For personal use only

Transcription

1 Company Announcements Office Australian Securities Exchange ASX Limited Exchange Centre Level 4, 20 Bridge Street Sydney NSW 2000 Via e-lodgments Dear Sir / Madam RE: Annual General Meeting 2017 Chairman and Managing Director Addresses Please find attached the addresses to be presented at today s Annual General Meeting by our Chairman Mr Richard Facioni and Managing Director Mr Scott Evans Yours faithfully Luka Softa Company Secretary

2 CHAIRMAN S ADDRESS Once again, I d like to welcome you all and thank you for joining us at today s 2017 Annual General Meeting was an eventful year for Noni B group, and a positive one. It was also a transformative year. The acquisition of Pretty Girl saw Noni B effectively triple in size and become one of the largest specialty retail groups within Australia. I m pleased to say that the integration of Pretty Girl was completed during the 2017 Financial Year and we are now seeing the benefits reflected in the Group s performance. What s particularly satisfying is that we were able to undertake a major acquisition, yet at the same time remain focused on, and continue to improve, our core business. I can assure you, it was no mean feat, and it is a testament to the quality and depth of our entire team. As a result of the team s efforts, the Group posted like-for-like sales growth for 2017 of positive 2.4% for the year, with a particularly strong second half of positive 4.3%. Group revenue was $316.8 million and underlying Earnings Before Interest, Tax, Depreciation and Amortisation was $22.9 million. The Group s balance sheet is strong, with Net Cash of $6 million at financial year end. I sincerely want to thank Scott and his team, and my fellow directors, for all the hard work that went into achieving such an exceptional result. As a result of the Group s success, we were able to resume dividend payments to shareholders, with the declaration of a fully-franked dividend of 4 cents per share, the first dividend since We now expect to continue to pay regular dividends consistent with market, reflecting the Group s return to profitability and strengthened financial position. Noni B also announced this morning an on-market share buyback, which will commence in 14 days. We ve announced the buyback for a couple of reasons. First, given the Group s strong financial position, we believe this is good capital management. Our view is that capital that is surplus to our immediate needs is best returned to shareholders, through dividends, returns of capital or share buy backs. Secondly, we believe our shares represent good value at current levels. Noni B s largest shareholder, Alceon, has advised the Company that it will not be participating in the on-market share buy-back.

3 We also recently agreed to finalise the deferred terms of the Pretty Girl acquisition. When we acquired Pretty Girl from Consolidated Press Holdings in September last year, we agreed as part of the transaction consideration to a deferred payment based on the future trading performance of the acquired businesses. As a result of the successful integration of Pretty Girl and the subsequent trading performance of the business, we recently negotiated with Consolidated Press Holdings to an early payment of the deferred consideration. The deferred payment was likely to be materially in excess of the $3.2 million provision taken up in our 2017 accounts, payable in September However, we agreed with Consolidated Press Holdings to bring the payment forward for a discounted amount. As a result, we have agreed to a payment of $3.0 million, payable in two equal tranches at the end of this month and the end of December. We believe this is a positive outcome for all parties. It s been an exciting journey to date. Noni B was an underperforming and loss-making business when Alceon Group acquired control in the 2015 Financial Year. The turnaround in such a short time has been nothing short of remarkable. Well done team! But the journey s not over. Turning to the current year, there s no doubt that highly-competitive market conditions have persisted and are likely to continue to do so. We have seen a number of retailers announce difficult trading conditions, and there is much discussion about the death of bricks & mortar retail with the imminent entry of Amazon into this market. Whilst trading conditions are undoubtedly more competitive than they were this time last year, we re pleased with our performance to date in this financial year. We have seen a continuation of positive like-for-like sales growth. Year-to-date, like-for-like sales growth for the first four months of the current Financial Year exceeded 2%. We believe this is a highly credible result, particularly in the prevailing market conditions. Much has been said about the entry of Amazon to Australia. In truth, no one knows what the impact will be. All we know is that there will be a meaningful impact on our market and on customer behaviour. We believe, however, we are well-positioned to respond to the increasingly competitive environment. We own our brands, we cater to a loyal customer base, we have a strong regional footprint and our service in our stores is a strong pillar of our business. We are continuing to invest heavily in our own online offering, including the successful introduction of AfterPay, a click and collect offering across our extensive national store network and participation on selected third-party platforms. Most importantly, we continue to put our customer at the heart of everything we do. Ensuring we offer her an emotive experience, service, and the product she seeks is our core focus.

4 We know we will continue to be successful as long as we remain focused on these key beliefs. The tougher retail conditions do create opportunities for the Group. Our strong financial position and profitability allow us to compete effectively in the market, and we continue to review potential acquisitions for the Group. As we have in the past, we will continue to take a disciplined approach to reviewing potential acquisitions and we ll only pursue them in cases where they fit into our portfolio, where we are confident they will materially increase shareholder value and where they have an acceptable risk profile. This approach has been successful to date and we are confident it will continue to be. Looking to the balance of the financial year, our full year results will, as always, be subject to some key trading periods, particularly Christmas and Mothers Day. However, we are pleased to report that for the first four months of the current financial year, ended 29 October, the Group s underlying EBITDA was $5.4 million higher than for the same period last year. This result-to-date, combined with our positive like-for-like sales growth, gives us continued confidence that we are on the right track. I d now like to briefly discuss our remuneration policy. The board of Noni B, has a simple approach to remuneration. Incentives drive behaviour, and behaviour, in turn, drives performance. Noni B adopts three components to its remuneration fixed remuneration, annual short term incentive bonuses and a long term incentive equity participation plan. We regularly review our fixed remuneration to ensure it is consistent with market and appropriate to our specific circumstances. This is an important part of succession planning and ensuring the integrity of the business. Our annual short term incentive is designed to incentivise achieving, and exceeding, annual budget earnings, whilst maintaining quality and sustainability of earnings through specific quality of earnings tests. Our Long term incentive plan is designed to encourage participants to take a long term view in their decisions and to focus on sustainable growth in shareholder value. Under the plan, shares are issued at the prevailing share price and funded by loans provided by the company. The shares vest over time and are subject to performance hurdles linked to the company s share price performance. We believe the three components of our remuneration policy complement each other and are a key factor in the success of the company and our performance to date. Retail is a tough industry, as we remind ourselves every day. But, with the right team, the right execution and the right focus, it can also be very rewarding, for customers, for employees and for shareholders.

5 I would like to take this opportunity to again thank my fellow Non-Executive Directors, Sue Morphet and David Wilshire, for their invaluable contribution. I would also like to thank Scott, Luka, and the whole Noni B Group team, for their ongoing commitment and efforts. I now invite Scott to address the meeting and provide you with more detail on the Noni B operating results. CEO/MANAGING DIRECTOR S ADDRESS Thank you, Richard, and good morning ladies and gentlemen. While we have made many operational improvements during the past year, two factors have been key in driving our financial performance. Firstly, as I have said before, we are extremely disciplined in making sure that the customer is at the heart of everything we do. And second, we have a great team both in our stores and in our support centre who all have worked very hard to achieve these results. I cannot praise our team enough, as they have embraced the many changes we have made and focused entirely on giving our customer what she wants, and I would like to thank them sincerely for enabling our group to deliver on its goals. As Richard has mentioned, this was a transformational year for Noni B Group. The acquisition of Pretty Girl in September 2016 tripled our revenue and store numbers and gave us three new complementary brands Rockmans, W-Lane and beme. Overnight, we became one of Australia s largest specialty apparel retailers. Immediately, we began to implement the strategies that had enabled us to restore the Noni B brand to profitability. We kept our focus clear and simple in order to ensure execution within each facet of the business was achieved. Our key areas of focus covered customer experience, the styling and quality of our products, logistics, sourcing, our cost of doing business and ultimately our profitability. At last year s AGM, I showed one slide that detailed how we segmented our goals into three priorities along with the execution timeline: namely integration of the Noni B and Pretty Girl businesses; establishment of a more efficient supply chain; and growth for the business. Here is an update showing progress since then. During the past financial year, I am pleased with the progress we have made across the group, from relocating to a support centre to Rosebery, integrating our IT platform, establishing a single outsourced warehouse, consolidating suppliers and redesigning the entire logistics process, to introducing direct-to-store shipping to improve speed to market.

6 The integration program was completed ahead of schedule and we have already achieved significant supply chain benefits as well as procurement savings, team synergies and significant improvements in working capital. This has resulted in savings of $8 million in the annual net cost of doing business which will be realised during this financial year, in addition to which the margin improvements from restructuring the supply chain will further impact the group s financial result. All these changes have contributed to the improvement in the group s financial performance, but we have been equally focused on improving our customer s emotional engagement so she wants to return to shop in our stores over and over again. To drive improvements in the stores look and feel and in our products and merchandising we have appointed a group general manager of customer experience. The investment in this new role is to ensure we exceed our customers expectations and to differentiate our brands from our competitive set. In addition to this, we have invested in additional training with modules covering all aspects of selling from welcoming the customer to closing the sale, including what we call the magic balance between customer service and salesmanship. More recently, we have launched a much improved team incentive scheme across our store network to not only reward our team financially but also to create a sense of community with paid leave for new grandparents as well as paid leave for charity work. We have implemented many changes over the past 12 months and our focus on the customer was rewarded with the continued improvement of the Noni brand and a turnaround in Rockmans, W-Lane and beme in the second half of the year compared to the first half. This resulted in all four brands achieving higher sales revenue for FY17. The group s like-for-like revenue for the year finished up 2.4%. This was supported by a very strong Mother s Day result with some of our brands achieving record sales weeks for this period. We invested significantly in our online business. We deepened our team, increased our fulfilment capability, migrated to one platform and appointed a group general manager for the online business. As a result, we have seen considerable success, with all four brands accelerating throughout the 2017 financial year, ending 56% up on the previous year and contributing 3.6% of group sales. As you have seen during Richards address this trend has continued delivering further growth year-to-date & at the end of October FY 18 we are up 84%, this clearly demonstrates this channel s potential and the underlying strength & growth of our brands. During the year, we optimised the store portfolio, expanding to new locations and closing a number of weaker stores or converting them to other brands within the group. By end of the

7 financial year 2017, our number of stores had grown to 614, compared with 596 following the Pretty Girl acquisition. Since then, this number has increased to 632 and we are scheduling a further 10 openings by Christmas. We believe there are further opportunities to expand our store network, in a measured way. As Richard has indicated, and media regularly report, we are operating in a tough market. The coming weeks, leading up to Christmas, are always vital for the retail sector; it is too early to predict our pre-christmas sales, but I am confident that the group is well placed and prepared for this key trading period. Thank you and I now hand back to Richard.