Leurs Fashion

7/31/2019 Leurs Fashion

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Presented by:

Moch Hasan

CEO of Indonesia

Jakarta, 31 May 2012

Business Meeting with GE Bank

Welcome ,to LeursFashionspresentation


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Presentation Outline

We have prepared to take off and grow

So, We offer save and attractiveinvestment opportunity

,because We have seen the

opportunities to grow

and We execute to build better business

and win the market


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We have prepared to take off and grow (1/2)

We are financially flexible. Our abilityto generate cash has improved. Rp6.3 B

of Rp8.2 B operating earning has been

generated in cash.

The sale continuously grows 33.12%in line with 24% growth of stores

served in 2011Sales Growth

Cash and Cash

Equivalent

The increase of ROE is mainly due tobetter asset utilization (79.3% in 2011

compare to 64.3% in 2010)Asset Turnover


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We have strong cash flow to serve our debt

Our shareholders have commitment tosupport us by providing Rp200 B additional

capital for ten year expansions

Even we financially more leveraged, we

have higher ability to cover our debt

Retain Cash Flow

to Debt

Interest Coverage

Additional Investment


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So, We offer save and attractive investment opportunity

Rp250 Billions

11%We offer interest rate of

11 %

7.3 of 10Our business will grow and

more be diversified in term

of geographic and product

segment

We got supportfrom ourshareholder

We financially prepared

to meet out liability

8.2 of 10


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Upper Class

Middle Class I

Low Class IMiddle Class II

Middle Class III Low Class II

Current Market

P

otentialGrowtho

fMarket

Sumatera

Jawa & Bali

Jawa & Bali

Jawa &

Bali

Sumater

a

Jawa &

Bali

Source: Roy Morgan, Indonesia Textile Association, and Statistic Indonesia

,because We have seen the opportunities to grow (1/3)


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Roy Morgan Database, Nielsen Report, and

Indonesia Investment Coordinating Board

10.9% middle class will pay

more for eco-friendly

product and itll expected to

increase

10.6%

73.6%Customer believe that

sustainable products give

positive impact on the

environment

79.4%Its important for company

to have environmental

program

The cloth consumption is

expected to grow

10.9%

50%The Government have

allocated special fund for

cloth SME to modernized, atleast, 50% of machinery by

2014


Source:


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The middle class want to be look

goodand be seen their wealth49.3%

63.2%Woman is the one decidingwhat will be bought, even

for mans fashion

The middle class see brand as

primary factor to decide what

product they buy

76.8%The middle class own smart

phone and would likely want to

use it to help shopping 81.9%The middle class prefer to

go to small and middle

boutique

95.3%The middle class use internet

as their preliminary survey for

shopping reference


Source: Roy Morgan Database and Nielsen Report


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and We build better business and win the market (1/3)

Improve the sale per store by increasing

efficiency of business process

Boost online marketing to capture Y generation

Encourage customers self service by using

smart phone personal wardrobe application

We invest Rp180 B to

expand at 2nd and 3rd

tier cities of Java & Bali

We invest Rp70 B to

improve System

Information to

increase sale per store

We are expected to win 8.84% of market share by 2022


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'13 '14 '15 '16 '17 '18 '19 '20 '21 '22

'13 '14 '15 '16 '17 '18 '19 '20 '21 '22

'13 '14 '15 '16 '17 '18 '19 '20 '21 '22Operating Expense

Revenue Operating Income

Saving of 5% in operatingexpense and rapid growth ofsale are expected to boost theOperating Income


3,018

1,908

1,224

800536372268201157125

4935 41 62 79107

151217

327

499

9 17 29 4674 119

198

329

547

916


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0 10 1728 46

74120

198

329

547

916

-120

-60 -58

9 2243

77

136

234

397

770

-120

-54 -46

6 14 2439

6195

144

249

Relevant cash in flow of investment until 2022

Present value of discounted free cash flow ofinvestment until 2022 is about Rp435.79 Billions. Andpresent value of incremental cash flow is about

Rp602.56 Billions

Cash in Flow

Free Cash in Flow

Discounted Free Cash Flow


14 18 20 2216


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Jakarta, 31 May 2012


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P r o u d t o b e g r e e n


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Profile of Leurs Fashion Indonesia

Organic fashion retailing company

that established on 2006 in Jakarta

Specialize in organic fashion with

tagline proud to be green

Has two main strong brands, Citeur

and Tachier, offering high fashion

taste

Leurs Fashion Indonesia issubsidiary company of Leurs

Fashion International, Retail

Fashion Company based on

France

Leurs Fashion Indonesiamainly operated in main cities

and 1st tier cities at Indonesia

Targeting upper class market

segment

The stores of Leurs Fashion is

exclusively placed at downtown

and center of cities

Has 5 distributions center that

serve 58 exclusive stores spread atJava & Bali

Currently considering emerging

middle class as source to grow


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Leurs Fashions Balance Sheet (in millions)

2011 2010

Current Liabilities 6,135 4,196

Non-current Liabilities 16,719 11,269

Total Liabilities 22,854 15,465

Share Equity 38,000 38,000

Retain Earning 46,227 45,806

Total Equity 84,227 83,806

Total Liabilities and Equity 107,082 99,272

Financial Statement of Leurs Fashion Indonesia


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Financial Statement of Leurs Fashion IndonesiaIncome Statement of Leurs Fashion (in millions)

2011 2010

Net Sales 84,920 63,791

Cost of Good Sold (65,490) (49,753)

Gross Profit 19,430 14,038

Operating Expense (11,219) (8,557)

Other Income /(Other Expense) (521) 1,320

EBITDA 7,690 6,800

Depreciation (1,719) (1,542)EBIT 5,971 5,258

Interest Paid (1,431) 1,279

EBT 4,540 (3,979)

Tax (1,135) (995)

Net Income 3,405 2,984


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Financial Statement of Leurs Fashion Indonesia

Operating Activities

Net Income 3,405

Depre Expense 1,719

Decrease in Current Asset 1,247

Increase in Current Liability 1,939

Loss of Write Down Assets 32

Gain of Sale fix Assets (1,106)

Gain of Debt Retirement (976)

Cash of Operating Activities 6,260

Investing Activities

Sale of Equipment 32,621

Purchase of Equipment (37,103)

Cash for Investing Activities (4,482)

Financing Activities

Cash for long term debt (1,087)

Cash of long term debt 5,120

Cash of Financing Activities 4,033

Net Cash Flow 5,811

Beginning Balance 18,937

Ending Balance 24,748

Leurs Fashion Cash Flow Statement 2011 (in millions)


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Activity Ratio 2011 2010

Inventory Turnover 2.92 2.08

Days of Inventory on

Hand121 144

Working Capital

Turnover1.57 1.32

Total Asset Turnover 0.79 0.64

Receivable Turnover 34.22 23.35

Days of Sale Outstanding 9 13

Purchases 10.67 11.86

Number of Days Payable 28 25

Liquidity Ratio 2011 2010

Current Ratio 8.62 11.52

Cash Ratio 4.03 4.51

Cash Conversion 102 131

Overall, We perform better to

manage our business activities in

efficient way and our capability ofgenerating cash flow to meet short

term obligation is improved

Financial Analysis of Leurs Fashion Indonesia


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Assessment of credit risk for Leurs FashionWeighting Score Total Score

Operationally

Growand

Diversified Revenue Growth 4 9 36

Gross Profit Margin 5 8 40

Growth of Stores 5 9 45

Segment Diversification 4 6 24

Geographic Diversification 4 6 24

Financially

Prepared RCF/total debt 25 8 200

Total Debt/EBITDA 15 8 120

EBITDA/Interest 10 9 90

EBIT/Capital 10 8 80

EfficientlyUtilized

EBITDA Margin 10 9 90EBITDA/Assets 8 9 72

Total 100 8.21

The assessment of credit risk shows that our credit risk is relatively low. The score

of 8.21 of 10 show how strong we are in managing credit risk


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'13 '14 '15 '16 '17 '18 '19 '20 '21 '22

103 126156

201259

41

108283

743

1950

12 34

97

280

809

Sale revenue per market segment until 2022

Emerging middle class is projected to be our main source ofgrowth in the future. We expect to seize 8.84% targeted

market share

Sale revenue from upper class customer

Sale revenue from first middle class customer

Sale revenue from second middle class customer

Projected sale revenue per segment until 2022


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Assumed that capital expenditure is made on 2012 withamount Rp120 B, 2013 Rp60 B, 2014 Rp60 B. After 10 yearswe can reuse it by investing additional 60% of investmentvalue for next additional 10 years

Calculation of relevant cash flow of project

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Incremental Cash in

Flow (Net)0 0 2 9 22 43 77 136 234 397 674

Capital Expenditure 120 60 60 -96

Free Cash Flow -120 -60 -58 9 22 43 77 136 234 397 770

Discount Factor 1 0.89 0.80 0.71 0.64 0.57 0.51 0.45 0.40 0.36 0.32

NPV of Free Cash

Flow-120 -54 -46 6 14 24 39 61 95 144 249

Total NPV of Free

Cash Flow412

Total NPV

Incremental CashFlow

603


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Risk Free* : 5.7% Risk Premium* : 12.07%

Beta* : 1.2

Cost of Equity : 13%

Cost of Debt : 9%

Tax : 25%

WACC : 11.9%

Relevant time frame for investment

is 10 years

The investment can be reutilized

for additional 10 years by investing

60% of initial investment value

Key assumptions for justification of pro-formafinancial performance

Relevant market base in 2011 isRp99,774 Billions and grows 10.5%annually

The middle class pocket share of totaldemand is about 48.9% in 2011 andincrease about 2.5% annually

Green awareness among middle classincrease from 8.9% in 2011 to 31.3% in2022

The growth of sale after project

implementation is about 56% annually

There will be 2% save of COGS and 5%of Operating Expense

Source: Pelindo equity and index valuation Estimates, Statistic Indonesia, Bloomberg, Roy Morgan database, and Nielsen report

Noted: *at March 6th, 2012


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Where are our middle class market?

0

2

4

6

8

10

Jawa & Bali Sumatera Kalimantan Sulawesi East

Indonesia

Numbers of population

Fashion consumption rate

Where they do fashion shopping?

Supermarket

Middle Boutique

Small Boutique

Traditional Market

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Television

Newspaper

Magazine

Colleague reference

Internet

Media used for buying preference

Source: Roy Morgan Database and Nielsen Report


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How to tackle any unexpected risk?

Shortage of

Suppliers

Volatile

Customers

Direct Channel of

Suppliers

Strengthen BACKSTAGE Win FRONTLINE battle

UNEXPECTED RISK

Maintain strong suppliers

relationship by providingattractive business model for

them

Diversify and set certain supply

rate for each supplier

Use famous designer to push

product brand

Push digital expansion to

capture Y generation market

Build brand value of product

Prepare excellent supply chain

Give solution, not just fashion

trend


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P r o u d t o b e g r e e n

Leurs Fashion

Documents

Transcript of Leurs Fashion