Adairs Ltd. · ASX:ADH

Adairs — Merger or Acquisition (December 2019)

14 slides from Adairs's merger presentation, Dec 4, 2019

  1. Slide 1: Acquisition of Mocka

    Acquisition of Mocka Mark Ronan, MD & CEO Ashley Gardner, CFO DECEMBER 2019

  2. Slide 2: Transaction overview

    Transaction overview Adairs has agreed to purchase Mocka, a vertically integrated pure-play online home and living products designer and retailer operating in Australia and New Zealand  Adairs to acquire 100% of Mocka for a notional Day 1 Enterprise Value of NZ$80m (A$75.5m), consisting of A$43.4m

  3. Slide 3: A complimentary strategic fit for Adairs

    A complimentary strategic fit for Adairs Attractive growth profile and opportunities for material value creation Highly complementary, attractive acquisition  Mocka is highly complimentary to Adairs with similar philosophy – both offer exclusive product, providing control of the vertical supply cha

  4. Slide 4: Mocka overview

    Mocka overview Highly efficient, vertically integrated, profitable pure-play online home and living products retailer with strong track record and significant growth potential remaining  Pure-play online retailer offering well designed, highly functional and stylish home and living products at ‘val

  5. Slide 5: Mocka - well designed, functional and stylish home and living products

    Mocka - well designed, functional and stylish home and living products Kids Home Furniture FY20F revenue by product & Decor 4% 18% 16% 62% Baby Baby Home Furniture Kids Other Delivering great product and compelling everyday value-for-money is core to the Mocka offer 4

  6. Slide 6: Design-led products and an efficient vertically integrated business model

    Design-led products and an efficient vertically integrated business model Mocka is a design-led product business  In-house design team enables differentiated product to be developed for customers  Enables Mocka to ensure they deliver value and quality at sustainable margins  Versatile design and

  7. Slide 7: Design-led products and an efficient vertically integrated business model

    Design-led products and an efficient vertically integrated business model ... with vertical integration  Exclusive product offering  Coordinated look across categories  Strong value-for-money proposition  In-house marketing  Operates its own DC’s  Consistent product quality and compelling valu

  8. Slide 8: Design-led products and an efficient vertically integrated business model

    Design-led products and an efficient vertically integrated business model ... and significant growth opportunities  Supporting Mocka’s range expansion both in category and in options is a significant opportunity  Continuing to invest in digital and technology to enhance the customer experience  S

  9. Slide 9: Deal structure and funding

    Deal structure and funding Acquisition of 100% of the shares in Mocka, with part of the consideration deferred Acquisition structure  100% acquisition for a notional initial EV of NZ$80m (A$75.5m) on cash and debt free basis (8.7x FY20F EBIT)  65% paid up front, of which NZ$6 million (A$5.7m) paid

  10. Slide 10: Financial implications for Adairs

    Financial implications for Adairs The acquisition will improve Adairs’ financial profile, increase its exposure to the fast-growing online channel and further diversify its revenue across Australia and New Zealand Pro forma FY20F revenue1 (A$m) ~410 368 Adairs alone Pro forma including Mocka Pro for

  11. Slide 11: Financial implications for Adairs

    Financial implications for Adairs The acquisition is immediately accretive to earnings without any assumed synergies Pro forma FY20 EBIT1 (A$m) ~53 ~45 Adairs alone Pro forma including Mocka Pro forma FY20 EBIT margin1 ~13% ~12% Adairs alone Pro forma including Mocka Source: Adairs assessment of Moc

  12. Slide 12: Revised FY20 outlook

    Revised FY20 outlook Revised FY20 guidance  The Board remains comfortable that the FY20 guidance previously provided for Adairs (ex Mocka) remains appropriate  Based solely on the inclusion of a 30 week contribution from Mocka in FY20 the Board has issued revised guidance as shown below  For illu

  13. Slide 13: Appendix – Details of deferred consideration

    Appendix 1 – Details of deferred consideration Deferred consideration structure and rationale  Indicatively, based on our acquisition planning, we expect the deferred consideration amounts to be1: – a further NZ$14-17m (A$13-16m) based on the FY21 Mocka EBIT (paid in September 2021) and – a further

  14. Slide 14: Appendix 2 – Mocka's history

    Appendix 2 – Mocka’s history  Mocka was started by the founders in 2007 out of their garage in Christchurch, New Zealand. Its initial focus was on baby and children’s furniture and toys.  Mocka Australia was established in 2011, which coincided with additional family members becoming involved in t

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