CBR Service GmbH
CBR FASHION HOLDING PLANS IPO IN 2015
DGAP-News: CBR Fashion Holding AG / Key word(s): IPO 2015-06-09 / 08:00 --------------------------------------------------------------------- NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN. CBR FASHION HOLDING PLANS IPO IN 2015 - Company to issue new shares in capital increase, EQT to sell part of existing shares - 2014 revenue at approximately EUR 609 million, adjusted EBITA of approximately EUR 105 million with adjusted EBITA margin1 of 17.2% - Planned IPO to provide CBR with financial flexibility for further transformation and growth path Celle, June 9, 2015. - CBR Fashion Holding AG ("CBR"), a top 5 player in the German womenswear apparel market , plans an initial public offering ("IPO") in the course of 2015, subject to market conditions. The offer is expected to consist of newly issued shares from a capital increase amounting to approximately EUR 200 million and the sale of shares by the company's owner EQT. The shares will be offered publicly in Germany and Luxembourg to institutional and retail investors. Outside of these countries, shares will be offered by way of private placements. CBR is one of the major players in the German womenswear apparel market, with two long-established brands and a strong geographical footprint in Germany and across Europe. CBR focuses on wholesale with a true omni-channel offering, including e-commerce and its own retail and outlet stores. CBR operates via two fully independent brands with a differentiated positioning, Street One and CECIL. Both target the mainstream fashion market as fashion followers, translating runway trends into mainstream fashion with a lead time of typically just 90 days from sampling to delivery through its unique DMV (Design, Marketing, Sales) concept. CBR generated revenues of approximately EUR 609 million in 2014 and achieved an adjusted EBITA of approximately EUR 105 million, corresponding to an adjusted EBITA margin of 17.2%. Over the last three years, CBR delivered an attractive adjusted EBITA Compound Annual Growth Rate ("CAGR") of 7% as well as a significant adjusted EBITA margin expansion of 2.7 percentage points. Under EQT's ownership, bank debt was reduced by approximately EUR 700 million since 2007. Christoph Rosa, CEO of CBR, said: "Our compelling business model is based on a strong control over the entire value chain and delivering excellent cash generation. We offer established brands with clear and differentiated positioning in a large market with selective opportunities for further growth. The planned IPO is a sensible step and provides us with the necessary financial flexibility to move the business forward." CBR intends to use the net proceeds from the offering of new shares in the capital increase to optimize its capital structure and improve financial flexibility. After the IPO, EQT will continue to hold a significant stake in CBR. Marcus Brennecke, Partner at EQT Partners, added: "Over the past years we have worked with the CBR management and employees to further develop CBR as a major and profitable fashion group with outstanding operations and drive the multichannel and selective retail business for future growth." Large market with long-term growth prospects CBR's brands Street One and CECIL are well positioned in a very large and growing market with long-term growth prospects. The German apparel market, CBR's core market, is the largest in Europe with an estimated size of EUR 58.4 billion in 2014 (source: Verdict Market Report 2014) and expected continued robust growth at a CAGR of 3.1% between 2014-2019 (source: Verdict Market Report 2014; CAGR 2009-2014: 1.8%), driven by rising consumer confidence and a favorable macroeconomic environment. The German womenswear apparel segment represented about 58% of the total German apparel market in 2014, as estimated by management based on data from the Euromonitor database. The European apparel market has recovered since the financial crisis in 2009 (2009-2014 CAGR: 0.6%), reaching a size of approximately EUR 285 billion in 2014 (source: Verdict Market Report 2014). According to Verdict Market Report 2014, this market is expected to grow at a CAGR of 2.7% over the 2014-2019 period, according to the same source. Strong E-commerce growth momentum and selective retail expansion E-commerce will be one of CBR's primary areas of focus for growth and CBR also plans to expand internationally with the next step of opening an EU-wide shop, leveraging the POS base using new omni-channel options (e.g. "click and collect") and increasing the use of data-driven cross-channel marketing initiatives. E-commerce revenue made up 8% of total revenue in 2014 and has grown at a CAGR of 41% over the 2012-14 period. In addition, CBR plans to further selectively expand its own retail operations - which represented 6% of total revenue in 2014 (including outlet stores) - by filling selected white spots which are currently not served by its retail partners. Asset-light business model delivering excellent cash returns and high margins CBR's asset-light business model has delivered in the past and is well positioned to deliver excellent cash returns to its shareholders. Outsourced production and logistics, a delivery of goods to the POS generally within 24-48 hours, as well as an own retail business that CBR expects to remain small relative to the overall Group greatly reduce working capital and capex requirements and have resulted in an excellent cash generation. In 2014, CBR generated a Pre-Tax Free Cash Flow of EUR 101 million (92% cash conversion). CBR achieved a strong uplift in gross margin from 38.4% in 2012 to 43.2% in 2014, driven by sourcing and logistics efficiencies as well as an increased focus on own retail and e-commerce. Deutsche Bank and Goldman Sachs International have been mandated as Joint Global Coordinators and Joint Bookrunners. BNP Paribas, UBS and UniCredit act as Additional Joint Bookrunners. IKB and Intesa act as Co-Managers. The annex to this release includes further important information on CBR (recent developments, including re-positioning and outlook, strategy, financial information and key performance indicators). About CBR Fashion Group CBR Fashion Group was founded in 1980 and today is a major fashion group in the large German women's mainstream market, with a broad geographical footprint and two well-established brands, Street One and CECIL. With revenues of EUR 609.2 million in 2014, CBR is one of Germany's major womenswear players. CBR has about 1,000 employees (as of March 31, 2015) and operates in 19 countries across Europe. For further information, please go to www.cbr.de Press contact Julia Mandrión Soria CBR Fashion Holding AG Hunäusstr. 5 29227 Celle / Germany communication@cbr.de Fon: +49 (5141) 998 2256 Fax: +49 (5141) 998 400 Alexander Styles CNC - Communications & Network Consulting Ltd. Alexander.Styles@cnc-communications.com Fon: +44 (203) 81 799 21 Annex: Further information on CBR Fashion Group CBR is one of the major players in the German womenswear apparel market with two clearly differentiated brands both positioned in the mainstream segment, Street One and CECIL. The Group operates a vertically integrated business model through its unique DMV concept (Design, Marketing, Sales), enabling customer oriented design and short lead times. In 2014, CBR generated revenue of EUR 609 million, an adjusted EBITA of EUR 105 million as well as a Pre-Tax Free Cash Flow of EUR 101 million. CBR operates in 19 European countries with Germany contributing 71% to total revenue in 2014 and the international business the remaining 29%. The Group's wholesale business made up 85% of total revenue in 2014, while the strongly growing e-commerce and its own retail operations (incl. outlets) contributed 8% and 6%, respectively, demonstrating CBR's true omni-channel offering and at the same time its future potential for further growth in retail channels. CBR's main competitive strengths are: 1. Resilient apparel market benefiting from consumer confidence pick up CBR Fashion Group operates in the womenswear mainstream fashion segment of the European apparel market. The German apparel market, CBR's most important regional market, is the largest in Europe with an estimated size of EUR 58.4 billion in 2014 (source: Verdict Market Report 2014). According to Euromonitor database, the German apparel market remains very fragmented. When considering the womenswear segment only, in which both of the Group's brands operate, the top five womenswear retail companies in terms of revenue accounted for approximately 16.4% of the total German market in 2014. The European apparel market has recovered since the financial crisis in 2009 (2009-2014 compound annual growth rate ("CAGR"): 0.6%), reaching a size of approximately EUR 285 billion in 2014, according to the Verdict Market Report 2014. According to the same source, the market had a growth rate of 1.9% in 2014 (expected annual growth rate) on the back of improving economic conditions across the Eurozone member states. CBR's management board estimates that the mainstream segment's growth, if any, will be probably below expected growth of the overall market (both on a European level as well as for Germany). 2. Established brands with clear and differentiated positioning CBR Fashion Group currently operates two established brands, Street One and CECIL, with clearly differentiated positioning and limited target customer overlap. Street One and CECIL seek to distinguish themselves from each other by offering a distinct position in terms of trend disposition. Street One stands for a feminine look with a casual feeling and its target customers are actively interested in being in touch with the latest fashion trends. The CECIL brand has an emphasis on apparel with a casual and uncomplicated style, which has a sportive touch and is less figure-accentuated. CBR believes that Street One and CECIL each have a truly unique and distinct value proposition in Germany. Street One is positioned as fashion follower at the mid-price point in the mainstream segment. CECIL with its differentiated and unique sportive positioning only has limited direct competition in its price segment and a niche focus on women with fuller body lines. CBR believes that key competitors of CBR Fashion Group are Tom Tailor, Gerry Weber and Esprit, as well as s. Oliver and the Bestseller Group in Europe (and in Germany, in addition Marc O'Polo), although some competitors target slightly different customer groups. 3. Strong "points of sale" footprint in Europe CBR Fashion Group is evolving into a pan-European player with a strong wholesale points-of-sale ("POS") network of 8,467 wholesale POS across 19 countries within the European Economic Area as of March 31, 2015 (note that at Group level one multibrand store is counted as one POS whereas at segment and sales channel levels one multibrand store is counted as two POS, one for Street One and one for CECIL; furthermore, all POS numbers for the sales channel wholesale are shown exclusive of own retail stores, outlet stores and e-commerce). The Group's largest customers are Galeria Kaufhof (Metro Group), Karstadt and Schild AG (since 2013 part of the Globus Group, Switzerland), which accounted each for less than 3% of group revenue with third parties. CBR supplied 4,390 wholesale POS in Germany at Group level (on segment level: 2,143 POS of Street One and 2,341 POS of CECIL) as of March 31, 2015. As of March 31, 2015, CBR Fashion Group supplied a further 803 wholesale POS in Switzerland and Austria. In the rest of Europe, the Group supplied 3,274 wholesale POS (Benelux: 992 POS; France: 936 POS; Nordics: 452 POS; Eastern Europe: 338 POS; Other Western Europe: 556 POS) as of March 31, 2015. In addition, the Group operated 64 own retail and 7 outlet stores in Germany and one outlet store each in Switzerland and Italy as of March 31, 2015. 4. Vertically integrated business model with strong control over the value chain CBR Fashion Group's vertically integrated business model enables the Group to have strong control over the value chain. Its unique DMV concept (Design, Marketing, Sales) is applied independently within each brand. This DMV concept enables customer-oriented product design and short lead times. Through electronic data interchange with the retail partners and own retail stores, CBR Fashion Group is provided with continuous information flow about the most recent sell-through figures as well as real time customer feedback, which the Group can factor into the next collection development. CBR's own retail and e-commerce business provides it with full control over those channels. In contrast to typical wholesale models, CBR has strong control over the product assortment and placement of its retail partners who participate in CBR's "menu order" ("Menüauftrag") concept (typically monolabel stores and shop-in-stores), which means that its retail partners place an order for a specific monetary value (based on the yearly sales budget) but CBR decides about the composition of the major part of the order in terms of product lines, colors and sizes. In the recent past, the vast majority of the Group's revenue (75-80%) typically came from the main collection, and approximately one fifth from its Quick Response ("QR") and Never-out-of-stock articles ("NOS") (meaning articles, which are available associated with the 24-48 hour replenishment of highly requested items at POS) and the remainder from Flash and Repeat items (which are manufactured and delivered at short notice to catch the very latest trends), whereby these splits varied depending on the relevant distribution channel. 5. Clear levers to deliver profitable growth over mid- to long-term CBR Fashion Group generates the majority of its e-commerce revenue through sales via its own websites (Street One and CECIL) and co-operates with third-party online market places Amazon, Otto Group, eBay and, with respect to Street One, Zalando. The attractive growth of the e-commerce business is underlined by strong key performance indicators. For example, the customer lifetime revenue the Group achieved in the past (sum of all cumulated revenues made since customer acquisition) has been growing steadily over time. Customer lifetime value, measured as cumulated customer lifetime revenues (excluding value added tax) multiplied by e-commerce contribution margin (after cost of goods sold and logistics cost; before marketing and administration cost) and the wholesale margin related to corresponding wholesale revenue multiplied by the wholesale margin for internal sales to e-commerce, increased for customers acquired in the first quarter of 2012 from EUR 36 in 2012 to EUR 54 in 2013 and EUR 72 in 2014. For customers acquired in the first quarter of 2013 the respective customer lifetime value was even higher (EUR 39 in 2013, EUR 56 in 2014) and is estimated to continue growing to approximately EUR 73 in 2015. 6. Asset light business model delivering high margins and excellent cash generation CBR Fashion Group's asset-light business model is based on outsourced production and logistics in which the Group's retail partners legally bear the inventory risk for most of CBR's sales modules. This model, combined with an own retail business that CBR Fashion Group expects to remain small relative to the overall Group in the foreseeable future, greatly reduces requirements for working capital, as well as capital expenditures. This has resulted in a high cash generation of the business (defined as earnings before interest, tax, depreciation and amortization ("EBITDA") minus capital expenditures divided by EBITDA in the respective period) which exceeded 80% in 2012, 2013 and 2014 and in the first quarter of 2015. CBR Fashion Group believes its cash generation rate in 2014 exceeded the cash generation rate of its main competitors Gerry Weber, Esprit and Tom Tailor. In addition, the Group's cash conversion (defined as the pre-tax free cash flow divided by EBITDA adjusted (defined as EBITDA, adjusted for exceptional items), for each period, whereby pre-tax free cash flow is defined as cash flows from operating activities plus cash flows from investing activities net of income tax paid and income tax received) amounted to 82.1%, 73.5% and 92.0% in 2012, 2013 and 2014, respectively, and to 75.6% in the first quarter of 2015. The Group's operational set-up with a relatively small fixed cost base has enabled it to generate a strong EBITDA adjusted margin which has increased from 15.2% in 2012 to 17.1% in 2013 and to 18.1% in 2014. Also, EBITDA adjusted increased in the same period from EUR 94.7 million in 2012 to EUR 104.3 million in 2013 and to EUR 110.0 million in 2014. CBR Fashion Group believes that its EBITDA margin, as based on CBR Fashion Group's reported EBITDA of 17.6% in 2014 exceeded the EBITDA margin of its main competitors Gerry Weber, Tom Tailor and Esprit. Overview of CBR's Strategy In order to continue achieving sustainable and profitable growth, CBR follows a clear strategy for the future as CBR intends to keep its historic key strategic principles (i.e. clear product focus, independently operating brands, fast creation and delivery of designs, high reach through a large number of POS, high level of control over value chain and focus on cash generation) and to further evolve its business model, specifically by getting closer to the consumer, managing consumers for life time value, leveraging E-commerce & POS via omni-channel, enhancing the benefits from data & algorithms and continuously optimizing its operations. In addition, CBR is focused on a set of key markets with further mid- to long-term potential. To this end, the focus is on the following key strategic objectives: 1. Wholesale Strategy CBR strives to further optimize and improve its wholesale business model to remain the preferred partner for its current retail partners and become the preferred partner for potential retail partners. In the recent past, the vast majority of CBR's retail partners received attractive mark-ups of 145%. CBR seeks to reduce the so-called "fashion risk" of stock obsolescence for its customers and retail partners by offering twelve independent collections for each of CBR's two brands every year, with 52 additional Flash and Repeat programs of strongly-demanded articles per year with short lead times. CBR strives to improve processes to increase the speed of Flash and Repeat programs in order to further reduce lead times and to achieve a balanced composition of CBR's sales programs (menu order, QR/NOS, Flash and Repeat) to ensure control over the POS assortment. CBR plans to introduce innovative sales concepts to further enhance retail partners' sales performance (e.g. creative buying, where a dedicated product and sourcing specialist identifies product gaps in the current collection and sources those missing products at short notice from suppliers to offer additional sales potential to the retail partner). Also CBR considers the option to extend the product lines of both its brands by including accessories, shoes, etc. in order to provide additional incentives for customers to visit the stores. CBR aims to profitably expand its retail partner network with clearly defined targets for expansion. The identification of new attractive locations is based on an analytical approach in the form of a thorough "white spot" analysis based on market knowledge provided by CBR's sales teams, which is then cross-checked against purchasing power data, to identify geographic areas which are under-served by retail POS. CBR has identified several opportunities for expansion in the core DACH region which it considers the most important region for short- to mid-term expansion. In this respect, CBR is in advanced talks with select potential retail partners and has started discussions with certain others regarding potential cooperation. CBR furthermore sees additional expansion potential in markets in which CBR has historically had a good market position like Belgium and The Netherlands as well as in markets where CBR only recently has intensified efforts, like France. 2. E-Commerce Strategy Based on the recent growth of its e-commerce business, CBR believes that e-commerce will be one of the main growth avenues in the forseeable future. To this end, CBR is following a clear roadmap to realize significant growth through continued innovation and the expansion of its service offering in the e-commerce business. In 2015 CBR strives to introduce a dedicated mobile app for iOS and Android devices featuring, inter alia, within its online shops a GPS-based POS-finder and a barcode-scanner. A loyalty card, same-day-delivery concept and a new payment system are considered for 2016. In addition, CBR believes that there is significant further penetration potential for its e-commerce business in many European countries, in particular in countries, in which a disproportionate share of Group's revenues still comes from wholesale as opposed to the e-commerce sales channel such as Austria, Switzerland, The Netherlands, Belgium and France. CBR also intends to expand its e-commerce business to Scandinavia and the remaining European countries in which it operates in 2016. 3. Own Retail Strategy CBR believes its own retail business has reached a critical mass and provides an opportunity for selective growth. The Group's 64 retail stores achieved a high single digit EBITDA margin, currently with the ambition to increase to a low double digit in the mid-term. For Street One, the average revenue per sqm amounted to EUR 4.2 thousand in 2014 and 2013. For CECIL, the average revenue per sqm amounted to EUR 4.0 thousand in 2014 and EUR 4.2 thousand in 2013. CBR plans to integrate its own retail operation into the brand organization and transfer the responsibility for its own retail stores to local sales personnel which is already serving CBR's retail partners. CBR plans continuing to selectively develop its own retail activities, both in metropolitan and non-metropolitan areas, by filling selected white spots. According to its "partners first" concept CBR strives to only open an own retail store in cases in which it does not find any partner but sees a clear potential for a store. CBR intends to focus on organically growing its own retail store network, but would also consider portfolio acquisitions from its partners in an opportunistic manner. For new stores CBR expects the size to be in the range of 100-180 sqm, the initial investments needed to amount to approximately EUR 1,000 / sqm, and the ramp-up phase to be one year. CBR has for the moment decided to take a cautious approach towards the further expansion of its own retail business in order to maintain the attractive cash flow characteristics of CBR's current business model, but CBR will routinely reassess this decision and the general option for additional/accelerated expansion remains. 4. Channel Integration Strategy CBR plans to further enhance its omni-channel offering, inter alia, by integrating its on- and offline channels through the implementation of click-and-collect (i.e. buy online and collect in-store) and in-store ordering. CBR believes this will allow it to better meet customer demand which is becoming increasingly channel-agnostic and convenience-driven. Whereas in the past customers from medium-sized and small towns often preferred to go shopping in their hometown, they now tend to shop online or on the high streets of larger cities. Part of the channel integration, which addresses these changed shopping preferences, is the introduction of click-and-collect and "return@store" (i.e. buy online and return in-store) offerings, which is planned for mid 2015 for CBR's own retail stores and in autumn 2015 for its wholesale monobrand stores. As part of the communicational channel integration of CBR's on- and offline channels it already launched a social media program in 2013 including a Facebook page, a blog and a brand presence on other social media channels, such as Pinterest and Instagram. 5. Operational Optimization Strategy CBR strives to constantly optimize its operations by making significant investments into its organization, supply and logistics as well as into CBR's IT platforms and its employees. CBR believes this will further improve its operations and cost ratios in sourcing and logistics as well as its product development process. CBR plans to re-allocate responsibilities between its marketing teams and design team to free up time for trend research. To further optimize CBR's product development process it strives to improve the integration of its sales teams into its collection days and marketing processes. The Group plans to optimize its supply process by a continuous optimization of its supply country mix. In 2014, suppliers based in Turkey and China accounted each for approximately one third of CBR's supplier base. Bangladesh accounted for a mid-single digit percentage range, with the remainder being split between India and the rest of the world in a fairly similar portion. CBR's top five suppliers produce a mid-thirties percentage of the Group's order volume from the main collection and the largest single supplier produced less than 15%. The Group plans to streamline its sales organization (e.g. consolidate number of showrooms) to improve efficiency and to overhaul incentive systems. CBR intends to overhaul its visual marketing guidelines to further develop a sales-stimulating POS design (e.g. shop windows). The Group strives to increase its omni-channel capabilities and CRM knowledge in-house during the first half of 2015 by hiring a dedicated team led by CBR's newly appointed head of omni-channel. Furthermore, CBR is currently finalizing the substantial IT systems overhaul which it initiated in 2010. The logistics overhaul started in 2013 and is expected to reap substantial cost savings over the coming years. CBR plans to evaluate potential synergies between e-commerce logistics and its newly modernized wholesale logistics. 6. CBR's Repositioning Between 2009 and 2011, CBR underwent a period of financial and operational difficulties due to historical strategic and managerial mistakes, as was predominantly reflected in a loss of key personnel and the corresponding loss of product competence and customer focus, a very aggressive historic POS expansion as well as the unsuccessful launch of additional brands. In order to turn CBR around and address the described challenges, a new management team and advisory board was brought on board at the end of 2011 and the beginning of 2012 which was tasked with stabilizing the Group. The new management team focused its repositioning efforts on strengthening the organization and restoring product competence, closure of loss-making brands (OneTouch and CECIL Men) and re-setting of the cost base, streamlining of its POS portfolio as well as the overhaul of its product assortment and the repositioning of its two brands. After the comprehensive repositioning program initiated in 2012 (which also implied a goodwill impairment in the amount of EUR 33.2 million in 2012 with respect to Street One Germany due to a significant decrease in revenue and a deteriorated outlook for the Street One business), and the subsequent stabilization of CBR Group, CBR is convinced that it has laid the foundation for a future acceleration of growth. However, CBR is mindful of the fact that there is still further upside for improvements with regards to its CECIL brand. Despite also initiating first improvement measures for CECIL in 2012, until 2014 the emphasis of CBR's product overhaul and brand repositioning activities had been on Street One. Consequently, CBR has now shifted its focus on the comprehensive re-launch of its CECIL brand and has developed a broad set of initiatives to replicate the turnaround success CBR has achieved at Street One. For the foreseeable future, CBR plans a series of additional ongoing investments into its business to continue the ongoing repositioning of CECIL and further improve the competitive position. These investments include (i) the streamlining and revitalization of the brand image, in particular with respect to CECIL, (ii) further improvement and development of the sales system, as well as (iii) the integration of CBR's sales channels. In total, as compared to the cost base in 2014, CBR expects additional annual costs in connection with all of these ongoing investments in a higher single digit EUR million amount of which CBR expects that only a minor part will be capitalized. Annex: Recent Developments and Outlook In the short-term, CBR Fashion Group aims to increase its total revenue at least in line with the market. In the financial year 2015, the Group is targeting a low single-digit percentage growth rate of its total revenue based on the positive trend for its Street One brand in the last two financial years and the strong growth of its e-commerce and its own retail business. CBR Fashion Group envisages an acceleration of this growth rate in the mid-term upon completion of the repositioning of its CECIL brand as it strives to leverage the strong competitive position of its wholesale business to outperform the expected development of the mainstream fashion market, to grow its POS footprint, as well as to deliver positive like-for-like growth. Moreover, in the short- to mid-term, it is CBR's goal to significantly increase the revenue of its e-commerce business, mainly by increasing the revenue generated through sales via its own websites (both for Street One and for CECIL), both in Germany and abroad. Furthermore, also in the short- to mid-term, CBR aims to increase the revenue of its own retail business based on its cautious approach towards the further expansion of its own retail business in order to maintain the attractive cash flow characteristics of its business model. In addition, it would also consider selected portfolio acquisitions from its partners in an opportunistic manner. Moreover, CBR aims to achieve a positive like-for-like revenue growth of its own retail business (as well of its outlet business) by further enhancing its consequent customer orientation. As CBR Fashion Group plans to enhance its efficiency measures and plans strategic investments, its EBITDA adjusted and EBITDA adjusted margin, as well as its EBITA adjusted and its EBITA adjusted margin may slightly decrease in the short-term, including the financial year 2015. In particular, the Group's EBITDA adjusted and its EBITA adjusted will most likely be negatively affected by its planned significant strategic investments comprising, inter alia, brand related initiatives like next level product development and strengthening of its strategic sourcing, as well as potentially higher sourcing costs in the financial year 2015 in a mid-single digit EUR amount due to the recent appreciation of the USD and other relevant foreign currencies. In the mid-term, it is CBR's goal to increase its EBITDA adjusted and EBITDA adjusted margin as well as its EBITA adjusted and its EBITA adjusted margin. In particular, the Group strives to increase its EBITDA adjusted by a mid-single-digit percentage per annum from the financial year 2016 onwards. CBR Fashion Group also plans to slightly improve its EBITDA adjusted margin as a result of the envisaged growth of its revenue, whereas it aims that its cost base will only grow underproportionally. In addition, the Group strives to increase its gross margin due to the planned continued operational efficiency improvements, including the recent improvement in the logistics set-up and the shift to increased e-commerce and own retail activities. CBR also strives to increase its EBITA adjusted by a mid-single-digit percentage per annum and to slightly increase its EBITA adjusted margin in the mid-term, although it may face a slight increase in depreciation due to the planned expansion of its own retail store network. In addition, CBR Fashion Group targets a decrease of its cash interest rate to approximately 2.5% as a result of the implementation of its new financing structure. The Company also aims to use the share of the Offering proceeds attributable to the Company to significantly reduce the Group's leverage (defined as net financial debt (exclusive of shareholder loans) divided by EBITDA adjusted) to approximately 3.0 times as a result of the implementation of this new financing structure. In the mid-term, it strives to further reduce its leverage. CBR Fashion Group expects its nominal tax rate to be in the thirty percent range, while its effective cash tax payments are expected to be lower due to existing tax loss carry forwards that can be utilized over the following financial years and the existing tax goodwill amortization running until 2019. CBR expects that it will be able to utilize the tax loss carry-forwards up to financial year 2020 for corporate tax purposes and up to financial year 2017 for trade tax purposes. Furthermore, in the mid-term, CBR aims to keep the level of its capital expenditures stable as a percentage of revenues. In the financial year 2014 the Group's capital expenditures accounted for 2.8% of the group's revenue compared to 2.4% as of March 31, 2015. On the one hand, CBR expects to reduce investments into its IT system in the mid-term once it has completed its comprehensive IT overhaul project, completion of which is scheduled for the end of 2015. On the other hand, CBR plans to incur further capital expenditures, as well as operating expenditures, related, inter alia, to new own retail and outlet stores, further IT infrastructure components including, for example, a CRM system and a loyalty program across all sales channels, the enhancement of its organization including innovative sales concepts and improved product development, as well as the revitalization of its brand image including new shop fitting concepts. CBR Fashion Group also plans to develop and launch vertically integrated marketing concepts to develop creative buying functions, to introduce a fifth sales program and to further invest into the speed of its Flash and Repeat programs with a view to further shortening lead times. In addition, CBR plans to complement its human resources capabilities by creating development and retention programs including strategic university co-operations and professional on-boarding programs. CBR intends to pay dividends beginning in the financial year 2016, i.e., for the financial year 2015, and aims, provided that the business performance remains stable, taking into account the savings in financial costs resulting from the restructuring of its financing in connection with the Offering and subject to the availability of distributable profit (Bilanzgewinn) of CBR, to distribute approximately 50% of its cash net income (defined as reported net income adjusted for exceptional items with respect to the adjusted EBITDA, and additionally adjusted for impairment losses and brand and customer file amortisation resulting from the acquisition of CBR in 2004). The remaining approximately 50% are intended to be used to retire debt. Financial Information 2012-Q1 2015 Table 1: Selected Financial Information from the Consolidated Statement of Comprehensive IncomeFinancial year Three-month Consolidated Statement of Comprehensive ended period ended Income (in EUR thousand) December 31, March 31, 2012 2013 2014 2014 2015 (audited) (unaudited) Revenue 624,247 611,267 609,172 137,900 139,434 Other operating income 3,484 4,101 4,701 1,011 2,330 Cost of materials -384,261 -363,898 -346,113 -78,216 -76,816 Personnel expenses -46,596 -48,075 -49,882 -12,016 -12,516 Depreciation, amortization and impairment -109,658 -73,355 -75,335 -18,412 -18,794 Other operating expenses -104,691 -106,332 -110,816 -25,409 -27,487 Operating income -17,475 23,709 31,727 4,858 6,151 Finance income 2,594 6,635 461 152 58 Finance cost -36,901 -36,534 -36,756 -9,470 -8,053 Net finance cost -34,307 -29,899 -36,294 -9,318 -7,995 Result from ordinary activities -51,782 -6,190 -4,568 -4,460 -1,845 Current tax expense -4,740 -3,942 -4,884 -1,247 -968 Deferred tax benefit 12,808 3,300 9,540 7,134 1,489 Income tax expense 8,068 -642 4,656 5,887 520 Consolidated result for the period/year -43,713 -6,832 88 1,426 -1,324Table 2: Selected Other Key Financial and Operating Data by Group, Segmental and Geographical SplitSelected Other Key Financial and Operating Data, by Group, Segment and Geographical Split (in EUR million, unless otherwise indicated) Financial Three- month year ended period ended December 31, March 31, 2012 2013 2014 2014 2015 (audited, unless otherwise indicated) (unaudited) Split by segments : Revenue with third parties 321.2 317.0 330.7 73.3 76.7 of Street One Revenue with third parties 276.0 263.8 254.5 58.1 55.2 of CECIL7 Revenue of Other 27.1 30.4 23.9 6.4 7.6 Split by geography6: Revenue Germany 435.1 427.0 431.4 95.6 95.5 Revenue abroad 189.1 184.2 177.7 42.3 43.9 Split by sales channels : Wholesale revenue 584.7 557.5 551.5 125.7 123.8 (unaudited) Retail revenue (unaudited) 6.1 23.8 36.2 5.9 8.8 , E-commerce revenue 23.9 37.2 46.6 10.0 11.8 (unaudited) Like-for-like revenue growth (in %) (unaudited) Group -7.2 3.3 -1.1 6.5 -1.3 Street One -9.5 6.8 1.8 6.9 (0.2 CECIL -4.2 -1.0 -4.7 6.1 -2.7 EBITDA 54.8 97.1 107.1 23.3 24.9 EBITDA margin (in %) 8.8 15.9 17.6 16.9 17.9 (unaudited) Split by segments6: Street One 22.8 56.6 66.5 14.4 17.5 CECIL 54.3 50.6 52.2 11.1 10.2 Other (22.3 (10.2 (11.6 (2.2 (2.8 EBITDA adjusted 94.7 104.3 110.0 23.8 25.4 (unaudited) EBITDA adjusted margin (in 15.2 17.1 18.1 17.3 18.2 %) (unaudited) Split by segments6: Street One 58.7 60.5 68.4 14.7 17.7 CECIL 57.5 53.9 53.6 11.3 10.4 EBITA (unaudited) 50.6 92.7 101.6 22.2 23.7 EBITA adjusted (unaudited) 90.5 99.9 104.6 22.8 24.1 EBITA adjusted margin (in 14.5 16.3 17.2 16.5 17.3 %) (unaudited) Pre-tax free cash flow 77.8 76.7 101.3 19.1 19.2 (unaudited) Cash conversion (in %) 82.1 73.5 92.0 80.3 75.6 (unaudited)Table 3: Key Performance Indicators E-CommerceAs of / for the As of / for the three-month Key Performance financial year ended period ended Indicators E-Commerce December 31, March 31, 2012 2013 2014 2014 2015 Active customers (in thousand) (unaudited) 203.5 333.4 421.2 359.0 436.9 Site visits (in million) (unaudited) 13.9 19.4 24.1 5.5 7.1 Conversion rate (in %) (unaudited) 2.8 3.2 3.5 3.3 3.1 Return rate (in %) (unaudited) 42.8 48.5 49.1 50.8 48.9Table 4: Selected Financial Information from the Consolidated Balance SheetConsolidated Balance Sheet As of (in EUR thousand) December 31, As of March 31, 2012 2013 2014 2015 (audited) (unaudited) Non-current assets 1,394,079 1,330,153 1,273,740 1,258,603 Intangible assets 1,341,304 1,279,633 1,219,635 1,204,611 Property, plant and equipment 26,598 27,744 29,379 29,036 Loans receivable 3,898 3,246 3,032 2,934 Deferred tax assets 22,279 19,530 21,694 22,022 Current assets 137,147 121,321 104,723 110,705 Inventories 17,680 19,245 20,910 19,370 Trade receivables 19,801 28,211 23,039 29,381 Other current assets 14,185 20,166 15,723 15,828 Other financial assets - - - 1,115 Cash and cash equivalents 85,481 53,699 45,050 45,012 Equity 504,471 501,232 502,004 500,882 Issued capital 25 25 25 25 Capital reserves 401,176 401,176 401,176 401,176 Equity raising costs reserve - - - -348 Cash flow hedging reserve -4,426 -727 0 785 Foreign currency translation reserve 2,625 2,520 2,477 2,243 Retained profits brought forward 148,784 105,070 98,238 98,326 Consolidated result for the year -43,713 -6,832 88 -1,324 Non-current liabilities 872,178 847,492 781,072 776,033 Liabilities to banks 650,528 602,893 539,365 534,821 Loans payable to related companies 17,753 45,196 49,382 50,429 Deferred tax liabilities 203,897 199,403 192,325 190,784 Current liabilities 154,577 102,750 95,387 92,392 Liabilities to banks 68,031 18,072 6,889 0 Loans payable to related companies 29,270 27,986 26,256 26,902 Other provisions 2,234 3,427 4,687 4,687 Income tax liabilities 6,410 7,968 8,970 9,360 Trade payables 27,804 20,502 28,435 31,519 Derivative liabilities 8,674 1,177 0 - Other financial liabilities 8,646 17,710 14,920 13,095 Other liabilities 3,508 5,908 5,231 6,829 Total Equity and Liabilities 1,531,226 1,451,474 1,378,463 1,369,308Table 5: Selected Financial Information from Consolidated Statement of Cash FlowsConsolidated Statement of Cash Financial year Three-month period Flows ended ended (in EUR thousand) December 31, March 31, 2012 2013 2014 2014 2015 (audited) (unaudited) Cash flows from operating activities 86,278 84,23824 116,819 23,049 21,714 Cash flows from investing activities -10,930 -12,190 -16,808 -2,798 -3,173 Cash flows from financing -103,725 activities -83,27024 24 -108,616 -28,257 -18,346 Cash and cash equivalents at the end of the period 85,481 53,699 45,050 45,723 45,012Additional Financial Information As of December 31, 2014, the German companies of the Group had accumulated tax loss carry-forwards of approximately EUR 74.6 million for German corporate income tax purposes and approximately EUR 31.3 million for German trade tax purposes. Based on an assumed statutory tax rate of approximately 16% for corporate income tax and approximately 14% for trade tax, as of December 31, 2014, CBR expects future potential tax savings in a total amount of approximately EUR 12.0 million related to corporate income tax and EUR 4.0 million related to trade tax. In addition, CBR will benefit from planned tax goodwill amortization of EUR 40.9 million per annum in the financial years 2015-18 and EUR 32.7 million in the financial year 2019. Based on an assumed overall statutory tax rate of approximately 30%, CBR expects, in addition to the abovementioned approximately EUR 12.0 million related to corporate income tax and EUR 4.0 million related to trade tax, future potential tax savings of approximately EUR 12.0 million per annum in the financial years 2015-18 and approximately EUR 10.0 million in the financial year 2019 due to tax loss carry-forwards. As a result of CBR's use of these tax loss carry-forwards and the tax goodwill amortization, the net cash outflow of income tax paid and income tax received fluctuated at a low level at EUR 2.4 million in the financial year 2012 and EUR 4.6 million in the financial year 2013 and to EUR 1.3 million in the financial year 2014. In the financial years 2012 to 2014, the non-cash amortization of the customer list in connection with the acquisition of CBR's business by EQT in 2007 amounted to EUR 43.5 million per annum, while the yearly amortization of its brands amounted to a total of EUR 23.3 million over the same period. CBR's brands were fully amortized by the end of April 2015 with amortization amounting to EUR 7.8 million for the financial year 2015 to that date. The absence of scheduled amortization of CBR's brands from the financial year 2016 onwards will positively affect its operating income. From the financial year 2016 onwards until the end of the financial year 2022, CBR expects the scheduled amortization charges to be predominantly affected by its scheduled amortization of its customer list. Scheduled amortization of CBR's customer list slightly rose from EUR 43.5 million in the financial year 2012 to EUR 43.8 million and EUR 44.1 million in the financial years 2013 and 2014, respectively. Furthermore, amortization of other intangibles totaled EUR 2.5 million, EUR 1.9 million and EUR 2.0 million in the financial years 2014, 2013 and 2012, respectively. From the financial year 2016 onwards, CBR expects for the short to medium term amortization of other intangibles to increase to a mid-single digit EUR million amount. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN. Disclaimer These materials may not be published, distributed or transmitted, directly or indirectly, in or into the United States, Canada, Australia or Japan. These materials do not constitute an offer of securities for sale or a solicitation of an offer to purchase securities of CBR Fashion Holding AG (the "Company") in the United States, Germany or any other jurisdiction. The securities of the Company may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The securities of the Company have not been, and will not be, registered under the Securities Act or under the applicable securities laws of Australia, Canada or Japan. Any offer will be made solely by means of, and on the basis of, a securities prospectus which is to be published. An investment decision regarding the publicly offered securities of the Company should only be made on the basis of a securities prospectus that may be obtained from the Company and that will contain detailed information about the Company and management, as well as financial statements. The securities prospectus will be published promptly upon approval by the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) and will be available free of charge from CBR Fashion Holding AG, Hunäusstraße 5, 29227 Celle, Germany, or on the Company's website. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies. Forward-looking statements speak only as of the date they are made. Each of the Company, the Joint Global Coordinators, the Joint Bookrunners and the Co-Lead Manager (all banks together, the "Underwriters"), and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The information in this announcement is subject to change. This announcement does not constitute a recommendation concerning the potential offering of securities described in this announcement (the "Offering"). Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing the entire amount invested. Potential investors should consult a professional advisor as to the suitability of the Offering for the person concerned. The Underwriters are acting exclusively for the Company and no-one else in connection with the Offering. They will not regard any other person as their respective clients in relation to the Offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the Offering, the contents of this announcement or any other matter referred to herein. In connection with the Offering, the Underwriters and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase securities of the Company and may otherwise deal for their own accounts. Accordingly, references in the Prospectus, once published, to the securities being issued should be read as including any issue or offer to the Underwriters and any of their affiliates acting as investors for their own accounts. In addition certain of the Underwriters or their respective affiliates may enter into financing arrangements and swaps with investors in connection with which such Underwriters (or their affiliates) may from time to time acquire, hold or dispose of the Company's shares. The Underwriters do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so. None of the Underwriters or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or, with limited exception, other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith. --------------------------------------------------------------------- 2015-06-09 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: CBR Fashion Holding AG Hunäusstraße 5 29227 Celle Germany Phone: + 49 (5141) 998-0 Fax: + 49 (5141) 998-400 E-mail: communication@cbr.de Internet: www.cbr.de ISIN: DE000CBR1111 WKN: CBR111 Listed: Regulated Market in Frankfurt (Prime Standard) Notierung vorgesehen / intended to be listed (Prime Standard, Frankfurt) End of News DGAP News-Service --------------------------------------------------------------------- 366471 2015-06-09
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