Altamir - 2018 Registration document

1

Business description and activities

Presentation of the Company

www.alainafflelou.com

1) Business description Alain Afflelou is a leading optical retail chain in France and Spain. Since its first store opening in 1972, the group has expanded significantly and operates as an optical and hearing-aid services franchisor. As of 31 October 2018, the company had a network of 1,462 points of sale, including 979 in France, 342 in Spain and 141 in 11 other countries. 2) Investment rationale Operating in the large and resilient optical market, Alain Afflelou has a strong franchise business model benefiting from a highly recognizedbrandandknow-howinmarketing,communicationand exclusive products. It is an attractive service and intermediation- based businessmodel with lowcapital intensity and limited fixed costs. The company has a complementary and experienced team. 3) Sources of value creation The objective is to build a leading optical and hearing-aid franchisor in Europe with a strong focus on Southern Europe. The group shows significant potential for further growth via new openings incoremarkets, international expansion, development of newproducts and business lines, as well as store refurbishments. 4) Achievements In 2015, the group completed the acquisition of Optical Discount, a franchise discount chain of 89 stores in France. In September 2016, the Group acquired happyview.fr and malentille.com, bringing in an experienced teamof digital experts in the optical sector to support the group’s omnichannel strategy, based on the relaunch of the Afflelou.com website, whose main objective is to drive in-store traffic. In October 2017, the Group announced the successful issuance of €425m of high yield bonds, further lowering (after the 2014 refinancing) the overall weighted cost of debt to provide greater flexibility to fuel growth.

In March 2017, the Group launched a digital transformation initiative aimed at reshaping the customer journey but also at reviewing internal processes, accompaniedby leading consulting firms. A Chief Digital Officer was hired in November 2018 to implement this initiative. To focus its effort on developing its historical banners in Iberia, the group announced the sale of the Optimil banner in Spain in October 2018 and of its 34% stake in Optivisao in Portugal in January 2019. In addition, the company continues to develop its hearing aid business, which already has approximately 300 points of sale, mostly in the form of corners in eyewear stores. 5) Performance For the financial year ended31 July2018, Group revenueamounted to €380.3m (+2.5% vs. 2016-17) and EBITDA increased by 1.1%. Performance was driven by positive like-for-like growth, notably in France where Afflelou outperformed the market – as well as an effort to rationalise underperforming activities. Over the first three months of the current financial year (Aug 2018 –Oct 2018), group network sales increasedby 6.7%, a strong commercial performancemainly driven by the Smart Tonic range in France and Spain. EBITDA was up 1% over the period. In a market environment which remains competitive, Afflelou continues to outperform its market thanks to the ramp-up of closednetworks, Management’s continued sales andpromotional efforts, as well as product launches such as Smart Tonic or new exclusive collections. Thegroupcontinues toactivelypursue itsFrenchand international expansion through store openings and acquisitions, aswell as the development of its discount banners. 6) Exit Alain Afflelou will be an attractive opportunity for a range of buyers due to its highly recognized brand, its leadership position in optical franchise retail and asset light structure translating into a highly cash-generative business model.

DATE OF INVESTMENT

PORTFOLIO AT FAIR VALUE

SECTOR

COUNTRY

RESIDUAL COST

FAIR VALUE

2012

€ 20.6 m €

24.8 m

2.5 %

F R A N C E

38 Registration document ALTAMIR 2018

www.altamir.fr