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

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 our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, 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. 2

Agenda Pages 1. Executive Summary 4 2. Business Model 5-7 3. Results 8-15 4. Group Key Initiatives 16-17 5. Conclusion 18 3

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

L’azurde Business Model Evolution L’azurde House of Brands L’azurde Gold Wholesale Business Jewelry L’azurde retail Gold Wholesale Business Tous Affordable Jewelry L’azurde Jewelry L’azurde Mono Brand Kenaz Value diamonds diamond jewelry retail jewelry Gold Wholesale stores Business Amazing Silver fashion jewelry 5

L’azurde Business Model Evolution L’azurde Group: House of Brands L’azurde L’azurde Group Group Wholesale Wholesale Retail Retail - 21K - 21K L’AZURDE L’AZURDE KENAZ KENAZ AMAZING AMAZING TOUS TOUS - 18K - 18K 24 Shops 24 Shops (Value Diamonds) (Value Diamonds) (Silver Fashion) (Silver Fashion) (Affordable Jewelry) (Affordable Jewelry) 7 Duty Free 7 Duty Free 12 Kiosks 12 Kiosks 3 Shops 3 Shops 25 Shops 25 Shops - 14K - 14K 6

Wholesale Business Model Gold Jewelry Wholesale Business Model Banks Value Creation at L’azurde: • Creating great Gold jewelry products Bank (Design, technology, value offering, Bank Facilities Facilities innovation,….) + Margin (Murabaha) • Brand marketing • Revenues = LSC (Labor Service Charge ) + Stones Profits L’azurde L’azurde Retailers pay L’azurde: • Physical Gold + Labor Service Charge Physical Gold + Gold Labor Service Jewelry Charge (SAR/USD) L’azurde takes no position on Gold 2,000 Retailers 2,000 Retailers 7

Revenues Variance – Q3 2018 (Million SAR) 120 100 (0.5) (0.1) 9.8 0.6 80 8.8 (0.1) 3.9 60 98.5 40 76.2 20 0 Wholesale Retail Net Volume and Price Impact 8

Revenues Variance – YTD 2018 (Million SAR) 350 300 0.9 1.9 14.4 (4.0) 250 (15.0) (7.3) 35.1 200 150 280.3 306.3 100 50 0 Wholesale Retail Net Volume and Price Impact 9

Group Quarterly Revenues (Million SAR) 140.0 115.0 120.0 98.5 100.0 92.8 82.2 76.2 75.1 80.0 60.0 40.0 20.0 - Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 10

Group Quarterly Net Income (Million SAR) 10.0 9.0 9.0 8.0 7.0 6.4 6.0 4.8 5.0 3.7 4.0 2.6 3.0 2.0 1.0 0.5 0.0 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018 11

Retail Revenues at +22% YTD Sep-2018 vs. LY 306 99 100 300 280 96 31 250 76 +22% 80 +43% 79 200 21 60 150 40 +24% +4% 210 68 100 201 55 20 50 - - Q3-2017 Q3-2018 YTD Sep-2017 YTD Sep-2018 Wholesale Retail Wholesale Retail 12

Egypt Revenues increased by 66% Operating Revenues by Country – YTD Sep 2018 Million SAR 190 161.6 170 150 132.0 130 110 90 70 50 30 10.9 1.8 10 -10 KSA Egypt Other GCC Other Export % of Total 52% 43% 4% 1% Vs. 2017 9% ▼ 66% ▲ 40% ▼ 69% ▼ 13

Group Gross Margin +31% in Q3 -2018 vs. LY (Million SAR) 59 60 200 183 180 171 11 +35% 50 36 +20% 160 45 30 140 8 40 120 30 100 80 48 +30% +5% 147 141 20 37 60 40 10 20 - - Q3-2017 Q3-2018 YTD Sep-2017 YTD Sep-2018 Wholesale Retail Wholesale Retail 14

Group Consolidated Income Statements (Million SAR) Q3 YTD September 2017A 2018A Delta 2017A 2018A Delta Revenue 76.2 100.0% 98.5 100.0% 280.3 100.0% 306.3 100.0% 29.3% 9.3% Cost of revenue (31.2) -41.0% (39.8) -40.4% (109.6) -39.1% (123.1) 27.2% -40.2% 12.4% Gross Profit 44.9 59.0% 58.8 59.6% 170.7 60.9% 183.2 59.8% 30.8% 7.3% Selling and marketing (24.8) -32.5% (32.6) -33.1% (82.4) -29.4% (96.6) 31.6% -31.5% 17.2% General and admin (9.4) -12.4% (10.4) -10.5% (27.0) (30.4) 10.1% -9.6% -9.9% 12.7% Operating Income 10.7 14.1% 15.8 16.0% 61.3 21.9% 56.2 18.3% 47.0% -8.3% Other income – net (0.3) (0.4) (0.2) (3.5) -0.4% -0.4% 21.5% -0.1% -1.1% 1303.3% Finance Charges – net (7.4) (9.0) (23.4) (26.2) -9.7% -9.1% 22.0% -8.3% -8.6% 12.1% Net Profit before Zakat 3.1 6.4 37.7 13.4% 26.5 4.0% 6.5% 110.0% 8.7% -29.6% Zakat (2.5) (2.6) (8.1) (8.2) -3.3% -2.6% 4.2% -2.9% -2.7% 1.0% Income Tax (0.1) (0.1) (0.6) (0.7) -0.1% -0.1% 97.5% -0.2% -0.2% 18.6% Net Income 0.5 3.7 28.9 10.3% 17.6 0.7% 3.8% 637.6% 5.7% -39.2% Earning per Share 0.01 0.09 0.67 0.41 637.6% -39.2% 15

Group Initiatives Celebrities Expand 3D Printing Grow 18K Market Share Collaboration Technology • New Collections • Launch more lines using • Raise number of SKUs for Campaign the 3D printing most profitable line • Nelly Karim, top celebrity technology • Partnership with in Egypt on board • Reduce costs through designers linked to • New opinion leaders production automation royalty Develop Exports Outside Perfect Integration Tous Enhance Retail The Region Franchisee Acquisition Performance • Solid response from • Train and develop team • Review performance of International Exhibitions • Stepchange marketing all locations and brands • Orders for new countries • Enhance products assortment in Europe and the USA assortment and VM • Launch new 2019 • New subsidiary Oman • Launch CRM collections 16

TOUS Overview 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 17

L’azurde, a great history, a greater future Thank You For investors relations matters please contact: investors@lazurde.com 18