AGM 3 2010 Harry Winston
AGM 3 2010 Harry Winston
AGM 3 2010 Harry Winston
Forward-Looking Information
Information in this disclosure that is not current or historical factual information may constitute forward-looking information or statements within the meaning of applicable securities laws. Forward-looking information is based on certain factors and assumptions regarding, among other things, mining, production, grade and tonnage, construction and exploration activities at the Diavik Diamond Mine, world and US economic conditions, the worldwide demand for luxury goods and the level of worldwide diamond production. Specifically, in making statements regarding expected diamond prices and expectations concerning the diamond industry and expected sales trends, margins, profitability and market conditions in the retail segment, Harry Winston Diamond Corporation (the Company) has made assumptions regarding, among other things, continuing recovery of world and US economic conditions, diamond supply and demand for luxury goods. Forward-looking information may relate to managements future outlook and anticipated events or results, and may include statements or information regarding plans, timelines and targets for construction, mining, development, production and exploration activities at the Diavik Diamond Mine, future mining activities and processing at the Diavik Diamond Mine, projected capital expenditure requirements and the funding thereof, liquidity and working capital requirements and sources, estimated reserves and resources at, and production from, the Diavik Diamond Mine, the number and timing of expected rough diamond sales, expected diamond prices and expectations concerning the diamond industry and the demand for luxury goods, expected cost of sales and gross margin trends in the mining segment, and expected sales trends and market conditions in the retail segment. Actual results may vary from the forward-looking information. While the Company considers these assumptions to be reasonable based on the information currently available to it, they may prove to be incorrect. Forward-looking information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what we currently expect. These factors include, among other things, the uncertain nature of mining activities, including risks associated with underground construction and mining operations, risks associated with joint venture operations, risks associated with the remote location of and harsh climate at the Diavik Diamond Mine site, risks associated with regulatory requirements, fluctuations in diamond prices and changes in US and world economic conditions, the risk of fluctuations in the Canadian/US dollar exchange rate, cash flow and liquidity risks, risks relating to the Companys salon expansion strategy and competition in the luxury jewelry segment as well as changes in demand for high end luxury goods. Readers/viewers are cautioned not to place undue importance on forward-looking information, which speaks only as of the date of this disclosure, and should not rely upon this information as of any other date. While the Company may elect to, it is under no obligation and does not undertake to update or revise any forward-looking information, except as required by law. Additional information concerning factors that may cause actual results to materially differ from those in such forward-looking statements is contained in the Harry Winston Diamond Corporations filings with Canadian and United States securities regulatory authorities and can be found at www.sedar.com and www.sec.gov respectively.
Agenda Introduction Financial Highlights Retail Segment Mining Segment Q & A Session
SUPPLY LEVERAGE
Price?
Cutters/Polishers
SUPPLY LEVERAGE
Price?
Cutters/Polishers
Other Jewelers
Retail Customer
LEVERAGE
Cutters/Polishers
Other Jewelers
Retail Customer
Cutters/Polishers
Other Jewelers
Indexed on S&P/Goldman Sachs spot metal prices and Harry Winston rough sales indexed to shipment 01/07
Harry Winston rough sales and polished purchases indexed to January 2008
Financial Highlights
10
Q2
Q3
Q4
149
+14%
134 118
-29%
110
-49%
95
-50%
75
FY 2009
FY 2010
FY 2009
FY 2010
FY 2009
FY 2010
FY 2009
FY 2010
11
Sales
114
Gross Margin
EBITDA1
110
37 26 23 8
Q1 FY2010
Q1 FY2011
Q1 FY2010
Q1 FY2011
Q1 FY2010
Q1 FY2011
12
Sales
625
58 49
Q1 Q1 CY 2009 CY 2010 (in thousands) (in millions of US dollars except carat amounts)
1
Q1 FY 2010
Q1 FY 2011
13
Achieved Price
98%
EBITDA1
18 10
Q1 FY 2010
-54%
Q1 FY 2011
Q1 FY 2010
14
Carats Recovered 1
3,690 328 +/-3,200
Sales
EBITDA 2
2,226
233 188
625 45
CY CY CY 2008 2009 2010 (in thousands) (in millions of US dollars except carats amounts)
1 2
FY 2009
FY 2010
FY 2011
FY 2009
FY 2010
FY 2011
Represents 40% share of the Diavik production EBITDA is earnings before interest, taxes, depreciation and amortization.
15
Sales
Gross Margin
EBITDA1
65 52 25 5
34
-2
Q1 FY2011
Q1 FY2010
Q1 FY2011
Q1 FY2010
Q1 FY2011
16
Gross Margin
133
EBITDA1
225
108
10
-3
FY 2009
FY 2010
FY 2011
FY 2009
FY 2010
FY 2011
FY 2009
FY 2010
FY 2011
17
Debt
Cash
Net Debt
Debt
Cash
Net Debt
Debt
Cash
Net Debt
18
62 41 -7 45 38 39
-23
-64 -105
Debt
Cash
Net Debt
Debt
Cash
Net Cash
Debt
Cash
Net Cash
19
28 6 18
-148 -176
Debt
Cash
Net Debt
Debt
Cash
Net Debt
Debt
Cash
Net Debt
20
Retail Segment
21
22
Create financial value for Shareholders, by creating emotional value for Clients and goodwill from Society,
by being the most exclusive Diamond Jeweler and Watchmaker in the world.
23
FY2010 Last year Revenue Gross Margin % Operating Profit % EBITDA % $225M 48% -7% -1.2%
FY20131
FY20161
Figures for internal planning and measurement purposes. This is not a forecast of actual results.
24
25
26
by Meaningful People
Harry Winston people are: Knowledgeable, passionate, trustworthy, service oriented
27
A Jewelry market over $150 billion1, 85% of which is unbranded Brands bring a sense of History, Social Status & Style Guidelines Branding Phenomenon in the 2000s: Luxury and Fashion brands are set to conquer the jewelry field
Page 31
32
Luxury in 2010 Entering a Post-recession Era Year 2010 growth forecast Global luxury market 5-10%
ASIA (ex-Japan) - Booming China 15%, Rest of Asia 10% THE WEST - Slow Recovery North America 4%, Europe 3% JAPAN - Still very Profitable but saturated Japan -3%
33
34
Europe: 2.6M
2005-2008: +7.7%
Africa: 0.1M
2005-2008: 0%
Sources: CapGemini Merrill Lynch, 2009 Footnote: HNWI: People with more than 1 million dollars in investable assets excluding primary residence, collectibles, consumables and consumer durables
35
Page 35
In 2010,China has the most billionaires outside of the US Closely followed by Russia, Germany and India HW already has a strong presence in key cities where top billionaires reside
City New York Moscow London Istanbul Los Angeles Hong Kong Mumbai Dallas San Francisco Tokyo
Number of billionaires 60 50 32 28 27 25 20 17 14 14
36
Luxury consumers declare the Internet is the most useful source of information for them 80% of wealthy consumers use search engines on a daily basis Luxury consumers shop both online and in stores On average, Internet users are richer and younger than instore shoppers
37
38
39
Bespoke
Ultra High-End
40
Rejuvenate the delivery of our message to appeal to the new generation Use our name & history to boost our communication exposure Harry Winston: a Brand of extremes, uncompromising
41
42
Timepieces Collections
43
Printed Material
Exhibition Design
Visual Merchandising
Packaging
Media Planning
44
45
Japan 5 Salons
4 Salons
46
Japan 7 Salons
47
Other Channels
Wholesale
Room for growth: develop network of authorized watch retailers
48
49
FY2010 Last year Revenue Gross Margin % Operating Profit % EBITDA % Operated Salons Partner Salons Wholesale Doors
1
FY20131
FY20161
20% CAGR +/- 51% +/- 7% +/- 11% +/- 26 +/- 12 250+
15% CAGR +/- 52% +/- 12% +/- 15% +/- 35 +/- 20 300+
Figures for internal planning and measurement purposes. This is not a forecast of actual results.
50
Mining Segment
51
8800 L
8750 L 8700 L
52
Exceptional grade makes Diavik one of the highest value tonne mines
Rock Value US$/Tonne for Major Kimberlites
Relative to 2008 Production Value
$350
$300 $250
Venetia $638m
$8,000m
Catoca $451m
Orapa $1,000m
$7,000m
$6,000m
Udachny $796m
Aikhal $372m
$200
Letlhakane $240m
$5,000m
Nyurba $596m
$4,000m
$3,000m
$2,000m
Ekati $535m
Jwaneng $1,709m
$1,000m
Diavik $800m
$0m
Source: Based on 2008 data from Company Estimates, Annual Reports, BMO Diamond Research (Jan 2009)
Mir $546m
53
De Beers 40%
54
55
56
57
58%
20% 23%
0%
Diamonds
Gold
Platinum
Jewellery
Investment
Source: De Beers Group analysis; World Gold Council Gold Demand Trends, February 2009; Angloplat 2008 Annual Report, page 20
58
1,500
500
50 0
Kimberlites sampled
Diamondiferous
Economic
Gold Mines
Source: De Beers exploration data (diamonds) and Metals Economic Group (gold mines)
59
60
Source: De Beers
61
62
63