full year result to 31 march 2016 -...

Full Year Resultto 31 March 2016

Trilogy InternationalOverview

2

Distribution

Consumer Product Brands

TIL - Trilogy International Limited (NZX:TIL) is a cultivator of

essential natural products and home fragrance brands: Trilogy,

ECOYA and Goodness in New Zealand and around the world.

It’s subsidiary CS&Co distributes international cosmetics, fragrances,

skincare and haircare brands in New Zealand.

Notes:1. Includes 7.5 months of trading since acquisition to 31 March 2016

TIL SegmentOverview

3

Natural Products Home Fragrance & Bodycare Distribution

Brands Trilogy Goodness ECOYA CS&Co

ProductsCertified natural and

organic rosehip oil based skincare range

Certified organic chia seed oilskincare range

Soy based home fragrance (candles, diffusers, bodycare)

Third party premium beauty products distribution

Target MarketAffordable luxury / premium

self-selectMass market / cost conscious

consumers – developed specifically for the grocery channel

House proud, fashion conscious consumer

New Zealand retailers

Channels

+3500 stores• Pharmacies / health

stores• Department stores• Online

+1600 stores• Grocery • Farmers• Priceline• Chemist Warehouse

+400 stores• Department stores• Independent gift and homeware

stores

+1900 stores• Pharmacies• Department stores• Grocery• Salon

Geographies• New Zealand & Australia• UK• Asia• US

• New Zealand & Australia • New Zealand & Australia • New Zealand

Established 2002 2015 2006 1976

FY16 Revenue

EBITDA

EBITDA Margin

$34.4M

$11.5M

33.3%

$20.1M

$2.5M

12.4%

$28.6M1

$4.8M1

16.8%

FY16Performance

TIL’s Year inReview

5

$83.1m

$16.3m

$0.15

5.45cents per share

Revenue

+127%

EBITDA

+208%

Dividend

+51%

EPS(diluted)

MARKET REVENUE & EBITDA

EBITDA

REVENUE

Australia

New Zealand

US

UK & Ireland

Asia

Other

SEGMENT REVENUE & EBITDA

EBITDA($M)

REVENUE($M)

Home Fragrance, Body & Bath

Natural Products

Distribution

FY12 FY13 FY14 FY15 FY16

EBITDA ($m) EBITDA Margin

4.7% 5.0%

7.2%

19.7%

14.5%

5.3

16.3

2.11.31.1


22.626.7

29.8

36.6

83.1

REVENUE ($m)

EBITDA

Key Drivers ofRecord Result

6

GROWING MARKET SHARE IN KEY

GROWTH CATEGORIES

Trilogy #11 natural skincare brand in New Zealand.ECOYA leads the New

Zealand home fragrance market and #22

in Australia.

INCREASED INTERNATIONAL PENETRATION

Combined revenue growthof 67% across the US, UK/Ireland and Asia.Launched Trilogy into

Wholefoods retail in the US which performed better than

expected.

EMERGING MARKETS AND

NEW PRODUCTS SOLIDIFY FUTURE

GROWTH

Revenue in Asia exceeded $5m for the

first time.

ACQUISITIONOF CS&Co

Completed in August 2015.Delivering $28.6m in

revenue and $4.8m EBITDA in its first 7.5 months.

1. Aztec data as at 20/03/16 NZ Pharmacy Facial Skincare

2. Aztec data as at 06/03/16 AU Pharmacy Facial Skincare

3. Aztec data MAT to 27/03/16 NZ Grocery Facial Skincare

EXPANDEDRETAIL CHANNELS

Launch of Goodness, a natural skincare range targeting a

different demographic through mass market grocery channel.Very early days for Goodness

range but has already achieved 4.8%3 share in the New Zealand

natural skincare grocery segment.

FY16 ResultsSnapshot

7

• Strong revenue growth in Trilogy, Goodness

and ECOYA brands.

• Momentum maintained in key New Zealand (+78%) and

Australia (+29%) markets.

• Successful marketing driving total revenue growth in the US

(+231%), UK/Ireland (+54%) and

Asia (+42%).

• Disciplined gross margin management.

• Moderate raw material cost increases, being managed

through Trilogy's global supply network.

• Significant increase in EBITDA margins.

• Increased profitability across all brands and all markets while

continuing to invest to support expansion of business and

drive future sales growth.

• While growing, distribution subsidiary CS&Co, contributes

lower margins compared to the

TIL product business, but in line with distribution category.

NZ$ millions FY15 FY16 YoY

Sales 36.6 83.1 127%

Gross profit 22.8 44.8 97%

% margin 62.2% 53.9%

EBITDA 5.3 16.3 208%

% margin 14.5% 19.7%

EBIT 5.0 14.9 221%

% margin 13.5% 19.1%

NPAT 4.5 9.4 108%

EPS 0.07 0.15

13.1

16.1 16.3

20.3

34.4

9.510.6

13.5

16.3

20.1

28.6


FY16 Results bySegment

8

4.14.9

3.6

5.3

11.5

(2.1) (2.5)

(0.4)

1.32.5

4.8


REVENUE (NZ$M)

EBITDA1

(NZ$M)

• Natural Products segment capitalised on increased global recognition of rosehip oil, with revenue growth of 69% in FY16

and EBITDA growth of 116%.

• Continued momentum in Home Fragrance & Bodycare division, achieving 24% revenue growth and 93% EBITDA growth.

• Strong EBITDA margin increases achieved across all brands and geographic markets.

Natural Products Home Fragrance & Bodycare CS&Co

CashflowStatement

9

• Operating business produced $5.7m net cash,

up 21 % YoY.

• Capital expenditure increased in FY16.

• Purchases of PPE required to support CS&Co

integration into Trilogy group.

• Increased spend on in store display assets to

support expansion across Trilogy and ECOYA

brands.

• Investment in head office and website development.

• Net financing cashflows increased to $30.5m due to debt

funded acquisition of CS&Co.

NZ$m FY15 FY16

Cash flow from operations

Receipts from customers (incl. GST) 39.6 89.6

Payments to suppliers / employees (incl. GST) (34.0) (79.2)

Interest received 0.0 0.0

Interest paid (0.4) (1.8)

Tax (paid) / received (0.5) (2.9)

Net cash inflow / (outflow) from operating activities 4.7 5.7

Cash flow from investing activities

Payment for PPE (0.1) (1.3)

Sale of PPE 0.0 0.0

Payment for intangible assets (0.2) (0.3)

Acquisitions, net of cash acquired 0.0 (33.9)

Net cash inflow / (outflow) from investing activities (0.3) (35.5)

Cash flow from financing activities

Proceeds from borrowings 1.9 40.9

Repayment of borrowings (4.8) (8.2)

Net proceeds from issue of shares (0.0) 0.1

Dividends paid 0.0 (2.3)

Net cash inflow / (outflow) from financing activities (2.9) 30.5

Net cash flow 1.5 0.7

BalanceSheet

10

• Increase in total interest-bearing liabilities to $35m

from debt-funded acquisition of CS&Co.

• Net debt / EBITDA rises to 1.9x for FY16, but

remains comfortably within existing debt

covenants.

• Increase in intangible assets made up of $32.6m

goodwill arising from CS&Co acquisition.

• Working capital increase driven by rising inventory

and trade receivables associated with acquisition

of CS&Co.

NZ$m FY15 FY16

Cash and cash equivalents 2.7 4.4

Trade and other receivables 5.9 14.4

Derivative financial instruments 0.2 0.1

Inventories 5.0 21.0

Total current assets 14.8 39.9

Plant and equipment 1.0 2.7

Intangible assets 17.5 50.4

Deferred tax asset 0.9 0.4

Total non-current assets 19.4 53.5

Total assets 34.2 93.4

Trade and other payables 4.9 12.1

Provision for tax 0.5 1.2

Deferred and contingent consideration - 1.5

Interest bearing liabilities - 4.8

Derivative financial instruments - 0.0

Total current liabilities 5.4 19.0

Interest bearing liabilities 1.6 30.4

Deferred and contingent consideration - 8.0

Total non-current liabilities 1.6 38.4

Total liabilities 7.0 58.0

Contributed equity 32.4 32.6

Reserves (1.2) (0.3)

(Accumulated losses)/retained earnings (4.0) 3.1

Total equity 27.2 35.4

11

Dividend• TIL's dividend policy is to pay 45-55% of business earnings

excluding CS&Co and after interest and tax.

• Allows adequate earnings to be retained to fund initiatives that drive capital growth for Trilogy shareholders and allow for debt

repayment.

• Full year dividend of 5.45 cents per share, up 51% on FY15.

• Dividend fully imputed

• Equivalent to 50% of 2016 business earnings excluding CS&Coearnings and after interest and tax.

DIVIDEND PAYMENT(CENTS PER SHARE)

FY15 FY16

3.60

5.45

CS&Co FY16 Highlights& Performance

12Notes:1. Pro Forma (PF) figures are based on management accounts and adjust for the 4.5 months of the twelve month period to 31 March 2016 that CS&Co was not part of Trilogy International

REVENUE(NZ$M)

EBITDA(NZ$M)

6.44.8 4.8

6.7

1.9

FY 15 FY 16A(7.5 months)

Pro Forma adj(4.5 Months)

FY 16 PF

+5.5%

40.228.6

42.2

13.6

FY 15 FY 16A(7.5 months)

Pro Forma adj(4.5 Months)

FY 16 PF

+5.0%

• Acquired by Trilogy International in Aug 2015

• Will commence distribution of Trilogy and Goodness

ranges throughout New Zealand from July 2016.

• Achieved 5.0% revenue and 5.5% EBITDA growth 1

• Benefits include:

• Synergy benefits

• Earnings accretive (contributed 7.5 months of

earnings to Trilogy International in FY16)

• Scale

• Export logistics service to the group

• International distribution contacts

ChileanJoint VentureACQUISITION OF A 25 PERCENT STAKE IN SOCIEDAD AGRICOLA Y FORESTAL CASINO SPA (“FORESTAL CASINO”), THE LARGEST CHILEAN BASED ROSEHIP PRODUCER

13

Overview

The acquisition delivers future supply certainty of certified organic

rosehip oil for TIL while also providing access to their deep knowledge

and experience of the rosehip industry.

The partnership enables Forestal Casino to expand at a faster rate

which also supports TIL’s growth strategy.

Transaction is expected to settle on 30 June 2016, subject to

customary closing conditions.

Forestal Casino

Forestal Casino is a family owned business first established in Chile in

1975. It has a long history in organic rosehip production and has

supplied TIL with high quality rosehip oil since 2010.

The business specialises in the production of high quality rosehip

products for the rosehip tea industry and the pressing of rosehip seed

into oil for the skincare market.

TIL - Forestal Casino Transaction Details

Under the terms of the agreement, TIL will pay USD 8.0 million, comprising of;

USD 2.0 million payable in cash and USD 6.0 million funded through the issue

of 2,615,181 new ordinary shares.

The shares are subject to a lock-up arrangement whereby the shares cannot be

traded by Forestal Casino for a period of two years from the transaction

closing date of 30 June.

As part of the acquisition Forestal Casino will grant Trilogy a long term supply

agreement for rosehip oil which is a core ingredient in a number of skincare

products produced by Trilogy.

TIL management expects the acquisition to be earnings accretive. However,

there is no expectation for a dividend to be received in relation to the

investment in the short term, as surplus cash will be utilised to invest in growth.

StrategicPriorities

14

• Natural Products and Home Fragrance & Bodycare –

continue to grow in Australia and New Zealand, while

identifying and developing opportunities to expand globally.

• Product development and innovation – increase our

investment in new product development to increase value of

basket per customer and market penetration.

• CS&Co - maximise the opportunity for Natural Products from

strong domestic retail environment through channel

expansion, and increased product offering, while maximising

existing brands.

• Supply Chain – invest in further strengthening and expanding

TIL’s supply chain network and distribution channels to drive

efficiencies and maximise global growth opportunities.

FutureOutlook

15

• As we look to the future, Trilogy International will take

confident strides in dynamic consumer sectors of Natural

Products and Home Fragrance to increase revenue and

profitability in Australia and New Zealand to support

meaningful opportunities in other markets.

• We expect growth will continue to out-perform market

growth in FY17. Leveraging that growth, we will expand our

investments in new business opportunities and markets to

sustain future growth.

• During FY17 Trilogy International will support its future

focused growth through investment in brand and marketing,

product innovation, working capital, technology, internal

functionality, and people. This will enable us to be fit for the

future, continuing to provide our consumers with quality

products and grow our business.

NaturalProducts

T R I L O G Y & G O O D N E S S

Natural Products Overview & Strategy

171Aztec data as at 20/03/16 NZ Pharmacy Facial Skincare2Aztec data as at 06/03/16 AU Pharmacy Facial Skincare

6.57.2

2.8 2.2

0.7 0.9

13.3

10.5

4.03.1

2.5

1.0

New Zealand Australia Asia UK & Ireland US Other

NATURAL PRODUCTS REVENUE BY MARKET

• Natural Products account for a fast growing share of total skincare spend. In pharmacy alone, the

Natural/Organic Skincare segment grew over 21%1

in New Zealand and over 26%2 in Australia.

• Trilogy is the #11 New Zealand natural skincare brand in pharmacy.

• Expect to continue market share gains in the

home markets ofNew Zealand and Australia by increasing brand

recognition, product development and innovation.

• The aspiration is to establish Trilogy as the global

leading authority in natural skincare by building on our leadership in rosehip oil products.

• Focus on deepening and strengthening distribution networks, particularly in Asia, the US

and UK.

• Continue to secure high quality rosehip oil supply

through our global supply network to meet growing demand.

FY15 FY16

FY16 Highlights& Performance

18

• Natural Products produced record revenue growth

of 69%.

• EBITDA growth of 116%, with margins expanding

from 26.3% to 33.5%.

• Investment in people, office move and international.

• Modest gross margin compression due to raw

materials pricing pressure (rosehip oil)

• 45% increase in new product development value.

• Launched Goodness brand, TIL’s Chia based

skincare range into 1600+ doors across New Zealand

and Australia.

• Launched Trilogy into Wholefoods retail in the US

which has performed better than expected.

Aztec data MAT to 27/03/16 NZ Grocery Facial Skincare

REVENUE(NZ$m)

EBITDA


4.1 4.93.6

5.3

11.5

31.3% 30.2%

22.0%26.3%

33.5%

-1

4

9

14


13.116.1 16.3

20.3

34.4


19

Natural ProductsGeomap

Home Fragrance& Bodycare

3.8

10.8

0.8 0.2 0.1 0.0

5.0

12.7

1.1 0.6 0.1 0.6

New Zealand Australia Asia UK & Ireland US Other

Home Fragrance Overview & Strategy

21

HOME FRAGRANCE & BODYCARE FY16 REVENUE BY MARKET

HOME FRAGRANCE MARKET SHARE

Source: TNS (May 2016)

• ECOYA has built it’s global reputation on the

ECOYA Collection, the brand’s signature range.

• Strong market share in home markets;

• ECOYA leads the New Zealand home fragrance market with 24% share.

• #2 in the Australian market with 7% share.

• Focused on product development and seasonal

editions to grow the home fragrance segment and

its share in home markets.

• The aspiration is to establish ECOYA’s position as

the #1 Australasian home fragrance brand in

targeted international markets.

New Zealand Australia

ECOYA

The Aromatherapy Co

The Body Shop

Crabtree & Evelyn

L’Occitane en Province

Linden Leaves

Glasshouse

Yankee Candles

Jo Malone

Ashley & Co

Other

24%

16%

9%

5%

4%

4%

4%

3%

2%

28%

2%

Glasshouse

ECOYA

L’Occitane en Province

Crabtree & Evelyn

Yankee Candles

In Essence

The Aromatherapy Co

Mor

Salt & Pepper

Woodwick

Other

16%

7%

7%

6%

5%

5%

4%

3%

3%

39%

5%

FY15 FY16

(2.1) (2.5) (0.4)

1.3 2.5

-21.6% -24.0%

-3.1%

7.7%12.5%

-35.0%-25.0%-15.0%-5.0%5.0%15.0%25.0%35.0%45.0%

(4)

(2)

-

2

4

6


9.5 10.6

13.516.3

20.1


FY16 Highlights& Performance

22

REVENUE(NZ$m)

EBITDA

• ECOYA produced record revenue growth of 24%

driven by continued strong profitable retail

relationships and driving the depth of distribution

in both the Australian and New Zealand markets.

• Continued success from the development

and launch of limited edition scents for

Christmas, summer and winter which

delivered 20% more in value.

• EBITDA margin expansion from 8.0% to 12.5%.

• In the UK, ECOYA has seen category and brand

growth through new display investment in new

retail partnerships.


23

Home Fragrance &Bodycare Geomap

CSCompany

CS&CoTRILOGY ACQUIRED CS&CO IN AUGUST 2015, NEW ZEALAND’S LARGEST INDEPENDENT IMPORTER AND DISTRIBUTOR OF FRAGRANCES, HAIRCARE, SKINCARE AND TOILETRIES

25

PRODUCTS Third party premium beauty products distribution

TARGET MARKET New Zealand retailers

• Largest distributer of fragrance in NZ with 33%¹ share• 13%¹ share of make up distribution in NZ

CHANNELS

+1900 stores• Pharmacies• Department stores• Grocery• Salon

GEOGRAPHIES • New Zealand

ESTABLISHED 1976

¹ CTFA annual survey statistics

KEY FRAGRANCE BRANDSCalvin Klein, Gucci, Marc Jacobs

& Dolce & Gabbana.

KEY COSMETIC BRANDSMax Factor, Natio & OPI.

60+ BRANDSFragrance, Cosmetics & Salon.

26

CS&Co AnnualisedImpact

Notes:1. Pro forma contribution adjusts CS&Co figures to include the 4.5 month period of trading in FY16 prior to CS&Co being acquired by Trilogy

PRO FORMA REVENUE CONTRIBUTION1

PRO FORMA EBITDA CONTRIBUTION1

Natural Products


CS&Co

43%

21%

36%

57%

31%

12%

Natural Products


CS&Co

• CS&Co acquisition announced in August 2015

• FY16 results include 7.5 months

post-acquisition contribution.

• The pro forma numbers are included to

demonstrate the annualised impact of the

CS&Co contribution.

• CS&Co accounted for 43% of revenue and 31% of

EBITDA on a pro forma basis in FY16.

• Estimate FY16 CS&CO revenue of $42.2m and

EBITDA of 6.7m.

• CS&Co provides strong revenue and EBITDA

contribution, however is a lower margin business

compared to our Natural Products and Home

Fragrance & Bodycare.

Appendix

TrilogyManagement Team

28

Kristy Macgregor Operations Manager

Claire BarnesECOYA General Manager

Lindsay RenderCFO

Sonya FynmoreInvestor Relations Consultant

Louise Clayton Trilogy Sales Manager

Angela BuglassCEO

15 years' of skincare and cosmetics

experience in the International markets.

More than 20 years' experience in

leading health and beauty teams in NZ.

Chartered Accountant with over 15

years commercial experience.

Background in project management and business development in the UK retail industry, Operations

Manager with Trilogy International since 2011.

Over 10 years of sales and marketing experience

centred around fashion, advertising and media.

Over 10 years’ experience in the financial

markets across multiple jurisdictions.

Grant BakerDirector

The Business Bakery Representative

Board ofDirectors

2929

Stephen SinclairExecutive Director


Mandy SigaloffIndependent Director

Jack MatthewsIndependent Director

Geoff RossChairman


Disclaimer

30

This presentation is given on behalf of Trilogy International Limited (Company number NZ 2090514, NZX: TIL).

Information in this presentation:

Is for general information purposes only and is not an offer or invitation for subscription or recommendation for purchase of

securities in Trilogy International Limited;

Should be read in conjunction with, and is subject to, Trilogy International Limited’s Annual Report, market releases, and information

published on (www.trilogyproducts.com/investors);

Includes forward-looking statements about Trilogy International Limited and the environment in which Trilogy International Limited

operates, which are subject to uncertainties and contingencies outside of Trilogy International Limited’s control – Trilogy

International Limited’s actual results or performance may differ materially from these statements;

Includes statements relating to past performance, which should not be regarded as a reliable indicator of future performance; and

may contain information from third parties believed to be reliable; however, no representations or warranties are made as to the

accuracy or completeness of such information.

All information in this presentation is current as at the date of this presentation, unless otherwise stated.

All currency amounts are in NZ dollars unless stated otherwise.

full year result to 31 march 2016 -...

Documents