16
Jul

Jul 2019: Essilor Luxottica – Through the looking glasses

July 16, 2019

Download PDF

EssilorLuxottica – Through the looking glasses

Jul 2019 (€114)

 

EssilorLuxottica is no headline bargain (PE of 20-25x). However recent disquiet between its managers bought the share price low enough for us to take a look. We like what we found.

Introducing EssilorLuxottica (E-L), a new Holland Franchise:
  • Pre-merger, E-L as independent businesses, had great track records of growth (organic and acquired) and high returns. Luxottica also had a maverick owner-manager at the helm (who today still owns 32% of E-L equity). After a multi-decade roll-up, this newly merged business dominates the eyewear market with quasi-monopoly positioning.

Fig.1: Excellent return on capital

 Source: Holland Advisors

  • Eyewear is a very unique product that is both a medical device and a fashion accessory, both key for pricing power and margins. The product enjoys regular replacement cycles.
  • The industry operates as an ‘agency model’, i.e. ophthalmologists are ‘agents’ in the eyewear buying process. We love the agency model (Howden/William Demant).
  • Most health organisations agree that there is an under-served worldwide myopia “epidemic”. This means structural demand growth for the €100bn eyewear market.
  • E-L is unique in the industry as it is vertically integrated with manufacturing, owned brands (Ray-Ban, Oakley, Varilux, etc.) and vast in-house retail and wholesale scale.
  • Its unmatched scale brings cost and distribution advantages (aka ‘moat’) and an ability to invest in innovation. Its brands bring pricing power as likely will, in time, its merger.

..and yet, the regulators saw fit to approve the merger of the world’s dominant frame maker (Luxottica) with the dominant lenses maker (Essilor). We explain why later.

  • Many blindly assume this market is ripe for e-commerce disruption and we address this issue head on too noting that the most prominent US disruptor has 90 stores!
  • E-L shares trade on c.20x adjusted PE post synergies (c25x consensus 2019) – not the starting depressed multiple we normally like. Even so, given the low capital needs and excellent returns, our compounding model suggests, with plausible top line growth of 5% and some op leverage, the shares could still compound at c.11%. With reinvestment, that could stretch to c.13%. We are interested. A lower share price would make us more so.

In this note, we address five key areas of interest to us:

  1. E-L enjoys a quasi-monopoly in an opaque, unregulated market..
 p.2
  1. ..with structural tailwinds to market growth
 p.4
  1. We dissect the presumed French-Italian culture clash narrative
 p.6
  1. And take a look at historical financials of both businesses
 p.8
  1. Finally, a look at e-commerce threats and intrinsic value of the shares
 p.11
1. A quasi-monopoly in an opaque, unregulated, market

In this section, we make the following points:

  1. The global eyewear market is a fragmented and complex market
  2. Despite E-L’s dominance, this mega-merger passed anti-trust without conditions.
  3. In-house Optometrists play a key role as intermediaries in the eyewear buying process.
1. A fragmented and complex market

To bastardise Buffett’s aphorism:

It’s not that we like monopolies but we like the pricing power they bring.

Global eyewear is a fragmented and complex market that requires medical expertise (optometrist professionals who act as agents), technical lens laboratories, bespoke fitting, fashion brands, high-volume manufacturing and fast logistic services. One of the conclusions from the E-L anti-trust investigation was that the market’s opacity caused delays in the investigation i.e. that this is not a well analysed or quantified market (at least in the EU). To us as investors, this is a good thing.

We think E-L is a price maker, as befits a market leader that demonstrably understands the power of scale, distribution and especially brands (it either owns or has licensed the majority of luxury eyewear brands).

The global eyewear market is worth c.$100bn and is, by any standards complex in terms of distribution and fragmentation. The US retail eyewear market is dominated by retail chains (LensCrafter, Pearle Vision and Sunglasses Hut are all Luxottica owned) and the supermarket chains. In Europe, there are fewer similar scale chains – Specsavers, VisionExpress and GrandVision being prominent – but independent opticians are far more prevalent.

Fig.2 below shows the EU anti-trust assessment of E-L’s market share position in Europe before the deal was approved. As mentioned, in the fragmented European marketplace, E-L sells mainly wholesale, whilst in the US, E-L enjoys Luxottica’s longstanding position as the largest optical retailer[1] through its ownership of LensCrafter, Pearle Vision and Sunglasses Hut chains.

Fig.2: E-L: European pro-forma Market Share

Table 3 Combined market shares in ophthalmic lenses and eyewear (in value) Sungla sses All Ophthalmic Lenses Single P rogressive Frames Multifocal Machine generated alternative text: [40-50]% I I [1020] [4O-O]%  Source: European Commission[2]

The phrase ‘complex monopoly’ has various connotations but we think EssilorLuxottica is at least a quasi-monopoly. That is, it has a dominant market position and pricing power which is reinforced by its brands, distribution channels and scale.

Specifically, the components of this quasi-monopoly are:

Lens Technological market leadership (8,000 patents)

+ R&D scale (3x nearest competitor)

+ Frames Brand Leadership (Ray-Ban, Oakley + Licenses[3])

+ US Retail chains scale

+ EU Wholesale scale (incl. Laboratories and STARS program)

= Moat (or quasi-monopoly)

Luxottica manufactured 83m frames last year and claims to have an ‘installed base’ of some 500m frame-wearers. Separately, Essilor claims that, of the 2bn people who wear corrective lenses globally, half have lenses made by Essilor.

2. So how on earth did the merger pass anti-trust?

In explaining the outcome, Essilor’s Head of Legal observed that “market dominance is not the same as ‘must-have’”: In other words, Luxottica (via Ray-Ban) ostensibly dominates the sunglasses market but sunglasses are typically a discretionary purchase.

We describe in section three, the ruthless practices that Founder Del Vecchio in particular undertook to vertically integrate Luxottica’s manufacturing operations, acquire brands and retail operations to roll-up the eyewear industry. These practices were ruthless, impressive and well known within the industry.

Here is The Guardian in a must-read article on Del Vecchio’s sharp practices:

“Luxottica bought US Shoe for $1.4bn. Once the deal was done, Del Vecchio promptly broke up US Shoe, whose roots went back to 1879, until all that was left were the LensCrafters stores that he wanted in the first place, which he proceeded to fill with Luxottica frames. “That is exactly the formula they have used ever since,” said Jeff Cole, the former chief executive of Cole National Corporation, an even larger optical retailer that sold out to Luxottica in 2004. “When they buy a company, they spend a little time figuring it out and kick out all the other suppliers.”– Guardian ‘Long Read[4]’

So, we are not the first to notice the E-L’s market power. Indeed, there have been mutterings of price gouging in the eye care industry for some years now. The famous US TV show ‘60 Minutes’ (a vaguely similar show to ‘Panorama’) did a piece on how Luxottica has “cornered” the eyewear industry.[5] [6] For those concerned that prospective customers might be deterred by such negative publicity, we note that this show aired in 2013. We also note that Luxottica’s US retail operations last year were 32% higher at $5.7bn, five years on from that show. Any negative publicity from the show did not deter consumers one bit. It also did not stop the regulators approving the merger.

So how did the merger get approved? An in-depth interview[7] with Essilor’s the Head of Legal was very instructive to us in understanding the regulator’s focus and resulting assessment of the merger. In the interview the head lawyer laid out the key question that anti-trust regulators sought to answer (the so-called “theory of harm”) which was effectively:

Could Ray-Ban’s brand dominance allow the merged conglomerate to sell more lenses?

The key point, in determining the conclusion was that Ray-Ban was deemed a discretionary purchase, not a must-have. In theory, Ray-Ban sunglasses are not an essential purchase (unless you are in Top Gun!). The regulators took the view that this was essentially a fashion accessory business merging with a medical device business. The result of this approval is a much wider moat for the combined business.

3. A word on agents

Howden Joinery and William Demant are examples of where agents are a very attractive part of the market dynamic. Our work on Howden Joinery (Holland Views – Howden, Double Agent, Dec 2016) highlighted the benefits that accrue to a company when an ‘independent’ agent is recommending the product. We included the following excerpt from the book Capital Returns where author Ed Chancellor outlines role of trusted intermediaries in influencing customer purchase decisions.

 Source: Capital Returns book

In the case of E-L it is the independent opticians (who are incentivised via loyalty and bulk purchase pricing to use E-L lenses and frames) who play this role. Better still in the customers eyes opticians are trusted quasi-medical professionals.

2. Secular Growth Tailwinds

In this section we make the following points:

  1. The historical growth record of both businesses has been strong albeit aided by significant acquisitions.
  2. Regarding future growth drivers, there is a Myopia epidemic globally, across both developed and developing markets
  3. Replacement cycles are also a key demand driver.
1. Growth track record

Fig.3 shows that both companies’ twenty-year track record growth have been strong. We fully realise that this has not been entirely organic as both companies, both for offensive reasons (Luxottica buying retail chains and brands) and defensive reasons (Essilor buying e-commerce brands). As a reminder, Essilor enjoys over 40% market share of global lenses sold and Luxottica dominates sun-glasses and high-end frame manufacture, distribution and retail with similar levels of market share.

Fig.3: Essilor and Luxottica standalone sales growth

Source: Bloomberg, Holland Advisors

2. Global Myopia

Despite the strong market share that E-L enjoys, the underlying eyewear market is both under-served and growing. This is due to widespread increased prevalence of short-sightedness (Myopia) across the world. Experts say that this is due to our increased time spent a) indoors and b) looking at computer screens. Eyewear is of course a market that first and foremost fills a medical need: Myopia and to a lesser extent other eye conditions such as glaucoma and cataracts. Fig.4 shows the growing prevalence of myopia across the world. This is a table worth studying in detail. Looking just at the developed markets expected myopia rates is instructive – with prevalence expected to rise 50% in Europe and North America alone between 2020 and 2050. Such forecasts have us thinking of snowballs on long wet hills!

Fig.4: Myopia prevalence

Table: Estimated Prevalence of Myopia for Each Global Burden of Disease Region (2000-2050) Prevalence (%) Andean Latin America Asia-Pacific, high income Australasia Caribbean Central Africa Central Asia Central Europe Central Latin America East Africa East Asia Eastern Europe North Africa and Middle East North America, high income Oceania South Asia Southeast Asia Southem Africa Southem Latin America Tropical Latin America West Africa Western Europe Source: Adapted trom Holden, Brlgn A. opntna•moogy 1 1036-42 2000 15.2 46.1 19.7 15.7 11.2 20.5 22.1 3.2 38.8 18 14.6 28.3 14.4 33.8 15.6 14.5 5.2 21.9 28.1 53.4 9.8 24.3 34.6 34.2 8.4 51 .6 32.2 30.5 42.1 28.6 46.1 12.1 32.4 27.7 9.6 36.7 50.7 66.4 55.1 51.7 27.9 47.4 54.1 54.9 22.7 65.3 50.4 52.2 58.4 23.8 30.2 53.4 50.7 26.8 56.2 etal. 2016. " Global Prevalence of Myopla and High Mppla and Temporal Trends trom 2000 through 2050"  Source: WEF[8]

However, a large part of untapped demand will be in emerging markets and not all of these new consumers will be wearing Ray Ban or Prada frames. That said, new customers tend to be customers for life once they get on the corrective lens ‘ladder’. Both your authors have first-hand experience of this as we suspect do the majority of readers.

3. Replacement cycles

Eye tests are a key driver of replacement cycles. Capture rates (the clue is in the title) are typically 60% – i.e. 6 out of 10 eye tests typically lead to the purchase of new lenses and/or frames. Sunglasses, ostensibly a functional purchase are heavily influenced by fashion too. Bear in mind though, if you need prescription glasses, you also need prescription sunglasses. This excerpt from The Guardian long read piece sets out very well, the unusual scene that is the retail experience! It is this experience that makes the eyewear retail so resilient to disruption and only E-L to us looks like a complex monopoly even if regulators could not assess it as such.

“Buying them, in my experience anyway, is a fraught, somewhat exciting exercise that starts in a darkened room, where you contemplate the blurred letters and the degeneration of your visual cortex, and ends in a bright, gallery-like space where you enjoy the spry feel of acetate in your fingers, listen to what you are told, pay more than you were expecting to, and look forward to inhabiting a new, slightly sharper version of your existing self.” – Guardian Long Read

3. French-Italian Culture clash?

Since the merger was first announced in 2017, there has been much written about the managerial friction that ensued from the equal-merger of these two businesses. The story goes that Del Vecchio (now as 32% shareholder) will not agree to the composition of the top management of the merged business despite having agreed a merger agreement ensuring equal power between both sides until 2021. We offer some historical context which makes us more sanguine.

  1. We cannot read Leonardo Del Vecchio’s mind as to his attitude towards Essilor management, but we can be guided by his track record. He has always been highly rational with shareholder capital as it is his own.
  2. We also look at briefly Essilor’s culture. It does not have a founder at the helm but it is no shrinking violet. We ask, is it really that different a culture from Luxottica?
1. Leonardo Del Vecchio – pioneer, maverick and value creator

We think the merger with Essilor is a strategic finale for Del Vecchio, a legacy, for the 84 year old. Again we point to that Guardian long-read for anecdotes on Del Vecchio rise.[9] Having just read another book on Michael O’Leary – we see much similarity in these two exceptional businessmen. Both were completely ruthless in their capture of their chosen markets. Del Vecchio (DV) had two visionary insights with respect to the eyewear industry that he found himself in in 1961.

  1. DV, an Italian, understood the importance of design and that eyewear was, essentially a fashion accessory. He knew the value of good brands.
  2. DV, like Phil Knight who had a similar epiphany at Nike, realised that he needed to control the distribution of his products.

Luxottica’s acquisition of Ray-Ban was, with hindsight, genius, and the way that business was repositioned and its pricing power re-asserted would make Buffett smile. A former brand manager explained:

The first step in Ray-Ban’s turnaround was a comprehensive market research to identify the “DNA” of the brand. Luxottica shut down the manufacturing facilities and halted sales of the world’s most popular sunglasses brand for six months. Distribution was re-opened in a selective way, elevating the status of the brand. Manufacturing was transferred to Italy and prices were standardized across the world and went up from a minimum of $29 to a minimum of $89.”

The Luxottica playbook was clear:

“There is no competition in the industry, not anymore,” he told me. “Luxottica bought everyone. They set whatever prices they please.” – Former frame supplier to LensCrafter, Charles Dahan[10]

Luxottica’s last big acquisition was in 2007 when it paid c.€1.5bn for the Oakley sunglasses business. In 2006, the year before, Luxottica reported op income of c.€750m. Whereas by 2017, group operating income had grown to c.€1.3bn. Some of that growth was organic, some was store growth and some, it seems fair to us came from Oakley. It is hard as with all companies to dis-aggregate the returns from acquisitions but we think the fact that total group returns on capital (as per Fig.1) have been sustained through the periodic acquisitions points to a strong capital allocation record – we are happy to share our modelling on this.

2. Hubert Sagnières’ Essilor: a Wolf in sheep’s clothing?

Hubert Sagnières is an Essilor ‘lifer’, and became CEO in 2010 and presided over the negotiations with Del Vecchio for what was technically the take-over by Essilor of Luxottica. He is now Executive Vice Chairman of the merged entity. He is not an owner-manager like Del Vecchio but perhaps this is mitigated a little by the fact that Essilor employees owned 4% of the company prior to the deal.

The first few months post the merger have been marred by headlines suggesting much tension between the Chairman and Vice Chairman over the division of managerial responsibilities – what media deem be a battle for the balance of power at E-L[11]. We don’t have a strong view on the veracity or implications of this dispute.

Perhaps more interestingly, under Sagnières’ watch (initially when he was Head of Europe and COO), Essilor spent €5.5bn on acquisitions since 2006. In an effort to assess how accretive those acquisitions were, here’s a thought process. In 2005, before this slew of deals began, Essilor’s operating income was c.€400m. A 15% annualised return on the €5.5bn spent equates to an incremental +€750m of operating income from the acquisitions. In 2017, Essilor actually reported €1,350m operating income. This suggests that the underlying operating profit growth was +$200m or 4% cagr. In other words, Essilor seems to be a good capital allocator too and has built scale and dominance.

Fig.5: Essilor has been rolling-up too – especially since 2006

 Source: Bloomberg

As a result of these acquisitions, Essilor owns a myriad of online retailers as the EU anti-trust investigation highlighted.

Fig.6: Essilor has recently been buying-up online eyewear businesses

(91) Essilor has developed its online retail activity in the EEA in recent years by acquiring Coastal in 2014, and Vision Direct and MyOptique Group in 2016. Essilor currently owns the following websites for online sales of multi-brand eyewear products, and in particular contact lenses, as illustrated in Table 2: Essilor Online Retail Channels in the EEA line Retail ision Direct yOptique Group (Glasses Direct, [ on, Sunglasses Shop, yewearbrands, Netzoptiker, and best) yeBuyDirect  Source: EU Commission

“investment in in-store digitalization in order to enhance omni-channel strategy very well engage at Luxottica. Third, targeted partnership, such as the acquisition of Brille24, a leading online retailer on optical product in Germany, which are developing an interesting drive-to-store concept, who is participating ECPs to offer a mid-tier solution to consumer” – Laurent Vacherot, Deputy CEO, April 2019

Here’s another quirk that was noticed and examined by the FTC as part of their merger investigation. Vision Source is an alliance of US optometrists, a company setup to give independent eye care professionals (iECPs) the scale to negotiate and purchase supplies and technology (presumably to compete with the in-house chains owned by Luxottica and others). Actually, by scale, the combined size of its members’ retail outlets is second only to Luxottica in the US. Here’s the kicker though: Essilor acquired Vision Source in 2015!

We suggest that perhaps, the prevalent concern that the merger of these seemingly disparate companies is a massive culture-clash is actually lacking in substance? Both businesses seem very innovative (in technology and business practices) and notably just as aggressive as each other in the marketplace. It seems like a great fit to us, whoever ends up managing it.

4. By the numbers: a closer look at E-L track record

In this section we briefly look at:

  1. The historical financials of both E and L
  2. Competitor context such as European chains GrandVision and Specsavers
1. Historical E-L financials

Luxottica, as an independent company, compounded sales (including acquisitions) by c.7% since 2002 and Essilor, likewise, has grown revenues by c.11% cagr over the same period. We acknowledge that Luxottica’s headline growth in the last three years has been minimal with weak US store LFLs. However as we will show in this section, eyewear should remain a structural growth market – certainly in volume terms. Luxottica sold 83m frames in aggregate last year but the combination of retail and wholesale revenues means that it is impossible to calculate average wholesale pricing.

Fig.7 shows an array of charts from both companies’ history. Of particular note is:

  • The growth track record of both businesses is excellent
  • Though Luxottica store LFL sales have been cyclically weak since 2016
  • That these are both very high (60-70%) gross margin businesses – in Luxottica’s case that includes a massive retail operation.
  • E-L has excellent and stable operating margins, and especially as we show later in the context of European peers.
  • We note also the reducing working capital needs (helpful to RoNTA and a low cost of growth)

Fig.7: E-L Chart book

 Source: Bloomberg

2. Other comparables

Fig.7b shows some data from GrandVision, the European based eyewear retailer that was spun-out of Dutch conglomerate HAL holdings a few years ago. In the UK, it owns the VisionExpress chain. Fig.7b shows a steady growth trend and perhaps more importantly, a margin of c.15%.

Fig.7b GrandVision

Machine generated alternative text: Reported Revenue €mn 3,500 3,000 2,500 2,000 1,500 1,000 500 o 2012 2013 2014 2015 2016 2017

Source: GrandVision (parent of Vision Express et al)

Specsavers needs no introduction but we thought its UK accounts might also give useful context. Specsavers caters more for the mass market ala GrandVision above, and thus does not really overlap with E-L’s target market per se but, considering the UK backdrop, its financials show that it is out-performing the UK high street in the last two years. Any UK retailer that is holding 6-7% operating margins in the last two years is operating in a resilient market we observe.

Fig.8: Specsavers – that rare beast – a resilient UK high street retailer!

Specsavers UK Holdings Limited Consolidated Profit and Loss Account for the Year Ended 28 February 2018 Turnover Cost of sales Gross profit Administrative expenses Other operating income Operating profit Interest receivable and similar income Interest payable and similar expenses Profit before tax Taxation Profit for the financial year Profit attributable to: Shareholders of Specsavers UK Holdings Limited Non-controlling interests Note 3 4 5 6 10 2018 000 1,360,993 (361,651) 999,342 (912,810) 4,259 90,791 77 (2,545) (2,468) 88,323 (20,700) 67,623 3,981 63,642 67,623 2017 E 000 1,285,964 (342,150) 943,814 (859,084) 6,888 91,618 68 (2,523) (2,455) 89,163 (19,617) 69,546 3,560 65,986 69,546  Source: Companies House

 

5. Threats, Valuation and a conclusion

We conclude with three further areas:

  1. The elephant in the room is e-commerce and technology. We have looked hard at this. Can Amazon et al kill this business?
  2. We relay an insider’s view of the unique quirks of the eyewear market, the competitive landscape etc.
  3. In assessing the value on offer to an equity investor, we apply our own ‘compounding lens’ to it
1. Dollar Glasses Club?

Journalist: “what are your predictions for the future trend of this industry in the next few years?

Hubert Sagnières: “People will be able to take the eye exam with their smartphones.”

Is the internet a threat or a boon to EssilorLuxottica? Interesting question. If you Google “Ray-Ban”, a very impressive Ray-Ban e-commerce website emerges with, as you would expect, full purchasing capability in your country of origin. But are you really going to purchase a pair of high-end sunglasses without trying them on? Hardly.

So, the next question – is the product stock available online (both from the parent company and third party retailers) cheaper than in-store? Actually, no – and we have checked this. Our checks with opticians show that, like most luxury brands, Ray-Ban (i.e. Luxottica) is very careful to control pricing such that its retail customer base (again, in-house and external) are not disadvantaged versus the online retailers. We were told that Luxottica’s distributors perform checks on retailers to ensure that retail pricing matches company policy. If, as a retailer you try to discount stock to drive volume, you will lose favour and thus lose supply (Ref. SPD + Nike).

Dollar Shave Club (DSC) is a well-known start-up that successfully disrupted the lucrative razor market. It is a great example of a start-up business that used the power of online marketing platforms and online distribution to up-end the high margin razor blade business. MBA classes around the world are using DSC as a template to clone in other markets.

Inevitably, one such start-up is targeting the eyewear market: Warby Parker was setup by a three Wharton MBA grads in 2010. Its evolution suggests that the eyewear market might not be as easy to disrupt as other markets. Specifically, the business has seen the need for high street stores (it now has 90 stores) in addition to its e-commerce offering and obviously it does not enjoy the luxury brand names that remain licensed to the largest frame manufacturers. Our conclusion? The eyewear market might not be at all easy to disrupt, not least for the links opticians have with eye health and their quasi-medical responsibilities.

Sagnières’ quote above shows that this is something that Essilor is well aware of (as per our earlier analysis of its e-commerce acquisitions). We think camera technology will allow automated high quality refraction assessments in due course. Again though we come back to the nuance of the product, the need for fitting and personalisation (and Warby Parker’s 90 stores) as being a major impediment to the idea of an online challenge to the market.

The other important point to note re competition is the scale of the global market that is going to develop E-L looks to us perfectly placed to capture more than its fair share of that, but globally there will be plenty of demand to share out amongst existing and new players.

2. Confessions of an insider

In a bid to understand the nuances of the eyewear market, we found a talkative former insider with much credibility – Dean Butler. Butler setup LensCrafter in the US in 1983 (later acquired by Luxottica in 1995) and then moved to the UK where he setup Vision Express (sold to GrandVision), was on the board of glassesdirect.co.uk (sold to Essilor) and is recently an advisor to LensKart, an innovative optical retailer based in India. This man knows the eyewear industry.

In an excellent interview[12] from 2016, the out-spoken Butler makes some very revealing points:

  1. This is not a homogenous market. The multiples like Tesco make excellent money (“hand over fist”) in eyewear at what are very low price points. Butler said at the time that he’d love to own Tesco’s optical business (and a year later it was bought by Vision Express!).

The point is that eyewear is an attractive market across its various segments. The market is sufficiently wide and deep to allow the chains such as Tesco and Wal-Mart to co-exist with the high-end retailers and suppliers such as Luxxotica.

  1. Here is that price opacity again: “you can buy high quality lenses for 25p (yes that’s pence), and quality frames for £3 (i.e. wholesale), they’re not high style, but they’re not bad…its well known that Specsavers sell their frames to franchisees for £4-£6 each”. No wonder the MBA graduates are trying to disrupt the market.
  2. But brands matter: “and then in India, 5% of lenses sold are super-expensive £400 Japanese Tokay lenses that are so expensive they are not even sold in the UK”…i.e. counter-intuitively some of the less developed eyewear markets are more fashion/product quality conscious that the UK or US.
  3. “technology will disrupt this industry” (especially at lower end). Butler thinks that 25% of the market could move online. Refraction (simple vision tests) can be easily be automated Butler believed. But again, counter intuitively, Butler believes that e-commerce sales in India “is shortening replacement cycles”. This is an interesting point. 1) It shows the importance of getting prospective consumer ‘on the eyewear ladder’ and 2) it shows that eyewear as a fashion accessory is an important driver of demand – even, or perhaps especially in so-called developing markets.
  4. So why isn’t everyone doing it? i.e. disrupting/selling at really low prices, the interviewer asked?

Butler replies “cos there’s a part to the business that is a profession (optometry) and that is off-putting to a lot of entrepreneurs” (there’s that agent cropping up again!)

3. Valuation

“If you paid 20 times for a business that was compounding the economic value per share in the midteens and have some level of confidence it is likely to do that for a reasonably long level of time, you will get to heaven doing that.” – Chuck Akre

Firstly we make an assessment on E-L’s post-merger, post-synergies pro-forma earnings power and PE ratio. Fig.10 shows a very simplistic pro-forma P&L for the merged business.

Fig. 10: EssilorLuxottica pro-forma earnings power

 Source: Holland Advisors

Now, a c.21x adjusted PE is more than we have accepted as interesting in the past. Without consideration for the company, the multiple alone is discounting a better than good business. It is hard to argue that such a multiple is reflecting a stock that is out of favour (aka this is not a great company priced like a bad one).

However, before one dismisses what is a clearly, a high quality business because it is on c.21x PE, we suggest it is worth re-considering those high returns and the low cost of growth. It is via our growing understanding of compounders that we suggest such businesses should be analysed.

The bigger question is – is this business a compounder? If, so how might it compound? Simplistically, we think the newly merged business – as it stands today – could potentially deliver c.11% investor IRRs with plausible growth assumptions and a slight PE de-rating. We detail our assumptions in the Appendix (Fig.A).

Businesses don’t stay in steady state of course and, it sounds it sounds like the business will remain an acquirer.

We anticipate that this (growth) will continue to increase as our bolt-on acquisition strategy is gaining momentum. And actually, in April, we already see an uptick here. Essentially, this is in relation to the acquisition that Laurent mentioned of Brille24 in Germany…as most people are aware, our M&A over the past couple of years has been quite moderate obviously with respect to the ongoing antitrust process. And so there is a robust pipeline that’s been put on hold, that’s now been fully reaccelerated, and we’ve seen that reacceleration start to come through in the first quarter of 2019.

And we continue to believe that it will continue to reaccelerate over the course of the year. And so, yes, there will be an acceleration in M&A-led growth coming through in 2019.” – Q1 19 conference call

On that basis, we take this into account in our compounding model. By assuming that say 40% of the excess cash from the core business as modelled above is reinvested (either in technology or say, Asian expansion). We assume that marginal returns on this investment are c.15%. Given historical marginal returns – this to us seems plausible. This combination of assumptions are of course crucial. If we can convince ourselves that this is a “invest more to make more” business then its compounding power could increase. Indeed were the 40% reinvested to make 15% pa as assured then our best guess investor IRR would rise from 11% to 13% (see Appendix Fig.B). We are not fools however. We know that many businesses make acquisitions at poor returns. However the odd industry where the scale monopoly player increases his reach and dominance by targeted acquisitions can create a more powerful beast. The track record of both companies increasing their dominance in this way is not something we should be too quick to dismiss.

Conclusion

We are drawn to EssilorLuxottica’s, excellent track record of growth and returns and its unique business model of vertical integration (brands, manufacturing and distribution). The future global industry growth we think is strong and secular. Demand is also relatively resilient due to its medical need, the role of professional intermediaries and the fashion element. All of these forces reinforce E-L’s excellent positioning. So the market outlook and the company’s position in it are excellent. Is it a cheap share? Ostensibly, no – the headline PE is punchy at c.25x. But that is before the merger synergies which seem likely to be delivered. Margin upside would also see another kicker to earnings in due course.

We started this work as the share price fell to c.€95, from which it has subsequently rallied 20%. We like the drivers for future growth we have found in E-L and our current best guess on likely investor IRRs (11-13%) we think is reasonable. At a lower starting valuation our pulses would race a little faster.

For choice we are buyers.

Andrew Hollingworth & Mark Power

The Directors and employees of Holland Advisors may have a beneficial interest in some of the companies mentioned in this report via holdings in a fund that they also act as advisors to.

Fig.A; Compounding Model – ‘Steady State’, 5% growth, op leverage, NO reinvestment

Fig.B; Compounding Model – 5% growth, op leverage, 40% of excess cash reinvestment

Fig.C: Luxottica (pre-merger) and the eyewear supply chain

 Source: IMD case study

Fig.D: Choices quotes from the industry

“Virtually every time something gets a big foothold in optometry, it screws us,” says Steve Nelson, OD. “That’s true whether it’s Luxottica or VSP. They virtually all start out as a ‘partner to optometry’ and all end up getting too large to be a good partner to us and end up with a business model using optometry to generate huge profits.At that point, we are too invested to back away and we just have to take it. I’m not saying this will screw us because maybe this time will be different, but history certainly suggests we should view this with a fair measure of scepticism”[13]

““We need to be open-minded and never assume that we have arrived, looking at the world as our only point of reference. We need to know how to enter the market and remain firmly there, changing, innovating and constantly improving, while preserving our DNA and our fundamental characteristics.”” – attributed to Leonarado Del Vecchio, founder of Luxottica

Fig.E: ‘The Dollar Shave Club of’ glasses? Warby Parker

 Source: Fortune magazine

Disclaimer

This document does not consist of investment research as it has not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore even if it contains a research recommendation it should be treated as a marketing communication and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. Holland Advisors is authorised and regulated by the Financial Conduct Authority. This presentation is intended for institutional investors and high net worth experienced investors who understand the risks involved with the investment being promoted within this document. This communication should not be distributed to anyone other than the intended recipients and should not be relied upon by retail clients (as defined by Financial Conduct Authority). This communication is being supplied to you solely for your information and may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose. This communication is provided for information purposes only and should not be regarded as an offer or solicitation to buy or sell any security or other financial instrument. Any opinions cited in this communication are subject to change without notice. This communication is not a personal recommendation to you. Holland Advisors takes all reasonable care to ensure that the information is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. This communication is based on and contains current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of this communication may have been disclosed to the issuer(s) prior to dissemination in order to verify its factual accuracy. Investments in general involve some degree of risk therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investment discussed in this communication may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of this investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. This document is for informational purposes only and should not be regarded as an offer or solicitation to buy the securities or other instruments mentioned in it. Holland Advisors and/or its officers, directors and employees may have or take positions in securities or derivatives mentioned in this document (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manage conflicts of interest in regard to this communication internally via their compliance procedures.

  1. “Luxottica is the largest optical retailer in the United States, with LensCrafters and Pearle Vision stores and optical retail concession operations in Target and Sears stores. It currently competes to varying degrees against iECPs, other optical retail stores, and “big box” retailers, among others. It is also the second-largest managed vision care provider in the United States” source: FTC https://www.ftc.gov/system/files/documents/closing_letters/nid/1710060commissionstatement.pdf ↑
  2. ↑
  3. http://www.luxottica.com/en/eyewear-brands ↑
  4. https://www.theguardian.com/news/2018/may/10/the-invisible-power-of-big-glasses-eyewear-industry-essilor-luxottica ↑
  5. https://www.youtube.com/watch?v=gDdq2rIqAlM ↑
  6. ‘Sticker Shock: why are glasses so expensive’ https://www.cbsnews.com/news/sticker-shock-why-are-glasses-so-expensive-07-10-2012/ ↑
  7. https://www.youtube.com/watch?v=Ul_2YSjTv8w ↑
  8. http://www3.weforum.org/docs/WEF_2016_EYElliance.pdf ↑
  9. https://www.theguardian.com/news/2018/may/10/the-invisible-power-of-big-glasses-eyewear-industry-essilor-luxottica ↑
  10. https://www.latimes.com/business/lazarus/la-fi-lazarus-glasses-lenscrafters-luxottica-monopoly-20190305-story.html ↑
  11. https://www.reuters.com/article/us-essilorluxottica-governance-sagnieres/essilorluxotticas-sagnieres-hits-back-at-attack-from-del-vecchio-idUSKCN1R21B5 ↑
  12. https://www.youtube.com/watch?v=zKqcY3d-fbg ↑
  13. https://www.optometrytimes.com/practice-management/what-essilor-vision-source-deal-means-you ↑
Holland_logo_RGB Agree

Welcome to Holland Advisors

By continuing to use this website you:
Terms and Conditions
Disclaimer
Privacy Notice

Agreement

Please confirm the following Please confirm that you have read and understood the following terms of use of this website. THIS PORTION OF THE WEBSITE IS ONLY MADE AVAILABLE TO NON-US INVESTORS AND PROFESSIONAL CLIENTS OR ELIGIBLE COUNTERPARTIES. The content of this website has been prepared by Holland Advisors (London) Ltd on the basis of information and sources believed to be reliable. Under no circumstances should any part of this website be construed as an offering or solicitation of an offer for any investment in the products on this site Holland Advisors (London) Limited is authorised and regulated by the Financial Conduct Authority (FRN 538932). 1. Not for U.S. Persons The provision of the information in this website does not constitute an offer of securities to any person in the United States or to any U.S. Person as such term is defined under the Securities Act of 1933, as amended. The information contained in this site about Holland Advisors (London) Ltd is not directed to any person in the United States. Funds referred to herein are neither registered under the Securities Act 1933 of the USA, nor are they registered under the Investment Company Act of 1940. Consequently, they cannot be offered for sale or be sold in the USA, its territories, possessions or protectorates under its jurisdiction, nor to nationals, citizens or residents in any of those areas. No investments or services mentioned on this website are directed at US Persons who are not Eligible Counterparties as defined by the UK Financial Conduct Authority (FCA) Handbook or Qualified Purchasers as defined under the Investment Company Act of 1940. The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such distribution or offer is not authorised. 2. Terms and Conditions of Use IMPORTANT LEGAL NOTICE THE FOLLOWING TERMS AND CONDITIONS OF USE (“TERMS OF USE”) APPLY TO YOUR ACCESS TO AND USE OF THE HOLLAND ADVISORS (LONDON) LTD WEBSITE (THE “WEBSITE”). EACH TIME YOU ACCESS OR USE THIS WEBSITE, YOU AGREE TO COMPLY WITH, AND BE BOUND BY, THE TERMS OF USE AND ACKNOWLEDGE THAT WE MAY RELY UPON YOUR AGREEMENT. PLEASE READ THE FOLLOWING TERMS OF USE CAREFULLY AND IF YOU DO NOT ACCEPT ANY TERMS OR CONDITIONS, PLEASE DO NOT ACCESS OR USE THIS WEBSITE. 3. Information on the Website Except where stated otherwise, the information, content and services on this Website (the “Information”) are provided by Holland Advisors (London) Ltd (referred to as “we” and “us”) as at the date indicated on the relevant material. The Information is provided for personal use and information purposes only. The Information does not take account of the investment objectives, financial situation and particular needs of any particular person and is not general advice to any class of persons. Therefore, you should not rely on the Information and should obtain relevant and specific professional advice in making any investment decision. Furthermore, nothing on this Website constitutes or should be construed to constitute: (i) an offer, advice, invitation or solicitation from us or our affiliates to buy or sell any investments or securities, futures, options or other financial instruments; (ii) an invitation or inducement to engage in investment activity or a financial promotion of any kind; or (iii) investment advice or recommendation. 4. Stock exchange prices and exchange rates The prices/values shown on this Website in relation to different underlying securities are based on the prices notified to Holland Advisors (London) Ltd as the last sale price of the relevant securities on the stock exchange on which they are traded as at the time and date shown. Those figures may vary throughout the course of, and between, stock exchange trading days, market trading times and business days in general. Holland Advisors (London) Ltd has not verified the figures with the relevant stock exchange and you should verify the accuracy of those figures separately before relying on them. 5. Permitted users of the Website The laws and regulations of the country from which you access this Website may include restrictions on the distribution of the Information. This Website is not directed at or intended for distribution to or use by any person or entity in any jurisdiction where (by reason of that jurisdiction’s applicable securities laws, person’s nationality, residence or otherwise) such distribution, publication, availability or use of this Website or any part of its contents would be contrary to applicable law or regulation or would subject Holland Advisors (London) Ltd to any registration or licensing requirement within such jurisdiction. If you are such a person or entity, you are not authorised to enter the Website. It is your responsibility to ensure that your use of this Website complies with any restrictions or any applicable local laws regarding use of the Information on this Website. Persons or entities in respect of whom such restrictions apply must not access the relevant pages on this Website. The Information displayed on this Website contains material that may be interpreted by the relevant authorities in the country where you are viewing this Website as a financial promotion or an offer to purchase securities. Accordingly, if you reside in any such country or fall within the scope of any law that seeks to regulate financial promotions in the country of your residence or in the country in which you are viewing this Website, please cease accessing or using this Website immediately. If you are uncertain about your position under the laws of the country in which you are viewing this Website, then you should seek clarification by obtaining legal advice from a lawyer practicing in the country of your residence or in the country in which you are viewing this Website before accessing this Website. You may not use any part of the material or Information on this Website to establish, maintain or provide or assist in establishing, maintaining or providing a stock market for trading in securities. 6. Investment Performance and Accuracy of Information The Site contains material about the past performance of our Funds. The value of an investment in a Fund may go up as well down so that an investor’s investment in a Fund, when redeemed, may be more or less than the original investment amount. By its nature, investment in a Fund managed by Holland Advisors (London) Ltd is only suitable for sophisticated investors who do not require immediate liquidity for their investment, for whom an investment in a Fund does not constitute a complete investment programme and who fully understand and are willing to assume the high risk involved in the investment programme of a Fund. THE PAST PERFORMANCE OF ANY INVESTMENT, INVESTMENT STRATEGY OR INVESTMENT STYLE IS NOT INDICATIVE OF FUTURE PERFORMANCE. Whilst the information contained on the Website has been given in good faith and every effort has been made to ensure its accuracy, the Information may not be complete or accurate for your purposes. This Website and the Information is provided on an “as is” basis and Holland Advisors (London) Ltd may not, and has no obligation to, update the Information or correct any inaccuracy which subsequently becomes apparent. The Information and/or opinions and estimates comprised in the Information may be changed or withdrawn without notice and may become outdated. You, therefore, should verify any information or other material obtained from this Website before you use it. HOLLAND ADVISORS (LONDON) LTD, ITS DIRECTORS OR OFFICERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BY WAY OF EXAMPLE BUT NOT LIMITATION AS TO RELIABILITY, COMPLETENESS, FITNESS FOR PURPOSE OR ACCURACY OF THE INFORMATION ON THIS WEBSITE OR ON ANY THIRD PARTY WEBSITE LINKED TO THIS WEBSITE. IN ADDITION, WE DO NOT REPRESENT OR WARRANT THAT THIS WEBSITE OR THE SERVERS THAT MAKE THE WEBSITE AVAILABLE WILL BE UNINTERRUPTED, ERROR FREE, OR FREE FROM INFECTION, VIRUSES, WORMS OR ANY OTHER HARMFUL CODE WHICH MAY HAVE CONTAMINATING OR DESTRUCTIVE PROPERTIES. YOU ARE FULLY RESPONSIBLE FOR ENSURING PROTECTIVE STEPS TO BE TAKEN SUCH AS VIRUS CHECKING. The Information is assembled from material prepared by Holland Advisors (London Ltd) or its agents but may not include Information made known to Holland Advisors (London) Ltd officers (or agents) subsequent to the date of publication of the Information indicated on the Website. If you use the Information, you do so at your own risk. Please recognise that the previous performance of securities or other instruments does not guarantee or predict future performance. 7. Exclusion of liability TO THE FULLEST EXTENT PERMITTED BY LAW, HOLLAND ADVISORS (LONDON) LTD ACCEPT NO LIABILITY TO YOU OR ANY THIRD PARTY FOR ANY LOSSES OR DAMAGES, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT DAMAGES, CONSEQUENTIAL OR SPECIAL DAMAGES, LOSS OF USE, DATA OR PROFITS, COSTS OR EXPENSES INCURRED OR SUFFERED BY YOU OR THIRD PARTY, WHETHER IN CONTRACT OR DUE TO NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING OUT OF OR IN CONNECTION WITH THE ACCESS TO, USE OF, RELIANCE ON, OR PERFORMANCE OF THIS WEBSITE OR ANY INFORMATION CONTAINED ON THIS WEBSITE, WHETHER DUE TO INACCURACY, ERROR, OMISSION OR ANY OTHER CAUSE AND WHETHER ON THE PART OF US, OUR SERVANTS, AGENTS OR ANY OTHER PERSON. NOTHING IN THE TERMS OF USE EXCLUDES, RESTRICTS OR MODIFIES ANY CONDITION, WARRANTY OR LIABILITY WHICH MAY AT ANY TIME BE IMPLIED BY STATUTE OR ANY OTHER APPLICABLE LAW WHERE TO DO SO IS ILLEGAL OR WOULD RENDER ANY PROVISION OF AN AGREEMENT VOID. 8. Third Party Websites We may provide, on our Website, links to websites operated by third parties as a convenience to you. If you use these other sites, you will leave this Website. If you decide to visit any linked site, you do so at your own risk and it is your responsibility to take all protective measures to guard against viruses or other destructive elements. Holland Advisors (London) Ltd makes no representations, warranties or guarantees of any kind about any of the content of any other website which you may access by hypertext link through this Website. When you access any other website by means of a link from this Website, you should understand that your access to that other website is independent of Holland Advisors (London) Ltd and Holland Advisors (London) Ltd has no control over the content of the website, nor does Holland Advisors (London) Ltd in any way endorse or approve the content of that website. In no event will Holland Advisors (London) Ltd in any way be liable to you or any other person(s) or organisation(s) for loss or damage (whether direct, indirect, consequential, special or other) for any use of any site linked to it by means of hypertext or otherwise. 9. Indemnity You agree to indemnify Holland Advisors (London) Ltd and its officers from and against any claim brought by third parties against Holland Advisors (London) Ltd and its officers as a consequence of your breach of the Terms of Use. Furthermore, if your use of this Website results in the need for servicing, repair or correction of equipment, software or data, you assume all costs thereof. 10. Intellectual Property Rights and Licence The copyright, trade mark or any other intellectual property rights in the Website and the Information are owned by or licensed to Holland Advisors (London) Ltd. You may download or print out a hard copy of individual pages and/or sections of this Website provided you do not remove any copyright or other proprietary notices. Any downloading or other copying from this Website will not transfer title to any software or material to you. You may not reproduce (in whole or in part), transmit (by electronic means or otherwise), modify, link to or use for any public or commercial purpose this Website without the prior written permission of Holland Advisors (London) Ltd. Any rights not expressly granted in the Terms of Use are reserved. 11. Operation of the Website You should be aware that the internet, being an open network, is not secure. If you choose to send any electronic communications by means of this Website, you do so at your own risk. Holland Advisors (London) Ltd cannot guarantee that such communications will not be intercepted or changed or that they will reach the intended recipient safely. 12. Privacy Any personal data relating to you will be collected, used and recorded by us in accordance with current data protection legislation, the Terms of Use and our Privacy Policy. You must read our Privacy Policy as it forms part of the Terms of Use. 13. Governing law The Terms of Use are governed by the laws of England and Wales and the courts of England and Wales will have exclusive jurisdiction over any disputes arising under them. 14. Waiver If you breach the Terms of Use and we take no action, we will still be entitled to use our rights and remedies in any other situation where you breach the Terms of Use. 15. Our details This website is owned and operated by Holland Advisors London Ltd. You can contact us at: Holland Advisors London Ltd, The Granary, 1 Waverley Lane, Farnham, Surrey, GU9 8BB. Updated and effective as of  31st March 2024
Disclaimer
Please read the following conditions of use of this website. This website is directed at high net worth experienced investors and institutional investors who understand the risks involved with the investments being promoted and it should not be relied upon by retail clients (as defined by Financial Conduct Authority). The information on this website is issued by Holland Advisors (London) Limited (hereafter referred to as “Holland Advisors”), a limited liability company (7431314) incorporated in England and Wales, which is authorised and regulated by the Financial Conduct Authority (FRN: 538932). This website is for information purposes only and does not constitute an offer or solicitation to buy or sell securities, funds or any other financial instrument. The information is directed inside the United Kingdom and is not directed at any persons in jurisdictions where it would be against local law or regulation.  In particular, information on this site is not directed at any person, partnership or corporation being resident in the United States of America. Holland Advisors disclaims all responsibility if you access or download any information in breach of any law or regulation of the country in which you reside. Information on this site The information provided does not constitute advice. Holland Advisors believes that the sources of the information in this website are reliable. However it cannot and does not guarantee, either expressly or implicitly, and accepts no liability for, the accuracy, validity, timeliness or completeness of any information or data (whether prepared by it or by any third party) for any particular purpose or use or that the information or data will be free from error. Holland Advisors does not undertake any responsibility for any reliance which is placed by any person on any statements or opinions which are expressed herein. Neither Holland Advisors nor any of its directors, officers or employees will be liable or have any responsibility of any kind for any loss or damage that any person may incur resulting from the use of this information. This does not exclude or restrict any duty of liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. All Information may be changed or amended without prior notice although Holland Advisors does not undertake to update this site regularly. Marketing Communications Documents on this site do not constitute investment research as they have not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore, even if they contain research recommendations they should be treated as marketing communications and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. These communications are not personal recommendations to you and any opinions cited are subject to change without notice. Holland Advisors takes all reasonable care to ensure that the information on this site is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. Documents on this site are based on, and contain, current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of these documents may have been disclosed to the issuer(s) prior to dissemination in order to verify their factual accuracy. Investments in general involve some degree of risk, therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investments discussed on this website may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of an investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. Holland Advisors and/or its officers, directors and employees may have or take positions in securities, funds or derivatives mentioned on this site (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manages these potential conflicts of interest internally via its compliance procedures. Fund Information Parts of this site may refer to Funds managed or advised by Holland Advisors. These are not solicitations to invest and any potential investors should refer to the “Our Funds” section of the website in order to learn more about these Funds and find out how and where to obtain the relevant full legal documentation. Linked Websites This site may be linked to third party websites or contain information provided by third parties. Holland Advisors does not make any representation as to the accuracy or completeness of such websites or information, has not and will not review or update such websites or information, and cautions browsers that any use made of such websites or information is at their own risk. Holland Advisors does not accept any liability arising out of the information contained on any linked website or Information provided by a third party and the use of such sites and information is at your own risk. This does not exclude or restrict any duty or liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. Indemnity You agree to indemnify and defend Holland Advisors, its affiliates and licensors, and the officers, directors, employees, and agents of Holland Advisors and its affiliates and licensors, from and against any and all claims, liabilities, damages, losses, or expenses, including legal fees and costs, arising out of or in any way connected with your access to or use of this website and the Information. Use of Cookies If you agree to these terms and conditions a “cookie” might be placed on your computer. A cookie is a packet of information that does not identify individual users of a website, but allows the collection of website activity (such as the number of users who visit our website, the date and time of visits, the number of pages viewed, navigation patterns, what country and what systems users have used to access the site). We can use this information for statistical purposes, which allows us to analyse and improve our website. The cookie will expire automatically after 6 months or you can manually remove cookies in your browser settings. Copyright, Trademarks and Other Rights Copyright, trademarks, database rights, patents and all similar rights in this site and the information contained in it are owned by Holland Advisors or relevant third party providers. You may use the Information and reproduce it in hard copy for your personal reference only. The information contained herein and any supplemental documentation provided is confidential and should not be copied, reproduced or redistributed without the prior consent of Holland Advisors. Governing Law You agree that your use of this site and any dispute arising from this use is subject to English law and you submit to the jurisdiction of the Courts of England & Wales.
Privacy Notice
This is the privacy notice of Holland Advisors London Ltd our company number is 07431314. Our registered office is at The Halt, Smugglers Way, The Sands, Farnham, Surrey, GU10 1NB.
Introduction
This notice describes how we collect, store, transfer and use personal data. It tells you about your privacy rights and how the law protects you. In the context of the law and this notice, ‘personal data’ is information that clearly identifies you as an individual or which could be used to identify you if combined with other information. Acting in any way on personal data is referred to as ‘processing’. This notice applies to personal data collected through our website www.hollandadvisors.co.uk. Except as set out below, we do not share, or sell, or disclose to a third party, any information collected through our website.
Data Protection Officer
We have appointed a data protection officer (‘DPO’) who is responsible for ensuring that our privacy policy is followed. If you have any questions about how we process your personal data, including any requests to exercise your legal rights, please contact our DPO, Claire Brunt at  claire@hollandadvisors.co.uk.
Personal data we process
1. How we obtain personal data The information we process about you includes information:
  • you have directly provided to us
  • that we gather from third party databases and service providers
  • as a result of monitoring how you use our website or our services
2. Types of personal data we collect directly When you use our website, you may provide personal data by submission of data by our Sign Up or Contact Us forms. This can be categorised into the following groups:
  • personal identifiers, such as your first and last names
  • contact information, such as your email address and your telephone number for communication
  • records of communication between us including messages sent through our website, email messages and telephone conversations
  • marketing preferences that tell us what types of marketing you would like to receive
3. Types of personal data we collect from your use of our services By using our website and our services, we process:
  • technical information about the hardware and the software you use to access our website and use our services, including your Internet Protocol (IP) address, your browser type and version and your device’s operating system
  • usage information, including the frequency you use our services, the pages of our website that you visit, whether you receive messages from us and whether you reply to those messages
  • your preferences to receive marketing from us; how you wish to communicate with us; and responses and actions in relation to your use of our services.
4. Our use of aggregated information We may aggregate anonymous information such as statistical or demographic data for any purpose. Anonymous information is that which does not identify you as an individual. Aggregated information may be derived from your personal data but is not considered as such in law because it does not reveal your identity. For example, we may aggregate usage information to assess whether a feature of our website is useful. However, if we combine or connect aggregated information with your personal data so that it can identify you in any way, we treat the combined information as personal data, and it will be used in accordance with this privacy notice. 5. The bases on which we process information about you The law requires us to determine under which of six defined bases we process different categories of your personal data, and to notify you of the basis for each category. If a basis on which we process your personal data is no longer relevant then we shall immediately stop processing your data. If the basis changes then if required by law we shall notify you of the change and of any new basis under which we have determined that we can continue to process your information. 6. Information we process with your consent Through certain actions when there is no contractual relationship between us, such as when you browse our website or ask us to provide you more information about our business, you provide your consent to us to process information that may be personal data. Wherever possible, we aim to obtain your explicit consent to process this information, for example, we ask you to agree to our use of non-essential cookies when you access our website. We continue to process your information on this basis until you withdraw your consent or it can be reasonably assumed that your consent no longer exists. You may withdraw your consent at any time by instructing us  claire@hollandadvisors.co.uk. 7. Information we process for the purposes of legitimate interests We may process information on the basis there is a legitimate interest, either to you or to us, of doing so. Where we process your information on this basis, we do after having given careful consideration to:
  • whether the same objective could be achieved through other means
  • whether processing (or not processing) might cause you harm
  • whether you would expect us to process your data, and whether you would, in the round, consider it reasonable to do so
For example, we may process your data on this basis for the purposes of:
  • improving our services
  • record-keeping for the proper and necessary administration of our business
  • responding to unsolicited communication from you to which we believe you would expect a response
  • preventing fraudulent use of our services
  • exercising our legal rights, including to detect and prevent fraud and to protect our intellectual property
  • insuring against or obtaining professional advice that is required to manage business risk
  • protecting your interests where we believe we have a duty to do so
How and when we process your personal data
8. Your personal data is not shared We do not share or disclose to a third party, any information collected through our website.
Use of information we collect through automated systems
9. Cookies Cookies are small text files that are placed on your computer’s hard drive by your web browser when you visit a website that uses them. They allow information gathered on one web page to be stored until it is needed for use at a later date. They are commonly used to provide you with a personalised experience while you browse a website, for example, allowing your preferences to be remembered. They can also provide core functionality such as security, network management, and accessibility; record how you interact with the website so that the owner can understand how to improve the experience of other visitors. Some cookies may last for a defined period of time, such as one visit (known as a session), one day or until you close your browser. Others last indefinitely until you delete them. Your web browser should allow you to delete any cookie you choose. It should also allow you to prevent or limit their use. Your web browser may support a plug-in or add-on that helps you manage which cookies you wish to allow to operate. The law requires you to give explicit consent for use of any cookies that are not strictly necessary for the operation of a website. 10. Personal identifiers from your browsing activity Requests by your web browser to our servers for web pages and other content on our website are recorded. We record information such as your geographical location, your Internet service provider and your IP address. We also record information about the software you are using to browse our website, such as the type of computer or device and the screen resolution. We use this information in aggregate to assess the popularity of the webpages on our website and how we perform in providing content to you.
Other matters
11. Your rights The law requires us to tell you about your rights and our obligations to you in regard to the processing and control of your personal data. We do this now, by requesting that you read the information provided at  http://www.knowyourprivacyrights.org 12. Communicating with us When you contact us, whether by telephone, through our website or by email, we collect the data you have given to us in order to reply with the information you need. We record your request and our reply in order to increase the efficiency of our business. We may keep personally identifiable information associated with your message, such as your name and email address so as to be able to track our communications with you to provide a high quality service. 13. Complaining If you are not happy with our privacy policy, or if you have any complaint, then you should tell us. When we receive a complaint, we record the information you have given to us on the basis of consent. We use that information to resolve your complaint. 14. Retention period Except as otherwise mentioned in this privacy notice, we keep your personal data only for as long as required by us to provide you with the services you have requested. 15. Compliance with the law Our privacy policy complies with the law in the United Kingdom, specifically with the Data Protection Act 2018 (the ‘Act’) accordingly incorporating the EU General Data Protection Regulation (‘GDPR’) and the Privacy and Electronic Communications Regulations (‘PECR’). 16. Review of this privacy policy We shall update this privacy notice from time to time as necessary.

Agree Disagree