating
Costs 485 508 4.9%
COP 47 76 62.2%% of Revenue 3.0% 4.7%
Men’s and Women’s Fashion
FY2016 FY2017 Change
623 820 31.5%
239 353 47.8%
38.3% 43.1%
198 281 41.4%
41 73 78.6%6.5% 8.9%
Footwear and Accessories
FY2016 FY2017 Change
1,214 1,281 5.6%
377 428 13.6%
31.1% 33.4%
364 421 15.4%
13 8 -39.5%1.0% 0.6%
Brand Management
FY2016 FY2017 Change
107 188 75.7%
34 50 49.0%
31.4% 26.6%
28 33 15.8%
5 17 229.7%4.9% 9.1%
• A global leader both in terms of scale and footprint
• Strong performance on a consistent basis for both characters and kids fashion businesses
• Continuous expansion of business e.g. Under Armour expanded from kids fashion to boys and girls swimwear, outerwear, and underwear
• A fast growing business; focus on strategically positioning the brands and growing them across multiple products and geographies
• Addition of new licenses and strategic investment in key brands impacted operating costs
• Looking to grow this into a scalable platform like Kids
• Continued revenue growth and total margin improvement
• Total margin improved due to new licenses and better mix of businesses
• Addition of new licenses and investment in Frye and Aquatalia impacted operating costs
• Formed a partnership in July 2016 with Creative Artists Agency (“CAA”) called CAA-GBG
• This combination created tremendous strategic value to our brand management business
• The partnership is now the world’s largest business in this space
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(1) Total debt represents bank loan ; (2) Sum of net debt and total equity; (3) Net debt divided by total capital ; (4) Current assets divided by current liabilities
Balance Sheet Highlights - FY2017
(US$m) Mar 2016 Sep 2016 Mar 2017
Total Debt (1) 996 996 1,118
Cash 99 208 174
Net Debt 897 788 944
Total Equity 2,476 2,362 2,456
Total Capital (2) 3,373 3,150 3,400
Gearing Ratio (3) 26.6% 25.0% 27.8%
Current Ratio (4) 1.11 1.05 1.18
• Net debt slightly higher due to various new licenses and acquisitions. Focus is to reduce over time as contingent consideration payables decrease
• Gearing ratio was up due to additional cash required for acquisitions and new licenses
• Current asset ratio continued to improve as cash increased and contingent consideration payables decreased
0
250
500
750
1000
179
143
165
441 275
273
944897
564
Net Debt at Spin-off
(Jun 30, 2014)
Cumulative cash from operating activities
Other uses of cash
Net Debt at March 31,
2016
Cumulative cash from operating activities
Other uses of cash
Net Debt at March 31,
2017
Cashpayment foracquisitions*
Cashpayment foracquisitions*
(US$m)
6
Ability to Reduce Leverage
* Cash payment for acquisitions includes upfront payment at close of current transactions as well as earn-up and earn-out payments for prior transactions
Three-Year Plan
Crystalized our business model as the go-to brand licensing and operating partner on a global basis
Further refined and strengthened our brand portfolio
Sharpened focus on our product verticals
Invested in building a strong management team to drive our business into the future
Last Three-Year Plan - Laid Solid Foundation for Growth
8
* EBITDA is defined as net profit before net interest expenses, tax, depreciation and amortization. This also excludes share of results of joint ventures, material gains or losses which are of capital nature or non-operational related, acquisition related costs and non-cash gain on remeasurement of contingent consideration payable
30.7%
FY2013 FY2017
1,416
1,010
36.4%
% of Revenue
EBITDA*(US$m)
Core Operating Profit(US$m)
CAGR
5.8%increased
by over
500 basis points
Track Record
9
FY2013 FY2017
3,891
3,288
Revenue(US$m)
% of Revenue
FY2013 FY2017
173
134
4.1%4.4% 9.8%
FY2013 FY2017
380
296
9.0%% of Revenue
Total Margin(US$m)
CAGR
9.0%CAGR
8.7%
10
Trend of U.S. Retail Sales (1992-2016)
Source: US Census Bureau
0
100,000
200,000
300,000
400,000
500,000
19921994
19961998
20002002
20042006
20082010
20122014
2016
(US$m)
4.2% CAGR
11
Changing Retail Environment
Source: Goldman Sachs research
Department Store Specialty Off-price Discount Fast Fashion EcommercePure Play
42.9%
18.0%15.4%11.9%0.2%
-5.2%
• Traditional retail model is no longer sustainable
• We have seen retail store closures and a shift from traditional retail model to omni-channel approach
• In a world of heightened transparency, quality of product and speed of response to consumer preference are both vital
Change in U.S. apparel sales by channel, 2014-2016
12
Global Brands’ Unique Platform
Unique advantages to exploit retail transformation
‣ Diversified brand portfolio ‣ Flexible licensing model ‣ Multiple product categories ‣ Multi-channel distribution ‣ Truly global
Trend: brand operation separating from
IP ownership
Global Brands has become thego-to operating partner for IP owners
Growth Pillars:
EBITDA*
US$5bn
Revenuereaching increase by
150 basis points
13
Total margin
Targets of New Three-Year Plan - FY2020
* EBITDA is defined as net profit before net interest expenses, tax, depreciation and amortization. This also excludes share of results of joint ventures, material gains or losses which are of capital nature or non-operational related, acquisition related costs and non-cash gain on remeasurement of contingent consideration payable
increase by
50%
14
Cash Strategy Over Next Three Years
• Focus on organic growth with the addition of new licenses
• Acquisitions will be small tuck-ins for strategic purpose
• Excess cash will be used to pay down debt
• As leverage decreases, the company will continue to evaluate paying a dividend
Looking Ahead
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• In the U.S., despite a steady start to the year, we remain vigilant about the policies of the new US administration and their potential long-term implications for the American and global economy
•Outlook in Europe remains uncertain, with the full impact on global markets of Brexit yet to be seen, and other unresolved geopolitical and social tensions in the region. Asia continues to be promising with the expansion of the middle class delivering solid economic growth
• Transformational changes in the industry mean tremendous growth opportunities for Global Brands -- given our platform of scale, flexible licensing model, a diversified brand portfolio, and strong access to all channels of distribution
•A strong management team is in place to drive our businesses into the future
Looking Ahead
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FY2017 Annual Results &Three-Year PlanAnnouncement
Analyst Meeting June 14, 2017
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